The Australian Securities Exchange (ASX) has said it will commit to developing a code of practice for cash equities clearing and settlement, after it was announced the current market structure will not be changed.
Treasurer Wayne Swan announced that any licence applications from equities clearing facilities looking to compete in the Australian market would be deferred for two years, but that the ASX would be required to develop a code of practice.
“Australia’s clearing and settlement infrastructure for cash equities is efficient, well capitalised and well regulated,” ASX managing director and chief executive Elmer Funke Kupper said.
“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.”
The ASX has said it will work in consultation with the industry and regulators to develop a protocol to ensure additional transparency of the stock market.
The code of practice will be implemented within the next six months and reviewed after two years.
The announcement follows the release of a discussion paper in June 2012 by the Council of Financial Regulators.
The paper, Competition in the Clearing and Settlement of the Australian Cash Equity Market, discussed whether increasing competition would benefit the Australian financial market.
Currently, the clearing and settlement of cash equities is operated by ASX.
“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.
