Today I release the Council of Financial Regulator's recommendations on reforms to the oversight of Australia's financial market infrastructure to ensure we continue to protect the interests of investors, businesses, and market participants.
Australia's strong, well-regulated financial system has been critical in ensuring our economy withstood the worst of the Global Financial Crisis and the continued turbulence in international financial markets. The Gillard Government is committed to ensuring Australia's regulatory settings continue to keep our vital market infrastructure strong and secure.
The Council recommendations include:
- new powers to require certain market infrastructure to have key aspects of their operations located in Australia, where deemed appropriate, and be managed and governed by 'fit and proper' persons;
- enhanced 'step in' powers for regulators to intervene in the event of infrastructure experiencing substantial difficulties; and
- strengthened and clarified powers for regulators to give directions to operators of key market infrastructure and impose appropriate sanctions where licensees and their officers fail to comply with directions or licence conditions.
The Council, whose members include the Governor of the Reserve Bank, the Secretary of the Treasury, and the Chairs of both APRA and ASIC, advise that these changes are desirable to underwrite the continued stability of our market infrastructure and ensure their strong ability to maintain robust oversight in all market conditions.
I asked the Council to advise on potential reforms last year following my decision to prohibit the acquisition of ASX Limited by Singapore Exchange Limited.
My comprehensive statement of reasons outlined a range of fundamental concerns – based on unambiguous and unanimous advice from the Foreign Investment Review Board – that the proposal was contrary to the national interest. The proposal also highlighted the need for reforms to strengthen our regulators' oversight of key market infrastructure, particularly in respect of any future commercial arrangement involving ASX and an overseas exchange.
The Treasury will now engage with stakeholders for a six-week period to consult on options for implementing the final framework. Interested stakeholders will also have an opportunity to comment on any exposure draft legislation before introduction.
A copy of the Council's recommendations and details on consultation are available on the Treasury website.
The Gillard Government will continue to work with Australia's world-class financial regulators to secure our financial system for the benefit of all Australians.