Enforcement Unit

Function and operation

The primary functions of the Enforcement Unit are to:

  • Independently review and advise on investigations conducted into suspected breaches of the ASX Market Rules, ASTC Settlement Rules and ACH Clearing Rules;
  • Provide support and advice to other ASX Markets Supervision units as required; 
  • Initiate proceedings before the Disciplinary Tribunal through the referral of investigated matters;
  • Appear and represent ASX, ASTC or ACH in litigation before the Disciplinary Tribunal or the Appeal Tribunal;
  • Prepare written submissions and other related documentation in respect of matters before the Disciplinary Tribunal; 
  • Negotiate agreed settlements for Tribunal approval;
  • Act as the single point of contact between ASX and ASIC in relation to potential breaches of the Corporations Act; and
  • Review the consistency and quality of information from other ASX Supervision Units in respect of referrals and notifications to ASIC.

The Enforcement Unit is comprised of legal and financial industry specialists and has responsibility for the independent and impartial legal review of investigations conducted by ASX Markets Supervision Investigations Unit in relation to suspected contraventions of the Exchange’s Operating Rules by its Market Participants. The Enforcement Unit also provides an important advocacy role in representing and appearing on behalf of ASX, ASTC or ACH in proceedings conducted before the Disciplinary Tribunal.

Approach to supervision

There are a number of key principles which underpin the Enforcement Unit in the exercise of its functions:

  • Effective regulation and supervision is promoted through the maintenance of an open and cooperative relationship between ASX Markets Supervision and those whom it regulates and supervises;
  • Enforcement action must be exercised in a manner that is fair, transparent and consistent; and
  • Integrity and confidence in the disciplinary process is maintained and enhanced through the professional independence of the Enforcement Unit.  

Consistency, fairness and integrity is achieved through:

  • The independent review of investigations by the Enforcement Unit prior to matters proceeding to the Disciplinary Tribunal; and
  • Processes that ensure review by the Enforcement Unit in the handling of referrals and notifications to ASIC.

Enforcement outcomes

The disciplinary framework adopted by the ASX Group provides for a range of enforcement outcomes. In reviewing and assessing matters for referral to the Disciplinary Tribunal or to ASIC, the Enforcement Unit may recommend:  

  • That no further action be taken;
  • The issue of a private Management Letter (which, if issued, may require an undertaking that certain actions be taken or conditions met);
  • The issue of a public Management Letter; 
  • The initiation of proceedings before the Disciplinary Tribunal;
  • The initiation of proceedings before the Disciplinary Tribunal on an expedited hearing basis; or
  • Referral or notification to ASIC.

Factors in the referral of a matter to the Disciplinary Tribunal

There are sound and well developed rules governing the activities and conduct of stockbrokers and broking firms.

Where it is suspected or believed that a Market Participant has contravened the ASX’s Operating Rules, the Enforcement Unit will take into account a number of factors in determining whether a matter should be progressed and referred to the Disciplinary Tribunal. Depending on the matter being investigated, these factors may include an assessment of:

  • Full circumstances of the matter;
  • Seriousness of the conduct;
  • Duration and frequency of the contravention/s;
  • Whether the conduct was deliberate, reckless or negligent;
  • Loss, or risk of loss, caused to any third party or to ASX;
  • Impact of the breach in relation to the orderliness of the market or facilities operated by ASX;
  • Whether the contravention was a systemic or isolated occurrence;
  • Whether the matter was self-reported;
  • The conduct of the Participant following the contravention, or upon becoming aware of the contravention; and
  • Any prior contraventions.      

Where a matter is referred by the Enforcement Unit to the Disciplinary Tribunal, and the Disciplinary Tribunal determines that the ASX Market Rules have been contravened, or that unprofessional conduct has been engaged in, the Disciplinary Tribunal may impose sanctions including the following:

  • Censure;
  • Fine (up to $250,000) or default of commission or gross profit;
  • Suspension or termination; and/or
  • Education and compliance program.

Similar provisions for sanction apply under both the ASTC Settlement Rules and the ACH Clearing Rules.

Notifications and referrals to ASIC

In accordance with statutory obligations imposed under the Corporations Act 2001, the Enforcement Unit also has responsibility for referrals and notifications to ASIC where the following conduct is suspected to have occurred:

In addition, there are a number of matters prescribed under the Corporations Act which are automatically required to be notified to ASIC (e.g. trust account breaches, disciplinary action taken by ASX, etc.).