© Reuters. FILE PHOTO: A pedestrian is reflected in a window where an investor sits looking at a board displaying stock prices at the Australian Securities Exchange (ASX) in Sydney, Australia February 9, 2018. REUTERS/David Gray/File Photo
By Byron Kaye
SYDNEY (Reuters) -Australia passed a law on Wednesday to support competition in post-trade settlement and clearing for financial markets, challenging the near-monopoly status held by ASX Ltd.
After ASX cancelled a costly overhaul of its trading platform, the federal government said it was encouraging competition from new entrants.
That required new legislation, which was passed by the Senate on Wednesday. The legislation also gives the Reserve Bank of Australia and corporate regulator the Australian Securities and Investments Commission (ASIC) greater power to set operating standards and intervene on pricing and access disputes, the government said.
“It creates a framework for fair, transparent and non-discriminatory access to market infrastructure for any emerging competitors, allowing them to offer their own clearing and settlement services,” said Treasurer Jim Chalmers in a statement.
ASX shares closed 0.6% lower on Wednesday, in line with the broader market. The legislative change had been widely flagged by the government.
Though Australian financial regulators have called for greater competition in clearing and settlement functions for years, a failed overhaul of ASX’s all-in-one legacy software system renewed pressure from market participants to challenge its near-monopoly.
In other major financial markets, clearing and settlement, or confirming the transfer of stock ownership and updating share registries, are managed by separate entities to the market operator.
An ASX spokesperson said the company supported “measures designed to facilitate safe and effective competition”.
“With the new legislation now in place, ASX intends to engage constructively with further consultations on the scope of clearing and settlement services to be covered and the ASIC rules relating to clearing and settlement,” the spokesperson said.