The Australian Securities and Investments Commission (ASIC) will not implement a small order resting time to manage high frequency trading (HFT) due to a drop in small and fleeting orders, it said.
ASIC has refined its rules for HFT and dark liquidity following the release of a suite of proposals, including the small order resting time rule, by Minister for Financial Services and Superannuation Bill Shorten last November.
ASIC will continue to monitor the issue and review the necessity of the rule if orders reached problematic levels, it said.
The regulator also said it would rely on an order's impact rather than remove ‘materiality' in relation to manipulative orders.
Dark liquidity had already reduced as a result of the new meaningful price improvement rule introduced on 26 May, ASIC said, and so it would not proceed with implementing minimum size thresholds.
It refined a number of rules as related to crossing system operators, including removing the requirement of crossing system operators to publish aggregate statistics in relation to system transparency and disclosure.
Although last March ASIC said industry concerns regarding HFT had been overstated, Industry Super Network has continued to lobby for a call order auction to reduce what it says are the negative and destabilising market effects of HFT.
