The requirement, in our words
A Trading Participant needs suitable governance and controls, with written procedures, covering how each Trading Algorithm it uses or offers to a client is built, tested, approved, released and watched. It must take reasonable steps to test, ahead of first use, ahead of offering the algorithm to a client, and ahead of a material change, that the algorithm will not harm a Market in its efficiency or integrity, the operation of a Crossing System it runs, or how a Trading Platform works. Development and testing should be done by suitably qualified people. Records of the governance and testing work are kept for seven years.
What the rule is trying to do
The rule creates a lifecycle duty, not a one-off approval. The three testing triggers are first use, first client availability and material change. The word "should" in subrule (3) is a standard of competence, not an optional step, and the seven year record is the proof of the whole lifecycle.
What good practice looks like
Write one procedure that covers development, testing, approval, deployment and monitoring, and map each algorithm to it. Map every automated function against the routing, bare submission, confirmation and post-trade exclusions before calling it a Trading Algorithm. Define what counts as a material change to an algorithm. Keep the test plan, the test environment, the results, the approver and the deployment record. Record who developed and tested the algorithm and their qualifications. Re-test on every material change.
What changed in the instrument
Item 69 inserts Rule 5.6.3B. The old regime had no express algorithm governance rule; the new rule adds the lifecycle procedure, the three testing triggers, the competence standard and the seven year record.
Evidence an auditor or ASIC asks for
| Category | Record to keep | Retention |
|---|---|---|
| Procedure | The written algorithm lifecycle procedure, approved and version controlled, covering development, testing, approval, deployment and monitoring. | Current, plus version history. |
| Algorithm inventory | The inventory of every Trading Algorithm used or made available to a client, with the owner, the version and the Markets. | Seven years. |
| Test record | The pre-use, pre-client and pre-material-change test plan, environment, results and approver for each algorithm. | Seven years. |
| Competence record | The qualifications and experience of the people who developed and tested each algorithm. | Seven years. |
Common gaps
- The firm tests the algorithm once at go-live and not after a material change.
- The algorithm inventory names the strategy but not the deployed version.
- Development and testing are done by the same person with no competence record.
- Client-facing algorithms are outside the inventory because they sit in a vendor platform.
What to do before 17 March 2028
- Write the lifecycle procedure and define a material change.
- Build the algorithm inventory with versions and owners.
- Collect the test records for each of the three triggers.
- Record the competence of developers and testers.
Dates and cross-references
Commences: 17 March 2028 (Rule 2 of F2026L01223 and the registration date). Retention: Seven years.
Read with: 1.4.3 (Trading Algorithm), 5.6.1, 5.6.3, 5.6.3A, 5.6.8.
Source
This page reads ASIC Market Integrity Rules (Securities Markets) Amendment Instrument 2026/574 (F2026L01223), Schedule 1, items 20, 23, 30, 33, 34 and 69, against the current compilation Compilation No. 6 (F2024C01108). Retrieved 2026-10-19. The requirement above is our own statement, not the instrument's wording. Not legal advice; does not certify.