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Aussie authorities seek to end ASX monopoly on equities clearance

Xinhua, March 30, 2016 Adjust font size:

Australian authorities are seeking to end the Australian Securities Exchange Ltd's (ASX) monopoly on the nation's equities-cash clearance system in a bid to become more internationally competitive.

Australian Treasurer Scott Morrison on Wednesday said the reform package reflects recommendations of the Council of Financial Regulators, which include the Reserve Bank of Australia (RBA), Treasury department, the Australian Securities and Investment Commission (ASIC) and the Australian Prudential Regulatory Authority (APRA).

"(It) will mean should a competitor to the ASX emerge, there will be arrangements in place for safe and effective competition, allowing for a transition to competition over a period of around 18 months," Morrison told reporters in Sydney.

The ASX in a statement said it welcomed the government's commitment to "putting in place conditions needed for safe and effective competition" in cash equities clearing, but until such time as licences are approved, it remains the sole provider of clearing services. However in anticipation of further competition, its equities clearance fee would be cut by 10 percent from July 1.

Though there are certainly opportunities for other funding sources in the local market, the ASX would still be the dominant player in the local equities space, as is similar to offshore markets which have competing exchanges, IG market analyst Angus Nicholson told Xinhua.

"(But) If it gets more capital in the Australian private sector, then that's a good thing," Nicholson said.

Morrison said he would also reduce regulations that limit individual shareholdings in the ASX -- which is also listed -- to 15 percent, allowing larger shareholdings in the nation's biggest exchange to create more flexible capital raising. The ASX has been investing in newer technologies, supported by the central government's financial technology (FinTech) agenda.

"I want to help create an environment where our financial services sector can be both internationally competitive and play a central role in aiding the positive transition of our economy," Morrison said. Endit