ASX holds onto settlement monopoly
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Share market operator ASX will retain its dominance of processes behind share sales after the federal government put off a decision to consider new competitors.
Treasurer Wayne Swan said he would not consider any applications from rival financial companies for licences to conduct clearing and settlement for two years, after considering recommendations from the Council of Financial Regulators.
"The advice of the council ... is that while competition would be expected to deliver efficient outcomes, now may not be the appropriate time for changes that will have further cost implications for the industry, given current market conditions and the magnitude of regulatory change already underway," Mr Swan said in a statement on Monday.
Clearing and settlements processes for the share market are currently conducted by companies operated by ASX Ltd.
ASX welcomed Mr Swan's announcement, as well as a recommendation from the Council of Financial Regulators for a new code of practice for settling and clearance.
"ASX will work with industry stakeholders to develop a code of practice for its clearing and settlement services, and is committed to deliver a world class financial infrastructure for Australia," ASX chief executive Elmer Funke Kupper said in a statement.
The code is expected to be implemented within six months.
"The council will review the effectiveness of these arrangements after the two year period and consider whether a new entrant should be considered or whether other regulatory responses should be pursued," Mr Swan said.
The Council of Financial Regulators includes the Reserve Bank of Australia, the Australian Securities and Investments Commission and Treasury.