A Major Australian Market Major Supports Breaking the Monopoly of the ASX on Post-trade Services

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A Top Australian share trading technology firm has just announced its support for a proposed government policy to break the monopoly of ASX Ltd over post-trade activities.

The company believes that allowing new entrants into the market will ultimately lead to increased competition and cost savings for investors. The draft legislation published this week by the Federal Government outlines plans to open up post-trade activities to potential rivals of the ASX.

The new rules proposed by the Federal Government would give the Reserve Bank of Australia (RBA) and Australian Securities and Investments Commission (ASIC) greater control over post-trade activities. This would ensure that ASX Ltd can no longer exploit its monopoly power, enabling other providers to enter the market.

David Ferrall, CEO of trading technology platform FinClear Pty Ltd., said, “We encourage anything that encourages innovation.”

“One of the main reasons we haven’t seen competition come into the Australian market is because that ASX and CHESS capability has been so dominant, and there hasn’t really been enough revenue or a business case for someone to recreate CHESS.”

In the wake of the failure of its overhaul, ASX’s all-in-one legacy software system is under tremendous pressure from market participants to challenge its near-monopoly position.

Aside from clearing and settlement, or in other large financial markets, the confirmation of stock ownership transfers and the updating of share registries are handled by entities separate from the market operator, who are in charge of clearing and settlement.

“The ASX is open to ensuring that there is a clear regulatory structure in place for clearing and settlement services, and strongly support the establishment of a strong regulatory oversight for all the entities that provide these services to ensure there is competition in the clearing and settlement market,” said Eone of the ASX spokesperson.

The proposed government policy to break ASX’s monopoly on post-trade activities has received support from a significant Australian share trading technology firm. The move is expected to foster competition and lead to cost savings for investors.

With the government drafting new legislation to facilitate competition in the market, it remains to be seen how ASX Ltd will respond to the changes.

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