Clearing competition for ASX needs a proactive RBA, ASIC: FinClear
The Reserve Bank and corporate regulator should be more proactive about promoting competition in sharemarket post-trade services after the ASX’s CHESS replacement debacle, a parliamentary committee has been told.
The call from FinClear boss and prospective ASX rival David Ferrall came on the day the market operator’s new advisory group met for the first time to formulate a plan for ASX to restore trust and get its CHESS project back on track.
ASX faces accusations it has not learned the lessons from its botched effort to rebuild the settlement and clearing system from scratch.
FinClear CEO David Ferrall: “Regulators should be encouraged to promote competition and new technology and do that under a proportionate approach, that doesn’t put markets at risk.” Kate Geraghty
Mr Ferrall told the House economics committee on Thursday he remained concerned both regulators were too conservative in holding potential new entrants in the post-trade services space to the same standards as ASX, even if their ambitions were narrower. He called this “regulatory capture”.
“Our market is relatively small, and the economics don’t necessarily stack up when you have to compete head-to-head with ASX on their terms – and on the regulatory structure that is imposed,” Mr Ferrall said.
“At the moment, the standard is ASX, and the expectation is everything must look like, smell like, behave like, and have capital standards equivalent to ASX Clear and settlement. We think there is a way to introduce proportionate competition, by lowering some of those thresholds and without putting the market at risk.”
The Albanese government has drafted new laws to break the ASX’s clearing and settlement monopoly, including giving ASIC more powers. ASIC chairman
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