The Government is committed to promoting safe and efficient financial markets that drive economic growth. To achieve this, appropriate regulatory settings for financial market infrastructure are essential, including for clearing cash equities.
The Government has asked the Council of Financial Regulators to conduct a review of competition in the clearing of Australian cash equities. The Council will conduct the review with the assistance of the Australian Competition and Consumer Commission.
Clearing involves a third party stepping in to protect each party to a transaction from the risk that the other will not meet their obligations. It is a key facility to manage overall risk in the financial system and also contributes to efficiency and certainty for investors.
In February 2013, the previous Government placed a two-year moratorium on competition in the clearing of Australian cash equities. As a result, all Australian cash equities are currently cleared through ASX Clear Pty Limited, a subsidiary of ASX Limited.
A code of practice has since been implemented to deal with clearing and settlement services.
The moratorium on competition will continue to apply until the Government responds to the Council's review.
As part of the review, the Council will undertake a consultation process, including a series of meetings with interested parties. Further details will be available on the Council's website.