Morrison unleashes clearing competition
The Federal Government says it is promoting competition by stripping the ASX of its legislated monopoly on share clearing.
Some of the changes recommended by David Murray's Financial System Inquiry will be taken on, Treasurer Scott Morrison has announced.
One reform will see the share clearing market opened to competitors over the course of the next 18 months.
The transition period has been set up to allow regulatory structures to be created to handle the newly competitive market situation.
Share clearing is the process by which money changes hands for share trades executed through the two competing Australian exchanges - the ASX and Chi-X.
For years, Chi-X has competed with the ASX for executing trades since 2011 - matching buy and sell orders and agreeing on the price to be paid.
But even so, all clearing still goes through ASX Clear, to which money is paid before being passed onto the seller.
Other firms will soon be able to offer these services, but none have yet raised their hand, so ASX looks set to be without competition for a while yet.
“Adopting a stance that's open to competition will bring the benefits of competitive discipline to the clearing and settlement market,” said Mr Morrison in a press conference.
“A competitor in this market may never emerge, or at least not for some time, so we need to ensure there are also appropriate measures in place to deal with a market serviced by a sole provider.”
The Australian Competition and Consumer Commission will play a central role in arbitrating disputes about access to the ASX's settlement and clearing services.
Moving with the newly-created market, the ASX has announced a 10 per cent reduction in its clearing fee from July 1.
Of potential benefit to the ASX is a relaxation in ownership restrictions surrounding it.
The stock exchange appears to have responded favourably to the changes.
“These are sensible decisions and in the best interests of Australia's financial markets,” ASX executive chairman Rick Holliday-Smith in a statement.