Australia’s main stock exchange ASX is having data issues for a second consecutive day, although unlike yesterday’s glitches these did not bring down trading altogether.

Yesterday we reported that ASX had become the third major global stock exchange to go down over the past few months, after somewhat similar problems were experienced at the New Zealand NZX in August and at the Tokyo Stock Exchange in October.

Today, after about an hour of normal operation, the ASX put out a “Partial Operational Impact” notice that it was aware of data issues with its Centre Point anonymous mid-point trade matching system. It later related that, until further notice, ASX Centre Point execution prices would be based on the ASX lit best bid and offer only.

The exchange’s decision to base execution prices only on ASX lit, excluding prices from alternative exchange Chi-X, seemed to irk the regulator ASIC, as it doesn’t necessarily conform with the (obvious) rule of exchanges providing execution based on the best bid-offer prices out there. The regulator also seems concerned that there are other problems with the ASX’s infrastructure.

The ASIC statement on the matter reads as follows:

Tuesday 17 November 2020

Trading on ASX equities market today

This morning at 11:03am ASX Limited (ASX) provided a system status update indicating that it had become aware of data issues with the ASX Centre Point matching system. At 11:17, ASX further advised that  ‘[u]ntil further notice ASX Centre Point execution prices will be based on the ASX-lit best bid and offer only.’  That is, Chi-X bids and offers would not be used.

By not considering Chi-X bids and offers, transactions conducted on Centre Point may no longer constitute a Trade with Price Improvement under Rule 6.2.3 of the ASIC Market Integrity Rules (Securities Markets) 2017 (Rules). As a result, orders may no longer fall within the exceptions to the requirement to enter into transactions by matching on a Pre-Trade Transparent Order Book (Rule 6.1.1).

ASIC has not instructed ASX to suspend the operation of Centre Point, and nor have we instructed Market Participants not to use Centre Point. This was to ensure the markets remained orderly.

However, participants should have sufficient flexibility to enable routing of orders to alternative venues. ASIC expects Market Participants that have not already done so to take reasonable steps to remove their reliance on Centre Point swiftly and safely.

ASIC is concerned that there have been further issues with infrastructure at ASX and are working with stakeholders to ensure that any impact on the fair, orderly and transparent operation of the markets is minimised. ASIC is actively assessing ASX’s compliance with its market licence obligations and is considering further actions to ensure the adequacy of ASX’s human, financial and technological resources to operate its markets in an orderly manner.

ASX Centre Point is an anonymous mid-point trade matching system. Centre Point normally operates by matching orders at the mid-point or other permitted price steps inside the National Best Bid and Offer (NBBO). The NBBO is ordinarily calculated by ingesting pricing data from ‘lit’ markets – that is ASX and Chi-X.