Announcement date
14 December 2022
Link to announcement
Modernising Australi...~https://ministers.treasury.gov.au/ministers/jim-chalmers-2022/media-releases/modernising-australias-financial-system
Problem being addressed
In 2012, 2015 and 2017, the Council of Financial Regulators’ considered policy and regulatory issues around competition in clearing and competition in settlement for Australian cash equities and found the Regulators to have insufficient powers to regulate both Central clearing and settlement (CS) facilities either in a monopoly or competitive environment. The Australian Securities Exchange (ASX) is currently the monopoly provider of both clearing and settlement services, which are regulated by Australian Securities and Investments Commission (ASIC) and the Reserve Bank of Australia (RBA).
Proposal
ASIC is given a rule making power to enforce the regulatory expectations in the event that the ASX remains the sole provider of CS services and set and enforce minimum conditions for clearing and minimum conditions for settlement in the event that a competitor emerges. The Australian Competition and Consumer Commission is given power to provide for recourse to binding arbitration in disputes about the terms of access to ASX’s cash equity clearing and settlement services.
Assessed RIS outcome
Independent review
Assessment comments
Consistent with the Government's Regulation Impact Statement (RIS) requirements, the reviews and policy statements have been certified by the Department of the Treasury as meeting the requirements of a RIS:
- Review of Competition in Clearing Australian Cash Equities: Conclusions, Report by the Council of Financial Regulators (CFR), June 2015
- Safe and Effective Competition in Cash Equity Settlement in Australia: Response to Consultation, Report by the CFR, September 2017
- Competition in Clearing Australian Cash Equities: Conclusions, Report by the CFR, December 2012
- Regulatory Expectations for Conduct in Operating Cash Equity Clearing and Settlement Services in Australia, September 2017
- Minimum Conditions for Safe and Effective Competition in Cash Equity Clearing in Australia, September 2017
- Minimum Conditions for Safe and Effective Competition in Cash Equity Settlement in Australia, September 2017.
The Office of Best Practice Regulation (OBPR) does not assess the quality of independent reviews and RIS-like documents used in lieu of a RIS, but does assess whether the options analysed in the independent review are relevant to the regulatory proposal. The OBPR assessed that the options analysed in the independent review are sufficiently relevant to the regulatory proposal.
Regulatory burden
The Department of the Treasury estimates an increase in regulatory costs of $0.27 million per year, averaged over ten years.