The Minister for Financial Services and Superannuation, Bill Shorten, today released an Options Paper, Australia's Financial Market Licensing Regime: Addressing Market Evolution, which discusses options for reforming Australia's financial market licensing regime.
"The Gillard Government is committed to ensuring that our financial markets are fair, efficient and safe," Mr Shorten said.
"Proper market regulation, including for dark pools, is critical to protecting mum and dad investors and Australians' superannuation savings. The Australian Securities and Investments Commission (ASIC) should have an appropriate regulatory toolkit to supervise and regulate our financial markets."
"The current licence approach was based around large public exchanges, like the ASX. Australia's licence regime should be able to accommodate these new market developments such as dark pools, and should be flexible enough to properly regulate any additional market types that may emerge in the future.
"I am pleased to release this paper, which discusses a range of options for more effectively licensing and regulating both traditional public exchanges and more recent developments such as dark pools," Mr Shorten said.
Two main options are discussed in the paper, although stakeholders are invited to give general comments on Australia's licensing regime.
- The first option would create flexibility in the Corporations Act, enabling the Minister to tailor the licence obligations for each market type by deciding which obligations should and should not apply.
- The second option would create multiple licence classes, with dark pools licensed in a different category to public exchanges, each with different obligations. This approach is similar to the arrangements already in place in the US and Europe.
"The Government is committed to introducing appropriate rules to govern high frequency trading. We are looking to ensure that those rules can be enforced in an effective and timely way, in order to protect the markets and investors.
"No decisions have been made at this stage as to what licensing approach should be taken. The Government will take the views of all stakeholders into account when considering any changes to the current regime. I encourage all interested stakeholders to make a submission to Treasury and participate in the consultation process," Mr Shorten said.
Written submissions in response to the paper close on 1 February, 2013. Treasury and ASIC will also be undertaking some face-to-face discussions. Anyone wishing to participate in these should contact Treasury by 21 December.
The Options Paper and details on how to participate in the consultation process can be found on the Treasury website.