Bloomberg News

Australia Mulls Market Rules Changes After ASX Bid Failure

October 21, 2011

(Updates to add investor comment in fifth paragraph.)

Oct. 21 (Bloomberg) -- Australia began a consultation on the regulation of its financial markets amid internationalization of bourse operations, more competition and calls for tighter scrutiny of derivatives trading.

The Council of Financial Regulators will consult for a six- week period on the proposals, which include forcing certain financial market infrastructure, such as clearing and settlement facilities, to be based in Australia if it is deemed systemically important. The consultation paper also proposes giving regulators the power to take direct control of such infrastructure in the event of a “crisis.”

Australian Treasurer Wayne Swan asked for a review of the regulatory regime after he rejected Singapore Exchange Ltd.’s $8.8 billion takeover bid for ASX Ltd., Australia’s main bourse operator, in April, saying a deal wasn’t in the country’s’ interest. Jurisdictions worldwide are reviewing regulation of financial markets, including over-the-counter derivatives, after the collapse of Lehman Brothers Holdings Inc. in 2008.

Other proposals include pre-approval by Australian regulators of the directors of financial market operators and strengthened powers for government overseers to insist upon certain rules being made and enforced by operators.

“It’s too early to say whether such measures would make it easier for someone else to come in” and bid for ASX, said Tim Schroeders, a fund manager for Pengana Capital Ltd. in Melbourne. “But I’m not sure how attractive it would be with any segregation of infrastructure that may or may not be undertaken” following the consultation.

--Editor: Nick Gentle

To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.


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