Australia has taken a significant step toward promoting competition within the post-trade settlement and clearing sector of its financial markets, challenging the long-standing near-monopoly held by ASX Ltd.
Following the abandonment of ASX’s costly trading platform overhaul, the federal government has taken measures to encourage the entry of new competitors into the arena.
This legislative move, which was necessitated by the need for a regulatory framework conducive to competition, successfully passed the Senate on Wednesday. Additionally, the legislation grants enhanced authority to the Reserve Bank of Australia and the Australian Securities and Investments Commission (ASIC), empowering them to establish operational standards and mediate in pricing and access-related disputes, as affirmed by government sources.
Treasurer Jim Chalmers emphasized the significance of this development, stating, “It creates a framework for fair, transparent, and non-discriminatory access to market infrastructure for any emerging competitors, allowing them to offer their own clearing and settlement services.”
On Wednesday, ASX shares registered a 0.6% decline, mirroring the broader market trend. The impending legislative shift had been widely anticipated by the financial community.
While Australian financial regulators have long advocated for increased competition in the clearing and settlement functions, ASX’s abandonment of its all-in-one legacy software system revived calls from market participants to challenge its quasi-monopoly.
It’s noteworthy that in many other major financial markets, clearing and settlement operations—encompassing stock ownership transfers and share registry updates—are managed by separate entities distinct from the market operator.
In response to these developments, an ASX spokesperson voiced the company’s support for measures designed to facilitate safe and effective competition. “With the new legislation now in place, ASX intends to engage constructively with further consultations on the scope of clearing and settlement services to be covered and the ASIC rules relating to clearing and settlement,” the spokesperson remarked.
