ASIC is consulting on proposed changes to modernise market integrity rules (MIRs) governing market participants’ trading systems and automated trading. The proposed changes aim to keep pace with continued developments in technology, including artificial intelligence (AI).

They also aim to:

• streamline and reduce complexity by applying consistent rules to any trading systems used by participants, irrespective of how orders are generated or submitted, and
• harmonise trading system rules and safeguards across the securities and futures markets and align our rules framework with the International Organisation of Securities Commission principles and international best practice on algorithmic trading.

Market participants’ systems used for trading, order management and surveillance are now largely automated. ASIC estimates that algorithmic trading in Australian listed equities markets comprises approximately 85% of all trading, while in the futures markets about 94% in SPI 200 futures trading and 46% in three-year Treasury bond futures trading.

As trading systems and algorithmic trading strategies are continually developed and improved, striving for greater efficiency, the guardrails in ASIC’s market integrity rules also need to adapt to changing market practices, technology and risks.

During periods of heightened volatility, financial markets may be especially vulnerable to risks from unexpected activity by trading algorithms or AI. Risks may be increased where AI is deployed with algorithmic trading, such as potential exacerbation of market volatility or ‘flash crashes’. Also, the complexity and opacity of AI models can make it difficult to understand decision-making processes, increasing the potential for unintended consequences.

ASIC’s proposed rule changes would extend the principles-based rules for trading systems to participants’ development, testing, use and monitoring of their trading algorithms and require ‘kill switches’ to enable immediate suspension of aberrant trading algorithm activity. ASIC also proposes to repeal some obsolete rules and reduce complexity as part of its focus on streamlining the MIRs, including repealing the automated order processing annual notification to ASIC requirement. To further ease regulatory burden, ASIC will provide a conditional class no-action position from this requirement to securities participants for annual notifications due from November 2025.  

Providing feedback

ASIC welcomes feedback from industry on the proposed changes by 22 October 2025. Submissions should be sent to markets.consultation@asic.gov.au.

Further, ASIC also welcomes feedback from industry on ways to simplify and improve the MIRs, including a call for participants to identify which rules they would like ASIC to prioritise for review.

Download

Consultation Paper 386 Proposed amendments to the ASIC market integrity rules: Trading systems and automated trading (CP 386)

Background

CP 386 sets out proposals to amend the trading systems and automated trading obligations in the ASIC Market Integrity Rules (Securities Markets) 2017 and the ASIC Market Integrity Rules (Futures Markets) 2017.

Source: ASIC