Knowing the Market Integrity Rules - We all have a role to play

Market Integrity Rules (MIR)'s play an important role in maintaining investor confidence in Australia's financial markets. These are the rules that regulate what orders CommSec, as a Market Participant, can or cannot accept.

As a Market Participant, CommSec is committed to ensuring our customers have access to the opportunities available through investing in listed shares, have confidence that the relevant share market will be fair and orderly, and that we comply with the relevant regulations..

To maintain market integrity and market fairness, CommSec and our customers must not place orders that may create a false or misleading appearance of active trading or disrupt the underlying market price of the relevant security (referred to as ‘Market Misconduct'). To help you set up for a successful investing experience, it's important to be across these unacceptable and illegal order / trading practices. These can include:
Market Integrity Rules

 

Small orders / price support

 

  • Placing orders of small value without legitimate reason or with the intention of moving the price of the stock up or down.
  • Placing multiple small orders to incrementally move or support the price of the stock over time.

 

Spoofing / ramping

 

  • Placing large orders or multiple small orders: with the intention of cancelling the orders before execution and/or creating the false appearance of investor interest in the stock.

 

Layering / stacking

 

  • Placing multiple buy or sell orders at various price steps above or below the current market price, to create a false appearance of market demand.

 

Pump and dump

 

  • Ramping the stock (often with collusion by more than 1 customer) to increase the price then 'dumping' (selling) the stock at the artificial high price which can cause the price to collapse.

 

Marking the close

 

  • Buying or selling quantities of shares just before the market closes with the intention of setting the last sale price.
  • Placing orders to deliberately increase or decrease the last sale price.

 

Pre-arranged trading

 

  • An arrangement between a buyer and seller to execute an order on the market between themselves at the same price.
  • This occurs when investors plan in advance of placing the trades, with the intention of their orders crossing.
  • On market trades are not allowed to be pre-arranged between the buyer & seller.

 

Insider trading

 

  • Placing orders to buy or sell a security when you have access to price sensitive information that's not publicly available.
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If CommSec is concerned about your orders or trading activity, we may reject your orders, refer to our CommSec Trading Desk, contact you to discuss, or refer your order / trading activity to Australian Investment & Securities Commission (ASIC).

Market Integrity Rules FAQs

CommSec has an obligation as a Market Participant to adhere to ASIC's Market Integrity Rules (Securities Markets) 2017. Maintaining a fair and orderly market means to consider all the circumstances of the order at the time it is placed, to determine if the order is acceptable to enter the market. Orders may be referred to CommSec's Trading Desk if the order triggers any of the pre-trade vetting rules in place.

Not all orders will be manually reviewed before entering the market. In fact, only a small percentage of CommSec's orders will be reviewed by one of our Trading Representatives. Majority of CommSec's orders are vetted through our automated order processing system.

If your order has been in processing for a long-time during market hours, it could potentially mean that one of our Trading Representatives is assessing your order.

When you are logged into the CommSec website, you will be able to see the reason for an order being cancelled/rejected under the Trading tab.

Need more info?

If you would like to understand how ASIC may take action for those found engaging in market misconduct please access this link: ASIC’s approach to enforcement | ASIC.

If you’d like to understand the rules that regulate our market in more detail, please visit ASIC’s Market Integrity Rules

 

Important information

Commonwealth Securities Limited ABN 60 067 254 399 AFSL 238814 (CommSec) a wholly owned but non-guaranteed subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945 (the Bank). CommSec is a Market Participant of ASX Limited and Cboe Australia Pty Limited. This is provided for informational purposes only. Trading practices and types of market manipulation may change over time as market conditions, systems, trading platforms, regulations, and investor behaviours change over time. CommSec is not liable for any losses or damages arising out of the use of information contained in this communication.

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