Govt defers clearing licences decisions

The Government has deferred any decision on license applications from equities clearing facilities to enter Australia's clearing and settlement market for two years. 

The Deputy Prime Minister and Treasurer, Wayne Swan, said he accepted the Council of Financial Regulators recommendations on competition in the clearing and settlement of the Australian cash equity market.

The decision was based on timing and an acknowledgement of market conditions and the magnitude of current regulatory change, he said.

"The advice of the Council ... is that while competition would be expected to deliver efficient outcomes, now may not be the appropriate time for changes that will have further cost implications for the industry, given current market conditions and the magnitude of regulatory change already underway," he said.

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Under the recommendations, the ASX is required to develop a code of practice with key stakeholders based on the principles set out in the Council's advice to ensure transparent and non-discriminatory access to its infrastructure.

The code is expected to be implemented within six months following industry consultation.

Despite the decision to defer the entry of competitors, the Government said it had a long-term commitment to competition in financial markets but had taken on the regulator's concerns.

Last November, the Association of Superannuation Funds of Australia (ASFA) said introducing competition to Australia's clearing and settlement market could have negative impacts on the management of superannuation assets, market liquidity and market fragmentation.