Amid a sharp spike in trading, the Australian Securities and Investments Commission (ASIC) ordered large traders to curb their trading by as much as 25% to prevent markets from being overwhelmed.
ASIC said that its equity markets have experienced record trading volume over the past two weeks, during which time the number of trades has jumped too. Volume increased notably on March 13, ASIC said.
The regulator said that while the market infrastructure has been able to handle the increased activity, it’s concerned about whether this will be the case if volumes continue to rise at these rates.
“While there was no disruption to market operations on Friday, there was a significant backlog of work required to be undertaken over the weekend by the exchanges and trading participants,” ASIC said.
“If the number of trades executed continues to increase, it will put strain on the processing and risk management capabilities of market infrastructure and market participants,” ASIC warned.
As a result, in an effort to reduce the pressure on markets, ASIC said that it has ordered “a number of large equity market participants…to limit the number of trades executed each day until further notice.”
These orders require firms to reduce their trade executions by up to 25% from the levels reached on March 13, ASIC said.
“This action will require high volume participants and their clients to actively manage their volumes. We do not expect these limits to impact the ability of retail consumers to execute trades,” ASIC said.
ASIC said it will continue to closely monitor the markets and that it will take further action as needed “to ensure markets remain fair and orderly.”