ASIC buys $4 million market surveillance package

Corporate watchdog selects solution to monitor the ASX in real time

The Australian Securities and Investments Commission (ASIC) has picked a SMARTS Market Surveillance solution to monitor equities and derivatives markets in a $4 million deal.

SMARTS' integrated market surveillance system (IMSS) will allow ASIC to monitor real time trading of domestic licensed markets such as the ASX.

ASIC released a tender for the market surveillance package in December, after the Federal Government's decision in August 2009 to allow the watchdog to assume monitoring of the ASX.

The solution will be installed by 1 July 2010 as part of the two-year deal. ASIC will assume real time monitoring some time in the third quarter of this year.

"ASIC is well advanced in our planning for the transfer of market supervision powers," ASIC Commissioner Belinda Gibson said in a statement. "The procurement of the IMSS is an important milestone in the transition and will underpin the streamlined markets analysis methodology and relationship management model ASIC has developed to monitor and engage market participants."

According to documents released in December, the IMSS is expected to detect aberrant trading activities in real-time, including unusual price or volume movements, market manipulation and insider trading. Any alerts will be flagged to the market surveillance team, which is made up of existing ASIC staff as well as new hires from ASX and the market.

ASIC has previously said it anticipates an average of 400 system alerts per business day, or 104,000 per year. It also expects an average of 2.5 million trades per day.

SMARTS Market Surveillance, a private Australian company, provides similar monitoring packages for 40 securities exchanges and national regulators, including the ASX.

The Australia as a Financial Centre, Building on our Strengths report released earlier this year, suggested ASIC's role in monitoring real-time trading was an important step in introducing competition to the ASX in Australia.

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