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Market Volatilty, regulator warnings on practices that may be affecting it


Market volatility has been in the news a lot lately; the following have been raised, by both the market and regulators, as potential causes:

  • Short selling
  • Stock lending
  • Un-timely disclosure of any information that might affect the price of a companies securities
  • Spreading of false or misleading rumors and predatory trading

To counter this both the ASX and ASIC have released a number of warnings to address market concrns.

ASIC

ASIC has warned investors to be aware of their obligation to lodge substantial holding notices in a timely manner, emphasising that while it can be tricky to do on time, it is important. ASIC will shortly release a consultation paper on the topic of streamlining disclosure procedures

In response to some market participants concerns that some individuals are deliberately spreading false or misleading rumours to affect the price of stocks, ASIC has made formal requests for information from a number of participants about their trading in the past weeks. ASIC's concern is that such behaviour could amount to market manipulation or insider trading.

ASIC is also working with overseas exchanges, SEC, FSA and SFC, with a view to seeking assistance on any international aspects.

ASX

The ASX is warning market participants of the practice of “naked” or short sales, where an order is entered into by participant or broker who does not have arrangements in place for delivery of the securities, and addressing transparency and settlement risk issues associated with short selling within the context of its rules.

The ASX is also reviewing the scale of its late fees in relation to delayed settlement.

Disciplinary action may apply to you if you do not comply with the ASX rules.

Other - International

To note, the issue of short selling etc is not specifically an Australian issue, the US Securities and Exchange Commission (SEC) has just proposed an anti-fraud rule aimed at short or “naked” sellers. The rule is aimed at sellers who deceive others, such as brokers-dealers and purchasers about their intention or ability to deliver securities in time for settlement.

How does this apply to you?

There are a number of things you need to be aware of:

  • your disclosure obligations, if you are a listed entity or unlisted disclosing entity then you need to disclose any information that might effect the price of your companies securities in a timely manner
  • any attempt to manipulate the market by non-disclosure or non-timely disclosure, or spreading false rumors may result in legal action by ASIC or the ASX

How can Certainty Compliance help you?

  • Certainty Compliance can undertake a review of your policy and procedures to ensure that you meet your obligations.
  • Certainty Compliance can tailor training to suit the needs of your staff in understanding their disclosure obligations

Further information

Certainty Compliance would be pleased to discuss your needs with you. Please contact us at (02) 8246 8560 or enquiries@certaintycompliance.com.au

ASICwww.asic.gov.au
ASX www.asx.com.au
SEC www.sec.gov