What is an ASX Speeding Ticket?

Submitted by Sharemarket News on 18 May, 2011 - 15:46

Learn about ASX speeding tickets.

Market rules are there for the same reason highway rules exist: to avoid roadkill. In share trading jargon, you may have heard of company so-and-so slapped with a "speeding ticket." Speed is generally good, but not when it means that your shares suddenly warped to an astronomical value seemingly without any explanation.

Perhaps one overgenerous investor spread top secret advice and caused a buying storm, causing share price to skyrocket. Dodgy company ABC, however, is keeping mum about it.

A speeding ticket (formally called Price and Volume Query) is slang for a notice issued by the Australian Securities Exchange (ASX). The notice asks a company to explain why its share price has abnormally increased in a short period of time or why there is abnormal trading volume.

It's only logical that ASX listed companies need to announce information that affect share price movement. Why share price plummeted or soared should be made public.

A price and volume query takes the following points into consideration:

  1. Is the company in possession of undisclosed information which would explain recent trading activity? If yes, can the company make an announcement? If not, why not and when can it be made?
  2. Are there other explanations for the abnormal trading activity?
  3. Is the company compliant with ASX listing rules and regulations?

The company needs to reply to the notice usually on the day the speeding ticket was issued.

Consequences of ASX Suspension

ASX can suspend trading in a company that cannot provide a satisfactory response to the query (not in compliance with rule 3.1 or continuous disclosure provisions). For example, a company not issuing quarterly reports will be forcefully suspended.

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