Revised ASX Guidance Note 27: Trading policies

ASX has revised its Guidance Note on trading policies, with the emphasis in the new version on preventing the perception of insider trading as well as reducing the occurrence of such trading. ASX has noted that a perception of insider trading can give rise to reputational damage.

The revised Guidance note covers:

  • why listed entities are expected to have a trading policy
  • who should be restricted from trading in a listed entity’s securities
  • when should trading in a listed entity’s securities be restricted
  • what types of trading should be restricted
  • exceptions where trading may be permitted
  • the procedures a listed entity should have to grant clearances to trade.

Last updated in 2012, given the emphasis on the need to not only minimise the risk of actual insider trading, but also avoid the appearance of insider trading and the reputational damage that may cause, the revised Guidance Note appears to be responding to the market concerns that arose in 2013 when the chair of David Jones approved share trading by two directors. That decision and the ensuing controversy saw the chair and the two directors resign from  the board.

The revised Guidance Note also refers listed companies to Governance Institute’s Good Governance Guide: Issues to consider in developing or reviewing the policy on trading in company securities to assist them to comply with their listing rule obligation.

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