ASIC Consults on Proposed Changes to the Capital Requirements for Market Participants

ASIC LogoASIC has released a consultation paper proposing changes to the capital requirements for market participants, which prescribe the minimum amount of capital a participant must hold. The proposed changes will better protect investors and market integrity by strengthening the risk profile of market participants and reducing the risk of a disorderly or non-compliant wind-up.

Consultation Paper 302 (CP 302) sets out the proposals to improve and simplify the capital requirements, including further consolidating the two market integrity capital rulebooks into a single capital rulebook (the ASIC Market Integrity Rules (Capital) 2018).

ASIC proposes that market participants of futures markets will be required to comply with a risk-based capital regime instead of a net tangible asset requirement, and must hold core capital of at least $1,000,000 at all times.

Another proposal would increase the minimum core capital requirement for securities market participants to $500,000, as well as introducing new rules such as an underwriting risk requirement. At the same time, ASIC proposes to remove redundant rules and forms and more closely align the capital requirements with the financial requirements of the Australian financial services licensing regime.

These proposals follow ASIC’s review of the adequacy of its capital regime. The review identified elements of the capital requirements that were outdated and not able to adequately address the risks of operating a market participant business today.

It is important that market participants maintain a financial buffer of liquid and core capital to decrease the risk of market disruption from a disorderly wind-up. Well-capitalised market participants are also better able to absorb losses and more likely to be able to meet their financial obligations to clients.

ASIC invites submissions on CP 302 by 15 August 2018.



Part 7.2A of the Corporations Act 2001 gives ASIC the power to make market integrity rules dealing with activities and conduct in relation to licensed financial markets, including market participants on the relevant market.

In 2011, we made capital market integrity rules for market participants of the ASX, ASX 24 and Chi-X markets, followed by the SSX and FEX markets in 2013 and 2014 respectively. In 2017, these rules were consolidated into the ASIC Market Integrity Rules (Securities Markets – Capital) 2017 and the ASIC Market Integrity Rules (Futures Markets – Capital) 2017.

Market participants (other than principal traders or clearing participants) of the ASX, ASX 24, Chi-X, SSX, NSXA and FEX markets are subject to the financial requirements of the ASIC capital market integrity rules.