The corporate cop has removed daily limits on the number of trades it placed on nine brokers in March, and promised regulatory changes to handle a similar situation in future.

In mid-March, ASIC told several trading firms to cut volumes by 25 per cent or more after massive volumes from investors and day traders, drawn in by the COVID-19-caused volatility, almost overwhelmed the ASX’s CHESS processing system.

Late on Thursday, ASIC removed the restrictions but said it expected all trading firms to take reasonable steps to ensure the number of trades matched from their orders.

ASIC is now watching trading flows with a view to bringing in regulatory changes to handle a similar situation in future.

It said measures trading firms needed to take to maintain a stable trading environment should include adjustments to algorithms to minimise excessive numbers of very small orders, and monitoring trade counts and not exceeding the number that would be appropriate for their market share.

“We understand that ASX, Chi-X and many market participants have taken steps to enhance their capability to manage large trade days,” the corporate cop said.

“This is important because while the levels of 13 March have not been exceeded since, there remains a real risk, particularly if equity markets experience further days of elevated trading volumes.”

March 13, a Friday, saw record trading with 5.1 million orders processed; 4.6 million trades were processed the day before. Normally the ASX would receive around 1.5 million on a busy day.

ASX and ASIC were concerned that staff would need to work evenings and weekends to ensure the trades were processed within two days.

In March, ASX managing director and CEO Dominic Stevens said the action was “sensible and measured” but a permanent solution needed to be put in place in future.

“The industry cannot provide unlimited capacity at short notice. Regulators, exchanges, participants and investors will need to come to a decision on what they want for the future,” he said.