Australia Unveils Plans for Modernizing Trading Regulations

ASIC Consults on Proposed Changes to Market Integrity Rules for Algorithmic Trading

The Australian Securities and Investments Commission (ASIC) has announced a consultation on proposed changes to the Market Integrity Rules (MIRs) for market participants' trading systems and automated trading. The consultation, outlined in CP 386, aims to modernize the MIRs to keep pace with technology developments, including artificial intelligence (AI).

The proposed changes aim to align ASIC's rules framework with the International Organisation of Securities Commission principles and international best practice on algorithmic trading. Approximately 85% of trading in Australian listed equities markets is algorithmic trading, while in SPI 200 futures trading, it is about 94%, and in three-year Treasury bond futures trading, it is about 46%.

ASIC is seeking feedback from industry on ways to simplify and improve the MIRs. The regulator invites participants to identify which rules they would like ASIC to prioritize for review. One of the key proposals is the requirement for 'kill switches' to enable immediate suspension of aberrant trading algorithm activity. However, CP 386 does not mention any proposed requirement for these 'kill switches' at this stage.

ASIC's proposed rule changes would extend principles-based rules for trading systems to participants' development, testing, use, and monitoring of their trading algorithms. The changes also aim to harmonize trading system rules and safeguards across the securities and futures markets.

CP 386 does not provide a specific deadline for feedback submission, but it is encouraged to be sent to [email protected] by 22 October 2025. It's important to note that the consultation does not mention any repeal of obsolete rules or conditional class no-action position from November 2025, which were previously proposed by ASIC.

The proposals for the amendment of the market integrity rules concerning the modernization of market integrity rules for trading systems and automated trading by participants were made by the Federal Ministry of Finance of Germany (Bundesministerium der Finanzen) as part of their legislative draft in May 2025.

ASIC will provide a conditional class no-action position from November 2025 for securities participants for annual notifications due. The consultation paper, CP 386, is part of ASIC's focus on streamlining the MIRs and reducing complexity.

ASIC welcomes feedback from industry on the proposed changes and encourages all relevant parties to submit their feedback by the deadline of 22 October 2025. For more information and to submit feedback, please visit [email protected].