Hi Andy -
Pls see attached a senate enquiry into ASIC’s performance (and ASX for that matter) when it comes to ‘Trading and Regulatory Issues Identified by Research into Empirical Registry and Broker Data” back in 2014 .... in other words investigating potential fraud (supported by evidence) into the functioning of the ASX ...
https://www.aph.gov.au/DocumentStore.ashx?id=db1bfe96-8924-4292-926d-6c86421612d5&subId=31219
The timing of this coincided with the resignation of 2x Directors of the ASX for insider trading. But this enquiry originated back in 2011 when CuDeco began to recognise irregular trading into its Company and commenced reported it to the ASIC (with evidence).
From my perspective the report highlights how systemic various illegal schemes work under the guise of “algorithmic trading” and that it probably affects every stock on the ASX. To name a few of the schemes:
# wash trades
# black pools (unofficial trades)
# “pump and dump” and vice versa
# insider trading
# naked shorting
# front running via high speed frequency trading
# spoofing (via social media ... example, a fraud environmental scare against Whitehaven)
The shame of it all is that ASIC claims it is difficult for them to act (as the regulator!!!) because of lack of transparency created by the algorithms. The creators of it can hide behind it in disguise if they know which way the machines are heading.
From the report: Key Points -
#
“on the ASX it seems that share manipulation has gained acceptance as somehow being normal, or a fact of life in modern markets, if only because of an apparent tolerance by regulators and with convictions few in number and lightly dealt with whenever cases are prosecuted ... it may also be because the activities where manipulation is able to take place are able to be easily camouflaged and therefore difficult to gather evidence”
# “the acceptance of manipulation as a legitimate approach to trading appears to have extended to the very top level of governance in our financial markets with the operator itself ie. the ASX, suffering the ignomity of having two of its Directors stand down because of illegal short selling activity”
Relevant Points -
#
“the benefits to the ASX mentioned in the article and inaction by ASIC in the face of pressing problems, may be suggesting some sort of collusion at the top end of the market for the benefit of the investment banks. It is definitely no coincidence that the ‘Top End of Town” happens to be intimately connected to securities lending, short selling, HFT algorithms, Dark Pools and unfair trading priveleges all of which are associated with trading behaviours that are destroying the market integrity”
ASIC’s response ... they found nothing worth pursuing!!!
Cheers,
TagH
