Security Trading Policy

December 15 2010

 BOARDWORX BRIEFING | Security Trading Policy


Welcome to this edition of the Boardworx newsletter, which provides an update on the recent changes to the ASX Listing Rules in relation to Securities Trading Policies effective 1 January 2011.

Change in ASX Listing Rules – Do you have a compliant Securities Trading Policy?

Directors of ASX listed companies need to be reviewing their existing securities trading policy to ensure that it complies with the minimum content requirements contained in the new ASX Listing Rules and lodge that policy with the ASX by 31 December 2010. If your company does not currently have a securities trading policy, directors need to ensure that one is prepared and lodged.

How does it impact you?

From 1 January 2011:

  • All ASX listed companies must have in place a securities trading policy  for key management personnel  (KMP) and disclose that policy to the market.
  • The securities trading policy needs to comply with minimum  requirements as set out in the new Listing Rules.
  • Every Change of Director’s Interest Notice  will  need  to  specify  whether the dealing in securities occurred during a closed period as stipulated under the policy, and if so, whether written clearance was obtained in accordance with the policy.

Main requirements of the new rules

The ASX has not imposed a ‘one-size-fits-all’ approach, rather it is up to each listed entity to determine the most appropriate details to be contained in its own policy. However, there are minimum requirements:

  • The trading policy must specify the entity’s ‘closed periods’ (fixed periods that prohibit an entity’s KMP from trading in the entity’s securities);
  • Restrictions on trading that apply to KMP during those closed periods and other ‘prohibited periods’ when trading blackouts may be imposed;
  • Any trading circumstances that are excluded from the policy;
  • ‘Exceptional circumstances’ must be specified, in which KMP may be permitted to trade during a prohibited  period  with  prior  written clearance
  • Procedures for this written clearance are also required to be stipulated; and
  • Information  on  trading  that  is  not subject to the Trading Policy.

Key issues to consider

(a)  When to allow trading in securities

Directors need to make a decision on the direction they will take in defining when KMP will be able to trade in an entities securities.

Appropriate closed periods will vary from entity to entity, but should be when KMP are more likely to be in possession of non-public material information.

Consideration needs to be made as to whether to impose blackout periods or alternatively prescribe trading windows with trading prohibited at all other times. Some entities may want to move to a combination of both blackout periods and windows.

In addition, the new Listing Rules implicitly require listed companies to consider whether there will be other ‘prohibited periods’.

(b)  Who should the policy apply to ?

KMP are defined as persons with  authority and responsibility for planning, directing and controlling the activities of the entity, and includes any director.

Companies need to consider the identification of those officers and employees who will be caught by the definition.

(c)  Excluded trading

Directors also need to consider circumstances which will be excluded from the operation of its trading policy.

(d)  Exceptional circumstances

Company trading policies may still permit trading during prohibited periods in instances of severe financial hardship or other exceptional circumstances with prior written authorisation. The policy needs to set out the process for obtaining this authorisation.


Decisions on issues outlined above need to be made and an immediate review of your existing securities trading policy is required to ensure compliance with the new ASX Listing Rules.

Boardworx can attend to this review or drafting of your entity’s securities trading policy for lodgement with ASX by  31 December 2010.

Remember that this trading policy  will become a public document and needs to be appropriate to your business, complied with and reported against.