General informationThis page describes the ASX rules and the ASX’s published guidance in our own words. It is not advice about any trade. Each listed entity’s own policy governs its people, ASIC administers the insider trading laws, and a lawyer can say how they apply.
What the listing rules require
Four short rules in Chapter 12 of the ASX Listing Rules do the work.
- Rule 12.9 requires the entity to have a trading policy that meets rule 12.12, and to lodge it with the market announcements office for release.
- Rule 12.10 requires a materially changed policy to be lodged for release within 5 business days after the change takes effect.
- Rule 12.11 requires the entity to hand its policy to the ASX straight away if the ASX asks for it.
- Rule 12.12 sets the minimum contents, listed below.
The ASX’s guidance note says these rules do not apply to entities in its debt listing or foreign exempt listing categories, although the ASX can require such an entity to comply in a particular case.
The five things every policy must contain
- The entity’s closed periods.
- The trading restrictions that apply to its key management personnel.
- Any trading the policy does not cover.
- Any exceptional circumstances in which key management personnel may trade in a prohibited period with prior written clearance.
- How that prior written clearance is obtained.
Two ways to draw the closed time
A policy must have at least one fixed closed period; the ASX’s guidance says a policy without one does not comply. There are two ways to express it.
| Approach | When trading is closed | What the ASX says about it |
|---|---|---|
| Trading windows | All year, apart from the windows the policy names | Often preferred, because the time open to trade tends to be shorter, which lowers the risk and makes the policy simpler to run |
| Blackout periods | Only during the blackout periods the policy names | Also complies with the rule; the choice is the entity’s |
An example calendar
The listing rules do not say which periods must be closed; each entity chooses its own. The ASX’s guidance does say what it would generally expect. Its points, in summary:
- Close trading from the close of the books at the half-year and the full year, or a little before, until a reasonable time after the results come out. The guidance calls starting one or two weeks before the books close best practice.
- Windows, where used, are usually short (around four weeks) and start a reasonable time after the half-year and full-year results, after the annual general meeting, and for some entities after their quarterly statements.
- A window may also run for the length of an offer of securities made under a prospectus, product disclosure statement or cleansing notice.
- Window open (example)
- Closed period (example)
| Dates (example) | Status | Why, in this example |
|---|---|---|
| 1 January to 20 February | Closed | The half-year books closed on 31 December and the results are not yet out. |
| 21 February to 20 March | Open window | Four weeks from the day after the half-year results, released on 20 February. |
| 21 March to 22 August | Closed | Takes in the full-year close on 30 June, starting well before it, until the full-year results on 22 August. |
| 23 August to 19 September | Open window | Four weeks from the day after the full-year results. |
| 20 September to 28 October | Closed | The policy opens no window again until after the annual general meeting on 28 October. |
| 29 October to 25 November | Open window | Four weeks from the day after the meeting. |
| 26 November to 31 December | Closed | Runs into the next half-year close. |
On the length of the “reasonable time”, the guidance gives two common approaches: some entities reopen trading when the market opens on the day of a release made early that morning, and others wait for the next trading day. This example takes the second, more cautious course.
Who the policy covers
The rules require the policy to restrict key management personnel. The listing rules borrow that term from accounting standard AASB 124: the people with authority and responsibility for planning, directing and controlling the entity’s activities, which includes every director. The guidance says this will typically include the chief executive and those senior executives reporting to them who hold that authority.
The guidance also asks entities to think about going further: to the close family of key management personnel and the family companies and trusts they control, and to staff who may see sensitive material early, such as finance teams, executive assistants and IT staff with access to executives’ files.
Extra closures, exclusions and exceptions
- Ad hoc closures. A “prohibited period” under the listing rules includes any extra period an entity imposes while it is considering a matter covered by Listing Rule 3.1A, a potentially market sensitive matter it does not yet have to disclose. The ASX strongly encourages policies to keep that power, and to keep word of any such closure tightly held, since a leak could itself fuel speculation.
- Excluded trading. Policies commonly carve out low-risk dealings. The guidance gives examples including accepting a takeover offer, taking up a pro rata issue, acquiring under an employee incentive scheme, and trading under a pre-arranged plan that was cleared in advance and leaves no discretion.
- Exceptional circumstances. Common examples are severe financial hardship that can only be met by selling, and a transfer required by a court order or another overriding legal requirement.
- Clearance. Some entities have the chair clear trades and others the chief executive, with someone else stepping in when that person is the one trading. The guidance says a clearance would typically lapse after a short time, usually a week or less.
When a director’s interests change, the notice the entity gives the ASX (Appendix 3Y) must say whether the trade happened in a closed period that needed prior written clearance, whether clearance was given, and on what date.
A window does not make a trade lawful
This is the point the ASX’s guidance returns to more than once. A trade made inside an open window, outside a blackout period, under an exclusion, or with clearance can still breach the insider trading laws if the person dealing has inside information at the time. The ASX recommends that every policy says so. The prohibition itself is in section 1043A of the Corporations Act, explained in the guide to what insider trading is.
The full rules and guidance are on the ASX’s page of listing rules, guidance notes and waivers.