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Market integrity

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On 30 July 2009 the Corporations and Markets Advisory Committee (CAMAC) released a report entitled “Aspects of Market Integrity” (“the Report”).

The Report was commissioned by the government to investigate:

  • directors entering into margin loans over shares in their company
  • trading by directors in “blackout periods”
  • spreading false or misleading information
  • corporate briefing of analysts

The Report recommends changes to the ASX Listing Rules, the Corporations Act and ASX Corporate Governance Council Corporate Governance Principles and Recommendations. The key recommendations of the Report are as follows:

Margin Loans

CAMAC does not recommend introducing a prohibition on margin lending as such. Rather, CAMAC recommends that as a matter of best practice directors and executive officers should:

  • give advance notice to the board of any proposed dealings in the securities of their company
  • obtain board clearance before entering into the dealing
  • undertake any approved dealing within two business days

CAMAC also recommends that:

  • any such transactions be disclosed to the market shortly after the event
  • a company disclose in its annual report the number of its securities held by directors and executive officers which are subject to a margin loan

Blackout Periods

CAMAC recommends that as a matter of best practice a company should:

  • prohibit its directors and executive officers from transacting in its securities in “blackout periods” (for example, the period between the close of a financial reporting period and the release of its financial results for that period)
  • permit a director to dispose of securities in a blackout period only where exceptional circumstances exist, and the relevant person is not aware of inside information
  • keep a record of any permitted transactions

False or Misleading Information

CAMAC recommends amendments to the law in order to support existing prohibitions relevant to the perpetration of false rumours. Specifically:

  • introducing civil penalties for breaches of the existing prohibitions
  • requiring market licensees to have internal guidelines on rumour mongering
  • empowering ASIC to make a banning order against a person who contravenes a licensee’s guidelines on rumour mongering
  • treating market manipulation as a serious offence for the purpose of telephone interception legislation
  • making it an offence to provide false or misleading information to bodies that conduct clearing and settlement operations


CAMAC recommends that as a matter of best practice companies should:

  • make analysts briefings more accessible and open (for example, by making them available on the internet)
  • avoid disclosing market sensitive information to analysts
  • introduce processes for checking information disclosed during briefings, and rectifying any inadvertent disclosure of market sensitive information by making the information publicly available
  • keep records of all briefings
  • introduce restraints on the kinds of communication made to analysts during times of market sensitivity

MST will endeavour to keep you informed as to which of the recommendations contained in the Report are adopted by the government.

Please do not hesitate to contact MST if you would like to discuss CAMAC’s recommendations, or if you would like advice in relation to your corporate governance practices more generally.

Author: Savvas Apostolou and Laughlin Nicholls