Australia’s government has announced that the Council of Financial Regulators (CFR) will conduct a review of competition in the clearing of Australian cash equities.
A consultation paper will seek views on the issues raised by the CFR in relation to competition.
The CFR is the coordinating body for Australia’s main financial regulatory agencies. Its role is to contribute to the efficiency and effectiveness of financial regulation and to promote stability of the Australian financial system.
There has previously been no competition in the clearing and settlement of ASX-quoted securities. ASX securities are cleared and settled by subsidiaries of the ASX Group, ASX Clear and ASX Settlement. The pair are linked operationally, with clearing and settlement of ASX securities occurring through a shared operating system, CHESS.
Trades executed on the Chi-X market are cleared and settled by ASX Clear and ASX Settlement using the Trade Acceptance Service.
This review will be carried out by the Australian Securities and Investments Commission, the Reserve Bank of Australia and the Australian Treasury – on behalf of the CFR, with the assistance of the Australian Competition and Consumer Commission.
A previous review took place in 2012 on the same subject. Its decision was to put the whole matter on ice for two years.
After this consultation process, the agencies said they will advise the government of the findings.