ASX’s regulatory licences

ASX is an operator of financial market facilities and services with six separate licences (one in the listed holding company, ASX Limited, and five in subsidiary companies).

These companies are licensed to provide these facilities and services to listed companies, brokers and other organisations, subject to regulatory oversight by ASIC and the RBA.  Each licensed business has appointed another (unlicensed) subsidiary, ASX Markets Supervision, as their agent to undertake licence obligations involving monitoring of conduct by the organisations to who services are provided by the licensed entities.

ASX regulatory licenses

ASX creates multilateral contracts with its direct customers in the form of listing rules, market rules, and clearing and settlement (CS) rules (collectively known as the Operating Rules). Because this contract structure provides the opportunity to shape the behaviour of market users, the Operating Rules are recognised in the Corporations Act . The Corporations Act sets out minimum content requirements for the rules. For example, the rules must deal with matters including admission, and ongoing conduct of Participants.

The law provides that these multilateral contracts cannot be changed without governmental oversight. This takes the form of a requirement that the relevant Minister, currently the Minister for Superannuation and Corporate Law, be given an opportunity to take the advice of regulatory agencies, such as ASIC, about the merits of ASX’s proposed rule changes and, in extreme cases, disallow the proposed rule changes.

The rules exist primarily to identify the services that are being offered by ASX. The rules set out the terms on which ASX operates its markets and facilities and provides related services, the way those facilities and services operate, the roles of each party, as well as the rights and obligations of entities that participate in those markets and use these services (market infrastructure). The Operating Rules are also one of the main tools that a market licensee uses to meet its obligations to ensure that the market is fair, orderly and transparent (market standard-setting).  

ASX monitors conduct in accordance with both the terms of its licences and the terms of its Operating Rules. On this basis ASX can be distinguished from APRA and ASIC, which are government agency regulators with regulatory powers conferred by Government. ASX is neither a financial services regulator (like ASIC) nor a prudential supervisor (like APRA).