Aussie rules OK – 8 November 2010
First Published Tuesday, 9th November 2010 03:05 pm from Fidessa : Steve Grob
The opinions expressed by this blogger and those providing comments are theirs alone, this does not reflect the opinion of Automated Trader or any employee thereof. Automated Trader is not responsible for the accuracy of any of the information supplied by this article.
The latest of our fragmentation forums landed in Sydney
last week where around 150 industry executives got together to
debate Australia's future in the global fragmentation
experiment. The event was well timed as the Australian Regulator,
target="_blank">ASIC, published its long awaited
href="http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/cp-145.pdf/$file/cp-145.pdf"
target="_blank">consultation paper outlining its
proposed new rules governing equities trading on the very same
href="http://www.asic.gov.au/asic/asic.nsf"
target="_blank">ASIC proposals could be summarised
as being based on MiFID-style best execution, sprinkled with some
RegNMS reporting requirements and all wrapped up firmly in a
href="http://www.asic.gov.au/asic/asic.nsf"
target="_blank">ASIC should be commended for the
thoroughness of its review and the thinking behind its
href="http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/cp-145.pdf/$file/cp-145.pdf"
target="_blank">paper provides an excellent
backgrounder on the experiences of the US and Europe as well as
comments on HFT and the Flash Crash.
title="ASIC" href="http://www.asic.gov.au/asic/asic.nsf"
target="_blank">ASIC also outlines its concerns over
the impact of dark pool trading on price formation (a concern
raised in the US and Europe, too). Some have argued that the
larger block sizes traded off exchange reflect a completely
different trading style/objective and so are not really relevant
to the average trader. On the other hand,
href="http://www.asic.gov.au/asic/asic.nsf"
target="_blank">ASIC points out that price formation
is not just a trading issue but also affects any stakeholder in a
public listed company that wants an accurate assessment of their
investment. The challenge, though, is to define exactly how much
non-lit trading needs to take place in order to have a negative
impact for either traders or longer term investors. On this point
href="http://www.asic.gov.au/asic/asic.nsf"
target="_blank">ASIC will get plenty of
comments.
Meanwhile, as other Asia/Pac
regulators think about their approach to increasing market
efficiency and innovation they may end up thanking title="ASIC" href="http://www.asic.gov.au/asic/asic.nsf"
target="_blank">ASIC for doing much of the heavy
lifting for them.
