ASIC today released its first annual assessment report of Chi-X Australia Pty Ltd (Chi-X).
The assessment covers 4 May 2011 to 31 March 2012, which reflects the date on which Chi-X was granted a licence to operate an Australian financial market by the Minister and Chi-X's financial year-end date.
ASIC concluded that Chi-X met its statutory obligations as a licensed market operator.
ASIC's findings are included in Report 315 Market assessment report: Chi-X Australia Pty Ltd (REP 315).
The report sets out nine agreed actions for improvement or attention. While the agreed actions are important, they did not cause ASIC to qualify the overall conclusion that Chi-X met its statutory obligations during the assessment period.
Chi-X has already commenced work to address some of the agreed actions outlined in the report.
Chi-X commenced operation of its financial market on 31 October 2011 and launched its off-market trade reporting facility in two phases - in May and June 2012.
REP 315 notes that up until March 2012, turnover on Chi-X remained below $50 million - a market share of less than 1%. However, daily turnover increased during the final four months of the financial year (it reached a high of $150 million in mid-May), lifting Chi-X's market share to around 3% by the end of 2011-12. It has been recently publicly reported that Chi-X's share of daily trading volume has reached more than 5%. Some of the improvement in turnover on Chi-X can be attributed to the launch of its trade reporting facility for off market trades.
A financial market is defined as a facility through which offers to buy and sell financial products 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.
ASIC is required to assess how well a market licensee is complying with its obligations under the Corporations Act 2001 at least once a year.