The program, a joint initiative similar to the continuous disclosure campaign run by ASIC and ASX, will focus on the conduct of securities firms and their employees.
ASIC Deputy Chairman, Mr David Knott, said: "The increasing trend towards globalisation of markets and cross border trading underline the importance of market integrity.
"Securities dealers and their representatives are the first line of defence in preventing manipulative and other abusive practices that undermine market integrity. The program should be seen as part of the continuing professional education for ASX's brokers and their representatives. It will increase awareness and knowledge of unacceptable trading behaviour and place brokers in a better position to refuse illegitimate orders.
"The main aim of Trading BEST will be to work with ASX brokers to ensure their compliance systems, supervision and training arrangements and record keeping practices and procedures are effective to detect and deter manipulation and other abusive practices.
"However, if serious compliance failures or possible contraventions of the Corporations Law are identified, appropriate and timely enforcement action will be taken against firms or individuals who engage in manipulative practices on ASX," said Mr Knott.
The program will be conducted with due recognition of the increasingly retail nature of ASX's market, and ASIC's corresponding consumer protection role.
ASX Managing Director, Mr Richard Humphry, said: "Changes in the ways retail clients gain access to the market and the corresponding rise in the levels of retail participation have brought with them a greater need for brokers to be alert to these issues.
"Just as the huge increase in shareholder numbers has seen ASX place substantial resources into investor education programs, so does it require brokers to be mindful of the effect of this surge of interest on their own business operations," said Mr Humphrv.
"Factors such as the increased order flow, and the relatively smaller order size, and the increasing competition and subsequent lower margins do place particular pressure on brokers. The campaign aims to remind brokers of, and help them meet our expectations and their obligations."
The program underscores the relationship between unacceptable trading transactions or patterns and poor order-record keeping. It will also emphasise that any deficiency in record keeping which inhibits enquiries into a possible breach of ASX Business Rules or the Corporations Law would be viewed seriously. The program will also examine the compliance policies and procedures of firms to ensure that appropriate mechanisms are in place for the detection and prevention of trading which might be in breach of the ASX Business Rules or the Corporations Law.
The program will have three main stages:
Stage 1. : An industry-wide education campaign, including the issue by ASX of a guidance note on trading behaviour and joint ASX/ASIC roadshows.
Stage 2.: An industry-wide self-assessment of compliance levels, including an examination of record-keeping, compliance policies, procedures and practices and on-going training.
Stage 3. : An inspection program of selected firms based on a review by ASX and ASIC of the self- assessment responses and other feedback.
Unacceptable trading behaviour can undermine the reputation of the market, negatively affecting consumers and other market participants, and it is important to undertake such programs from time to time.
