Report of the Roles Played by the Asx and Asic

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Report of the roles played by the ASX and ASIC

Prepared for
Tiffany Hutcheson
Coordinator of capital market

April, 2011

Table of contents

1.0 Introduction…………………………………………………………………1 2.0 Roles played by the ASX…………………………………………………...2 3.1 Importance of the ASX as a regulator…………………………………..2 3.2 Responsibility and objective of the ASX……………………………….2 3.3 Roles of the ASX………………………………………………………..2 3.4 Changing role of the ASX………………………………………………3 3.0 Roles played by the ASIC in the market…………………………………….4 4.5 Responsibility and objective of the ASIC………………………………4 4.6 Roles of the ASIC……………………………………………………….4 4.0 Conclusion & Recommendation………………………………………………6 5.0 Reference list…………………………………………………………………..7

1.0 Introduction
On 1 April1987, six exchanges that operated in the state capital cities merged to form the ASX. It is an Australia's primary national market for equities, derivatives, and securities. In Nov.1998, the ASX became the first exchange in the world to have its shares listed on its own market. On 1 August 2010, the responsibility for the supervision of real-time trading on the ASX was transferred to ASIC. The ASIC which is an independent commonwealth government body become the Australia’s corporate, market and financial service regulator. From then on, trading on the ASX is regulated and supervised mainly by ASIC and ASX. In this report, we are going to look in detail at the role played by the ASX and ASIC in the regulation and supervision of trading on the ASX. Moreover, a wide range of sources are used in this report. Some information are obtained from the textbook, official website of the ASX and ASIC, as well as several journal articles. Topics covered in this report are the importance of the ASX as a regulator, the responsibility and objective of the ASX and ASIC, roles played by the ASX and ASIC, and the supervision transferred.

2.0 Roles played by the ASX in the markets
2.1 Importance of the ASX as a regulator
The successful regulation of the share market is an important priority of parliament and legislators as most share ownership is direct, through shares or other listed investments (Quilter 2010, p.160), which emphasizes the importance of the role played by ASX (Australian Stock Exchange).

2.2 Responsibility and objective of the ASX
Accordingly, ASX takes the primary responsibility that not only monitors its market for its operation but also oversees and supervises all the market participants. ASX also set its objectives to adapt the rapidly development of dynamic markets. It would love to provide a well-informed and fair market for an internationally competitive market but not just for the financial securities traded on it (Quilter 2010, p.160).

2.3 Roles of the ASX
In order to regulate the markets, the ASX generated one set of rules which are called Listing Rules. The Listing rules represent certain criteria that all the market participants have to meet and follow. Otherwise, failure to comply with those rules might lead to delisted from the Board (Chand 2010, p.20). In a word, the companies and trusts whose securities are listed, the relationships between market participants for example, stockbrokers, their client and the ASX are also regulated by Listing Rules. For instance, there is an important rule for listed entities called “continuous disclosure”. Such rule requests companies to inform the ASX of any information that may have influence on the share price. In other words, it is compulsory for all the companies to disclose relative information to the whole market. If a company fails in providing fully information to the ASX, then the ASX Surveillance would notify the Listing Unit that who might decide if it is necessary to contact the entity. If so, the entity would be contacted by the Listing Unit and requested to provide any undisclosed information. If the information provided does not meet the satisfaction of exchange, the...
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