Competition in cash equities clearing and settlement: legislative reform

On 30 March 2016, the Government endorsed the recommendations of the 2015 review of competition in clearing Australian cash equities, carried out by the Council of Financial Regulators (CFR) in collaboration with the Australian Competition and Consumer Commission (ACCC). Among others, the recommendations suggested the relevant regulators:

• be granted rule-making powers to impose requirements on clearing and settlement (CS) facilities; and
• be granted the power to arbitrate disputes about the terms and conditions governing access to CS facilities, including price and data.

As a result of these recommendations, the full set of which can be found in the 2015 conclusions report, CFR released two policy statements setting out:

• expectations for ASX’s conduct in operating its cash equity clearing and settlement services until such time as a committed competitor emerged (Regulatory Expectations); and
• a set of minimum conditions to ensure safe and effective competition should a competing provider of clearing services emerge (Minimum Conditions (Clearing)).

In March 2017, CFR and the ACCC released an additional consultation paper considering the implications of competition emerging in settlement services. Stakeholders acknowledged the increased likelihood of competition emerging and broadly supported proposed policy controls for safe and effective competition.

As a result, CFR released a set of minimum conditions to ensure safe and effective competition should a competing provider of settlement services emerge (Minimum Conditions (Settlement)).

On 7 September 2017, the Treasurer issued a media release stating the Government remains committed to developing and consulting on legislation to provide the relevant regulators with rule-making and arbitration powers to apply to clearing and settlement facilities.

Related information

• The Hon Scott Morrison MP, Treasurer of the Commonwealth of Australia, Open competition in clearing and settlement of shares, media release, 7 September 2017
• CFR, Regulatory Expectations for Conduct of Cash Equity Clearing and Settlement Services in Australia, policy paper, October 2016, amended September 2017 (PDF 211 KB)
• CFR, Minimum Conditions for Safe and Effective Competition in Cash Equity Clearing in Australia, policy paper, October 2016, amended September 2017 (PDF 255 KB)
• CFR, Minimum Conditions for Safe and effective Competition in Cash Equity Settlement in Australia, policy paper, September 2017 (PDF 286 KB)
• CFR, Safe and Effective Competition in Cash Equities Settlement in Australia: Response to Consultation, policy paper, September 2017 (PDF 250 KB)
• Government Response to CFR Review and Recommendation 44 of the Financial System Inquiry, March 2016 (PDF 377 KB)
• CFR, Review of Competition in Clearing Australian Cash Equities: Conclusions, report, June 2015 (PDF 1.07 MB)
• CFR, Review of Competition in Clearing Australian Cash Equities, consultation paper, February 2015 (PDF 674 KB)
• CFR, Advice on Competition in Clearing of the Cash Equity Market, advice, February 2013
• CFR, Competition in Clearing Australian Cash Equities: Conclusions, report, December 2012 (PDF 820 KB)
• CFR, Competition in the clearing and settlement of the Australian cash equity market, discussion paper, June 2012 (PDF 330 KB)