In a significant move to encourage competition in post-trade settlement and clearing for financial markets, Australia has passed new legislation challenging the near-monopoly status held by ASX Ltd. The decision follows ASX’s cancellation of a costly trading platform overhaul.
The federal government’s objective is to create a more competitive landscape by allowing new entrants into the market. To achieve this, the Senate passed new legislation on Wednesday. The legislation not only promotes competition but also grants enhanced powers to the Reserve Bank of Australia and the Australian Securities and Investments Commission (ASIC) to establish operating standards and intervene in pricing and access disputes.
Treasurer Jim Chalmers highlighted the legislation’s importance, stating that it establishes a framework for fair, transparent, and non-discriminatory access to market infrastructure, enabling emerging competitors to offer their clearing and settlement services.
Following the news, ASX shares closed 0.6% lower on Wednesday, aligning with the broader market’s performance. While Australian financial regulators have advocated for greater competition in clearing and settlement functions for years, the recent failure of ASX’s comprehensive software system overhaul renewed calls from market participants to challenge its near-monopoly.
ASX expressed its support for the measures aimed at facilitating safe and effective competition. With the new legislation in place, ASX intends to engage constructively in further consultations regarding the scope of clearing and settlement services to be covered and ASIC’s rules related to clearing and settlement.
This legislative change signifies Australia’s commitment to fostering competition in its financial markets, potentially leading to a more dynamic and innovative landscape for market participants and investors.
