Finance system review calls for online regulatory gateway

Recommendation seen as a way to enable greater competition to the ASX

A report into the competitiveness of Australia's financial system has recommended the development of a new online regulatory gateway to attract potential overseas investors and competitors to the ASX trading platform.

Titled Australia as a Financial Centre, Building on our Strengths and written by the Australian Financial Centre Forum, the report outlines several recommendations to boost the performance of the finance sector.

Notably for the ICT industry, the report calls for a regulatory online gateway to be developed and administered by Austrade in partnership with six other agencies including the Australian Security and Investment Commission (ASIC) and the Australian Competition and Consumer Commission (ACCC).

It notes that the Australian equity capital market remained relatively strong during the recent global financial crisis because of its regulatory structure and obligations.

The report goes on to say that "equity trading and settlement arrangements needs to be as competitive, efficient and innovative as possible" to enable organisations to take advantage of emerging opportunities, particularly in niche markets.

One unusual feature in the domestic market is the ASX acts as the sole service provider, as a supervisor (along with ASIC), and as the central clearing and settlement facility, all of which are based online.

"An important regulatory development with respect to exchange traded instruments in a number of major economies, particularly in North America and Europe, has been the promotion of competition between market operators in order to enhance market efficiency and innovation," the report reads. "These developments in the global regulatory environment have led to an increase in the number of trading platforms being made available to market participants in many other major economies."

The authors contend competition to the ASX can now be introduced because the Federal Government has begun the process to grant ASIC powers to supervise real time trading on Australia's market.

"The Forum encourages the early consideration of licences for new trading platforms and exchanges, with a view to introducing competition as soon as possible once the recently announced financial market regulatory changes are in place."

To achieve a competitive environment the report says it "is important to ensure the appropriate clearance and settlement facilities are accessible on fair terms, whether they are located in or outside Australia" and thus an online regulatory gateway could be developed.

The full report can be viewed on the Australian Financial Centre Forum website.

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Tags financeASXgovernment regulationacccASIC

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