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, ACH Clearing Rules, Operating Rules of the Sydney Futures Exchange, Clearing Rules of SFE Clearing and Austraclear Regulations;
  • 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, ACH, SFE, SFEC and Austraclear 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, ACH, SFE, SFEC and Austraclear 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 initiation of proceedings before the Disciplinary Tribunal;
  • 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.

If it is considered that a Participant (or Issuer) has contravened the Operating Rules, the usual course will be for a Contravention Notice to be prepared and submitted to the Disciplinary Tribunal. There may be extenuating circumstances requiring the adoption of an alternative strategy (e.g. other regulatory action) however this would be rare.

Where a matter is referred by the Enforcement Unit to the Disciplinary Tribunal, and the Disciplinary Tribunal determines that the ASX Operating 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 $1,000,000) or default of commission or gross profit;
  • Suspension or termination; and/or
  • Education and compliance program.

When the Disciplinary Tribunal has determined that there has been a breach of the ASX Operating Rules, the Disciplinary Tribunal will take into account certain principles in determining the appropriate sanction, which include:

  • The disciplinary history of the Participant;
  • Disciplinary sanctions previously applied by the Disciplinary Tribunal for similar types of contraventions;
  • Whether the Participant assisted and cooperated with ASX;
  • Whether the Participant made an early decision not to contest the matter;
  • Whether the conduct was unintentional, negligent, deceptive, manipulative, fraudulent or intentional;
  • Whether the misconduct was a systemic or isolated occurrence;
  • Whether the matter was self-reported;
  • Whether a commercial advantage of financial benefit had been obtained as a result of the misconduct;
  • Whether a corporate culture conducive to compliance with the rules is evident;
  • Loss, or risk of loss, caused to any third party or to ASX.

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.).