Volatility driven by macroeconomic developments saw turnover across Australia’s financial markets rise eight per cent over the year, says the Australian Financial Markets Association (AFMA).
In the 2015 Australian Financial Markets Report issued by AFMA, it was found that turnover across Australia’s financial markets rose eight per cent over the year to a total of $135,208 billion.
The report found that over-the-counter markets recorded a 7.7 per cent increase in turnover to $83,656 billion, with total equity market turnover rising 14 per cent to $3.679 billion.
Moreover, the turnover in exchange-traded markets rose nine per cent to $51,552 billion.
AFMA economist Stephen Kirchner said regulatory developments have led to a reduction in market liquidity and an increase in price volatility across most asset classes.
“New prudential, liquidity and collateral requirements have resulted in banks hoarding high-quality liquid assets, reducing the availability of traditionally safe short-term assets,” he said.
AFMA chairman Steve Harker said that while turnover on both the exchange and over-the-counter markets increased, it remains "within the boundaries of recent experience".
“Structural change in the financial system, partly due to global regulatory reform, is creating greater reliance on market-based financing to fund economic growth," he said.
“The future of Australia’s financial markets is bright, but we must strive to realise that potential."
Mr Harker added that if Australia is to build its international competitiveness, it must remain open to the flow of capital, people and ideas from the rest of the world.