ASIC Warns On Insider Trading In Small Cap MinersAugust 3, 2019
According to a report released yesterday, the corporate regulator, ASIC reckons integrity is getting better and insider dealing was not as noticeable last year as in a couple of previous years.
But the same report also revealed there is still some dodgy trading going on, especially ahead of mergers and acquisitions announcements, unscheduled announcements; with the most affected being small-cap companies in the materials sector
The review found that after deteriorating in 2016, market cleanliness improved over the next two years, returning to levels seen in 2015. ASIC defines a ‘clean’ market as one where prices ‘react immediately after new information is released through the ‘proper channels’.
ASIC said “there was more suspicious trading before merger and acquisition announcements than other announcements…announcements by smaller companies were more likely to be unclean. Many of these smaller companies were in the materials sector.”
The overall cleanliness of the market fluctuated between 2015 and 2018—despite a deterioration in 2016, market cleanliness improved in 2017 and 2018 to settle around 2015 levels, according to ASIC.
ASIC Commissioner Cathie Armour said ‘Markets cannot operate with a high degree of integrity if people trade with inside information. We expect all parties involved in mergers and acquisitions to put in place meaningful confidentiality controls at the start of a transaction – and make sure the controls are rigorously followed. Controls for some small-cap companies are clearly lacking and need to be tightened.’
In the three years to 2018, ASIC said on average 0.6% of accounts that traded before material price-sensitive announcements were deemed suspicious. While the percentage of suspicious accounts remained stable during the period, ASIC found that the volumes traded by these accounts increased.
ASIC said there was a greater instance of suspicious trading before merger and acquisition announcements than other market-sensitive announcements, and before unscheduled announcements.
Small companies in the materials sector were the most likely to have suspicious trading.
“We aim to increase our monitoring of brokers with high concentrations of anomalous order flow and clients, or groups of clients, that exhibit repeat patterns of anomalous trading,” ASIC said in a statement.
“Our findings complement independent research released in 2018 by Intralinks and Cass Business School. The study found Australia was the cleanest market over the last decade among a sample of major markets.
“Going forward, ASIC will use historical trading behaviour before material announcements to enhance our market supervision work and inform our regulatory priorities,” Ms. Armour said yesterday.
read the report here >>>> rep623-published-31-july-2019
Subscribe to our newsletter
- How to deal with COVID-19 in the reporting season July 13, 2020
- financial reporting news and insights June 30, 2020
- End of Year Tax Planning Guide – 2019/20 June 02, 2020
- COVID-19 | Reporting deadlines further extended for listed and unlisted entities May 14, 2020
- COVID-19: Signing contracts electronically just got easier for companies May 06, 2020
- ASIC reports on corporate finance regulation – July to December 2019 April 20, 2020
- JobKeeper Payment has now been legislated by Parliament April 14, 2020
- ASIC to provide additional time for unlisted entity financial reports April 09, 2020
- Coronavirus stimulus package to include jobkeeper payments March 31, 2020
- New ASIC guidelines for upcoming AGMs and financial reporting requirements in light of COVID-19 March 25, 2020
- Initial public offers: Relief for voluntary escrow arrangements and preprospectus communications February 24, 2020
- Financial Services Royal Commission Draft Legislation February 04, 2020
- 2020 IPO Watch Report January 30, 2020
- The execution challenge for a new decade January 21, 2020
- Australian Government delays implementation of Open Banking after facing practical issues with the new Consumer Data Right January 13, 2020
- ASIC reports on corporate insolvencies 2018–19 December 19, 2019
- ASIC Financial reporting focuses for 31 December 2019 December 06, 2019
- ASIC releases report on mining and exploration initial public offers December 05, 2019
- Final ASX listing rules reforms – summary of key changes November 12, 2019
- tokenized securities are the next big megatrend of the blockchain revolution November 06, 2019
- CDR privacy safeguards: OAIC guidance released November 06, 2019
- Financial Services Council releases guide to help stop elder financial abuse October 31, 2019
- Final ASX listing rules reforms October 11, 2019
- ATO celebrates 20-year milestone of regulating self-managed superannuation funds October 10, 2019
- ASIC reports on corporate finance regulation – January to June 2019 September 23, 2019
- Does your SMSF investment strategy meet diversification requirements?’ September 19, 2019
- ASIC’s Corporate Plan 2019-2023 August 28, 2019
- Government announces Hayne Royal Commission implementation timetable August 26, 2019
- Countdown to AGM August 20, 2019
- ASIC enforcement update January to June 2019 August 18, 2019
- ASIC Warns On Insider Trading In Small Cap Miners August 03, 2019
- APRA proposes stronger rules on remuneration August 01, 2019
- AASB 16 Leases – get it right as it may have a large impact on your financial reporting July 19, 2019
- FATF releases 2019 guidance on virtual assets: 9 key points and global changes July 18, 2019
- Major financial reporting changes and other focuses June 17, 2019
- ASIC issues guidance to licensees to protect against share sale fraud June 16, 2019
- ASIC consults on proposals to maintain investor protections by restricting retail offers of ‘stub-equity’ in control transactions June 04, 2019
- ASIC releases market integrity report May 31, 2019
- ASIC updates information for businesses on ICOs and crypto-assets May 30, 2019
- Succession Planning May 14, 2019
- Large proprietary company thresholds increased April 16, 2019
- Australia passes new laws regulating streaming of abhorrent violent material by ISPs and other content providers April 15, 2019
- Federal Budget Review April 03, 2019
- ‘Mind the gap’ – consumers confusing different types of financial advice March 28, 2019
- Accounting and Financial Reporting Standards update March 27, 2019
- ATO & Council of Financial Regulators report on SMSF borrowing arrangements March 22, 2019
- fourth edition of ASX Corporate Governance Council’s Principles and Recommendations officially released. February 27, 2019
- ASIC consults on updating its responsible lending guidance February 14, 2019
- Final report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry February 02, 2019
- ASIC reports on 2018 annual general meeting season January 31, 2019
- new mandatory wording requirements for service providers under the Australian Consumer Law January 30, 2019
- Protecting your PPSR Registration from Expiry January 30, 2019
- Findings from 30 June 2018 financial reports January 25, 2019
- Western Australia expands its duty base December 18, 2018
- Australian startup and young technology company funding report 2017/18 December 01, 2018
- proposed changes to the ASX Listing Rules December 01, 2018
- Plans to reduce the financial reporting burden for Australian proprietary companies. November 27, 2018
- The SEC reiterates its position on the issuance, trading and investment in digital assets November 23, 2018
- Three companies combining with a common vision of providing coordinated solutions for unlisted companies November 20, 2018