ASX to come clean on pricing, competition, access

The corporate regulator has warned its latest forays, slapping new rules on the ASX, are a sign of things to come.

ASIC has slapped ASX with new rules to encourage competition in financial markets. Picture: Gaye Gerard

The Australian Securities Exchange has been slapped with new rules which will force it to open up access and oversight to its clearing and settlement services, in a first for the corporate regulator.

The ASX will now be required to ensure “transparent, fair, and reasonable” pricing on its clearing and settlement systems, which are used to manage millions of trades in equities and futures markets.

The market operator reported $126.4m in revenues from its Futures and over the counter clearing operations in the first half of this financial year when it reported its earnings two weeks ago.

The ASX will also be forced to provide access to its covered services, including data, “on commercial, transparent and non-discriminatory terms”.

The Australian Securities and Investments Commission will also require ASX to design its core technology systems “in a way that facilitates third-party access”.

ASIC chair Joe Longo said the new rules would promote and support the development of the financial system.

“This is about limiting ASX’s ability to misuse its monopoly power to deter new entrants,” Mr Longo said.

“The new rules support the long-term confident and informed participation of investors in Australian financial markets by establishing clear obligations to promote competitive outcomes in the provision of clearing and settlement services.”

ASIC Chair Joe Longo speaks at an ASIC conference. Picture: John Feder

ASIC’s three-pointed manoeuvres threaten to open the door to ASX competitors, as well as put the exchange on notice over the design and implementation of its flagship CHESS replacement technology platform.

ASX is currently bankrolling a massive program to replace its ageing CHESS platform, first introduced in 1994.

The market operator has selected Indian firm Tata to build a replacement clearing and settlement platform using its BaNCS technology suite.

Mr Longo said the rules requiring ASX to provide pricing for its clearing and settlement systems, benchmarked to overseas competitors, was intended to “reduce competitive barriers to entry for entities unaffiliated with the ASX”.

“This is a key step in ensuring Australians have a fair, strong and efficient financial system,” he said.

Mr Longo warned ASIC was also looking at the regulatory settings for Australia’s broader financial markets, noting plans to release a discussion paper in the coming days.

“These new rules demonstrate our commitment to acting where we see it is necessary,” he said.

“In accordance with these new rules, ASX must ensure its clearing and settlement services are offered in a transparent, non-discriminatory way.”

ASIC’s use of its powers to compel the ASX are the first time the regulator has exercised its powers since being granted them in May 2024.

ASX shares closed down 0.06 per cent at $65.99 on Monday, and are up 1.4 per cent this year.

Originally published as ASX to come clean on pricing, competition, access