NEWSREADER:
The future of the ASX'S role as a market supervisor is being considered by the Federal Government. Federal Minister for Corporate Governance, Nick Sherry, says the possibility of removing the supervisory role from the ASX, is among a number of prospects he's considering, given there are new competitors wanting to enter the sector.
Business Channel reporter, Aaron Young, spoke with Senator Sherry, and asked particularly, given the collapse of Opus Prime, whether it's not time to separate the functions.
NICK SHERRY:
Well the issue of the future of the ASX, is before the Government in the context of three applications for competition, to compete as trading entities against the ASX, and that therefore raises the issue of supervision, the future of supervision, but that's a coincidental issue, it's not arising as a result of current market fall-out, and the Government will make a decision as to whether it will allow competition in due course, it will be a whole of Government decision.
AARON YOUNG:
So you'll certainly take it into consideration?
NICK SHERRY:
Well, I've got an Application for Licences before me, I've got a duty to make a decision about those licences. What may or may not happen in terms of market supervision, is a decision for whole of Government. There's no decision made as yet about market supervision, it may stay the same, it may change, there's a range of options. But we have to consider whether to accept or reject market competition as a matter of principle, there are licence applications, and that raises the issue of how you supervise a market, if that were to go ahead.
AARON YOUNG:
And there's a green paper on financial services regulation, what can we expect from that?
NICK SHERRY:
Well, the Council of Australian Government, Federal Government states, have already agreed that there are some areas, significant areas of financial regulation at state level, six states, two territories, attempting to regulate mortgage broking, margin lending in some areas, non-deposit-taking institutions, trustee companies. It is much simpler, it's more cost-effective, to have financial regulation carried out at the national level, by one Government, not eight.
We're in a national financial system, and for financial providers and consumers, it's too complex to have different rules and regulations in different states and territories, so it's very, very important to have national regulation in financial services, and frankly, if anything US sub-prime, I mean there's a number of lessons that that has reconfirmed for the Rudd Labor Government, that is that in the States, United States, you had state-based regulation, which is virtually non-existent.
Well, we're not going to allow that sort of situation to occur here, so we're going to have single, standard, national regulation in almost every area of financial services.
AARON YOUNG:
Are you happy with the ASX's role as a supervisor?
NICK SHERRY:
I think the ASIC, the regulator, and ASX, who is the supervisor, have done a solid job in very difficult circumstances. I mean the volatility, the fall-out we've seen on markets, has been occurring world-wide, with very similar type issues, and every regulator and supervisor has been trying to deal with those issues, what are a new and unique set of events, so they've done a solid job.
But ASIC for example, are undergoing a fundamental restructuring. Now, they were always going to restructure, and I am pleased that in carrying out their restructure, they are taking note of some of the lessons of the enormous volatility in the markets, so ASIC are, if you like, refocusing, resharpening their regulatory approach, as a consequence of the reorganisation, which is a good thing.
NEWSREADER:
And that is Business Report for this Tuesday.