Australia's Securities and Investments Commission is tightening guardrails around automated and AI-enabled trading to keep pace with how markets actually work today. In a Thursday update, the regulator said the package follows extensive industry consultation as it seeks to align with international practice. As ASIC Commissioner Simone Constant put it, "Trading on Australia's markets is now almost entirely automated, and the adoption of AI is increasing." She added a caution: "While these technologies can improve efficiency, trading algorithms can also behave in ways that are opaque, unpredictable and potentially manipulative."
Under the reforms, market participants are obligated to evaluate, supervise, and control their trading systems and algorithms as market structures evolve and AI usage grows. The rules cover risk arising from every trading algorithm, including ones powered by AI and machine learning. The changes take effect in 2028.
After reviewing industry input, ASIC set an 18-month transition so firms have more room to implement the changes while holding the line on market-integrity objectives. The agency positioned this as part of a broader global push to keep up with AI and automation in finance, which could influence how companies roll out the tech and how watchdogs supervise it. ASIC also noted last year that markets could be particularly vulnerable to algorithmic and AI-driven trading risks, and floated the use of "kill switches" to halt abnormal activity on the spot.
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For everyday investors, this is about reducing left-field tech blowups in the plumbing of the market. Better controls behind the scenes can mean fewer nasty surprises showing up in your portfolio screen.
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