Friday 2 March 2007 LAWFUEL – Australia Law & Business – The Australian Securities and Investments Commission (ASIC) has today released the findings of its second assessment of Australia Pacific Exchange Limited (APX). Under the Corporations Act, ASIC is required to conduct an annual assessment of how well APX is complying with its obligations to supervise its market.
Taking into account the size of the APX market, ASIC concluded that APX has adequate arrangements for the supervision of its market. As a market licensee, APX must ensure that it has adequate arrangements to deal with any real or potential conflicts of interest between its commercial interests and its obligation to supervise its market. During its assessment, ASIC noted that APX’s conflict handling arrangements did not initially identify a potential conflict of interest involving a senior APX executive, although subsequent safeguards worked to identify and deal with the conflict.
ASIC will continue to closely monitor APX’s arrangements in this regard to ensure that potential conflicts can be identified and are properly dealt with. ASIC’s assessment also identified an issue regarding APX’s management of its compensation arrangements, based on a particular interpretation of the requirements of the Act. This issue, involving a transfer of excess funds by APX out of its fidelity fund, was resolved in subsequent discussions with ASIC. The funds that were transferred have been re-instated to the fidelity fund. A copy of the assessment report is available form ASIC’s website at www.asic.gov.au or by calling the ASIC Infoline on 1300 300 630.
Background A financial market is defined as a facility through which offers to buy and sell financial product are regularly made. Anyone who operates a financial market in Australia must obtain a licence to do so, or otherwise be exempted by the Minister. As part of the conditions of granting a licence to operate a financial market, the licensee must supervise the market in accordance with Part 7.2 of the Corporations Act. Page 1 of 2
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Under the Act, ASIC is required to conduct an assessment of how well operators of licensed financial markets are complying with their obligations to supervise the facilities’ operations. ASIC must do this at least once per year in relation to each licensee. ASIC can also assess how well a licensee is complying with its other obligations under the Act. For further information contact: Emma Forehan ASIC Media Unit Telephone: 03 9280 3354 Mobile: 0409 702 310