The Gillard Government today granted a licence to Chi-X Australia Pty Ltd (Chi-X) as an alternative securities exchange to boost competition in Australia's financial markets, as part of a broad agenda to build our reputation as a financial services hub within Asia.
Competition in Australia's financial markets is critical to promoting exchange innovation, lowering transaction costs for market participants, leveraging our pool of national superannuation savings, and improving liquidity and access to capital for companies.
In August 2009, the Government announced important reforms to transfer supervisory responsibility for Australia's financial markets to the Australian Securities and Investments Commission (ASIC).
Since the Government announced in-principle approval of Chi-X in March 2010, ASIC has worked carefully and methodically to develop robust market integrity rules. These rules are designed to ensure the strength and stability of our financial system while allowing vibrant competition from alternative securities trading platforms.
The Government also recently commissioned Australia's financial regulators to consider potential measures to preserve the integrity of our financial infrastructure, particularly clearing and settlement facilities, allowing robust oversight in all market conditions.
The new market licence will be granted subject to Chi-X meeting strict conditions in relation to resourcing, including the establishment of an adequate compensation fund and robust testing of its technological infrastructure.
ASIC will continue to work closely with market operators and participants during the coming months to ensure a smooth transition to full competition between securities trading platforms.
Today's announcement is another important step in the Government's long-standing agenda to build a competitive and sustainable financial system that works for all Australians.