ASX gets a tick, but…

Can a sudden bear market overwhelm a stock exchanges front line surveillance?

Investors, still shaken by the events of last September might well believe that they already know the answer to that question.

But the Australian Securities and Investment Commission thinks it is worth further study.

In a report just released, ASIC says surveillance “plays a critical part in identifying matters warranting further investigation.”(see www.asic.gov.au)

And it has urged the Australian Stock Exchange to investigate this matter further.

The report said, though, that this and three other recommendations ASIC made, while important, did not cause the Commission to qualify its conclusion that ASX licensees have met their statutory obligations over the past troubled year.

ASIC said, too, that there would be value in the exchanges “undertaking further consideration” of the way they “administer trading halts and suspensions.”

It noted that both algorithmic trading and direct market access are taking an increasing roles in ASX activities.

ASIC said it had identified incidents in which these developments had highlighted a potential for these activities to threaten the orderliness of ASX markets.

It urged the ASX to investigate these matters, too.