AUSTRALIA: Government to Open Competition in Share Clearance

Thursday March 31 2016

On 30^th March 2016, Treasurer Scott Morrison announced a reform package that opens the door to competition in the clearing of cash equities, acting on the recommendations of the Council of Financial Regulators’ (CFR) Review of Competition in Clearing Australian Cash Equities.

The Council of Financial Regulators’ Review of Competition in Clearing Australian Cash Equities recommended:

• That the Government be open to competition in clearing of equities and implement legislative changes for safe and effective competition.
• That the CFR set out regulatory expectations for ASX conduct while it remains a sole provider, and make legislative changes to allow regulators to enforce the expectations where necessary.
• That the ACCC be given power to arbitrate disputes about access to ASX clearing and settlement services.

The Treasurer also announced a relaxing of ownership restrictions on the ASX, acting upon Recommendation 44 of the Financial System Inquiry.

In response to this recommendation, the Government will amend the ASX ownership restrictions in the Corporations Act to make them consistent with other financial sector companies, like banks and insurance companies. This will allow the ASX more flexibility in raising capital.

Additionally, the Government also recognised the potential benefits of the ASX’s investment in distributed ledger technology (Blockchain) for the Australian market.

Finally, it was concluded that the Government and the CFR agencies will continue to work with the ASX as it progresses this initiative, while identifying any regulatory barriers and ensuring that technological advancements do not preclude competition.

Click on the link above for further details.