Australia’s Council of Financial Regulators (CFA) has today released policy statements on the regulation of Australian cash equities clearing and settlement services.
The statements outline the minimum conditions for equity clearing competition and provide clarity to potential applicants on how licence applications will be assessed. They also cover a range of matters relevant to governance, pricing and access.
In March this year, the government asked the CFR to develop policy to allow it to open up competition in the clearing of cash equities as part of its agenda to demonstrate a commitment to open and competitive markets.
While the Chi-X introduced competition to the Australian Securities Exchange for trading platforms, ASX still holds a monopoly in the clearing of trades.
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The government is also amending ASX ownership restrictions to provide the ASX with more flexibility to raise capital.
The ASX has welcomed the clarity provided by the guidelines and has taken immediate steps by updating its Code of Practice.
ASX group executive Amanda Harkness said in a statement, “The updated code formalises the way in which ASX consults with those who connect to and use our clearing and settlement infrastructure. ASX is investing in market infrastructure that meets global industry standards and which will provide opportunities for productivity gains and innovation.”
As part of its updated code, the ASX committed to providing access to clearing and settlement services “on transparent and non-discriminatory terms”, and said it will respond to all requests for access in a “fair and timely manner”.
The ASX, which has been under pressure from trading firms to lower costs, has said it will decide by the end of 2017 whether a new blockchain-style system will replace its current method for clearing and settling stocks.