As AI Enters the Trading Floor, ASIC Strengthens Algorithm Controls

Australia's ASIC is strengthening safeguards for automated and AI-enabled trading, with new Market Integrity Rules requiring securities and futures market participants to improve the testing, monitoring and governance of trading systems and algorithms.

The amended rules will take effect in 2028, following an 18-month transition period designed to give market participants more time to implement the changes.

ASIC Strengthens Algorithmic Trading Controls

The reforms follow Consultation Paper 386 and update Australia's rules to reflect the growing use of algorithmic trading, artificial intelligence and machine learning.

ASIC Commissioner Simone Constant said trading on Australian markets is now almost entirely automated and AI adoption is increasing. While these technologies can improve efficiency, trading algorithms can also behave in ways that are opaque and unpredictable.

The new framework strengthens participants' responsibilities for testing, monitoring and governing trading algorithms. It also clarifies the application of rules covering activity that creates a false or misleading appearance in the market.

The reforms are technology neutral, meaning the requirements apply to trading algorithms generally rather than AI systems alone.

New Rules Take Effect in 2028

ASIC initially proposed changes to its securities and futures Market Integrity Rules through Consultation Paper 386. Following industry feedback, ASIC extended the transition period to 18 months, with the amended rules taking effect in 2028.

ASIC is also updating RG 265 and RG 266, while relevant electronic trading guidance from RG 241 will be consolidated into the two guides. The regulator estimates the changes will reduce relevant guidance for securities market participants by almost 60%.

The reforms also bring Australia's approach closer to IOSCO principles and international standards for algorithmic trading.

What It Means for the Market

For securities and futures market participants, the changes place greater emphasis on controls around automated trading systems as AI becomes more widely integrated into market infrastructure.

The reforms also show that regulators are increasingly addressing AI trading through existing market integrity principles—including governance, monitoring and responsibility—rather than treating AI as a separate category of trading activity.

Investor Reminder

AI and automated trading tools do not eliminate market, execution or technology risks. Investors should understand how automated systems operate, independently assess trading risks and verify the regulatory status of financial service providers before investing.

For more information on financial regulation, broker licences and trading platform risks, visit our 【Q&A】 section.

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