29 April 2011

Government Welcomes Final Competition Market Integrity Rules

The Gillard Government today welcomed the new market integrity rules announced by the Australian Securities and Investments Commission (ASIC) that will provide a framework for competition in equity exchange markets.

ASIC also published new market integrity rules specifically for the Chi-X market.

Assistant Treasurer and Minister for Financial Services and Superannuation, Bill Shorten, said "Most of the new market integrity rules begin on Monday 31 October 2011. This will give industry participants time to get ready before competing exchanges – such as Chi-X – are able to start operations."

"This announcement supports the Government's policy to encourage competition between exchange markets in Australia and meets the timetable for the introduction of competition."

This is a significant change in Australia's market structure. While competition between financial markets for trade execution services is new to Australia, alternative trading systems have successfully operated in the US, Canada and Europe for a number of years.

ASIC will also consult further on broader market development, such as the need for additional market operator and participant risk controls and to complete its review of pre-trade transparency exceptions, in the third quarter of 2011. ASIC aims to settle these additional rules in early 2012, with sufficient time for transition and implementation.

This framework is the next step in responding to recommendation 4.5 of the Australia as a Financial Centre: Building on Our Strengths report (Johnson report), which encouraged competitive, efficient and innovative equity markets.

"Competition is good for the equities market, good for Australian and overseas-based listed companies and good for our financial services sector and employment growth in that sector."

"By allowing competition we are promoting Australia as a financial services centre and helping ensure our financial markets are efficient and innovative."

"Chi-X's application for an Australian market licence is under consideration. The Government expects to announce a decision soon," Mr Shorten said.