Treasurer the Hon. Scott Morrison today welcomed the Council of Financial Regulators’ (CFR) release of policy statements on the regulation of Australian cash equities clearing and settlement services, a further step in the Turnbull Government’s opening of competition in clearing of Australian cash equities.
These reforms to the market in the provision of clearing and settlement facilities are part of the Turnbull Government’s competition law reform agenda and demonstrate our commitment to open and competitive markets, which are fundamental to a vibrant, modern, world-leading economy.
The Government asked the CFR to prepare the policy statements in March, on our acceptance of the CFR’s recommendations following their Review of Competition in Clearing Australian Cash Equities.
Competition in trading platforms emerged with the advent of Chi-X’s exchange in 2011, and the Government is ensuring that the right settings are in place for competition should it emerge in relation to cash equity clearing and settlement facilities.
Today’s release contains two CFR policy statements:
- Regulatory Expectations for Conduct in Operating Cash Equity Clearing and Settlement Services in Australia; and
- Minimum Conditions for Safe and Effective Competition in Cash Equity Clearing in Australia.
The Regulatory Expectations apply to the ASX’s engagement with, and provision of services to, users of its cash equity clearing and settlement services for which it is currently the sole provider. These expectations cover a range of matters relevant to governance, pricing and access.
ASX is expected to publicly commit to act in accordance with the CFR’s Regulatory Expectations by releasing an updated ASX Cash Equities Clearing and Settlement Code of Practice.
The Minimum Conditions seek to provide potential applicants for clearing facility licences sufficient clarity on the measures that the regulators would consider necessary to support a licence application.
As announced in March 2016, as part of this program of reform, the Government will develop and consult on legislation to provide the relevant regulators with rule-making and arbitration powers, which would underpin both the Regulatory Expectations and the Minimum Conditions.
Recognising the place of ASX in a more competitive environment, the Government will also amend 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.
The two CFR policy statements are attached and details will be available on the CFR’s website.
Regulatory Expectations for Conduct in Operating Cash Equity Clearing and Settlement Services in Australia [PDF Download 205KB]
Minimum Conditions for Safe and Effective Competition in Cash Equity Clearing in Australia [PDF Download 256KB]