ASX seeks compo for shake-up
Sydney Morning Herald
Thursday October 1, 2009
THE Australian Securities Exchange will demand compensation from the Rudd Government as a result of a sweeping shake-up of market regulation which will see the exchange operator stripped of some of its powers to supervise brokers.The chief executive, Robert Elstone, also urged the Government to tread carefully in its push to open the nation's equities market to competitors at the same time it was undertaking a complex transfer of regulatory powers to the Australian Securities and Investments Commission.His comments follow a decision by the Rudd Government in August for ASIC to take charge of real-time market trading supervision and enforcement which are presently part of the ASX's regulatory powers.The move to give ASIC responsibility for regulating brokers is aimed at resolving the long-standing conflict of a listed company supervising brokers trading in a market the ASX depends on for its profits.Mr Elstone declined to say how much compensation ASX would seek but said shareholders were entitled to receive "fair value" for the transfer of assets such as technology and intellectual property to ASIC.Analysts say such a move could run into millions of dollars.Precedents include compensation paid to the New York Stock Exchange in 2007 when its supervisory role was shifted to the Financial Industry Regulatory Authority. Mr Elstone said he was seeking talks with regulators on the issue, with any outcome likely to take months to resolve.He told shareholders at ASX's annual meeting the shake-up would have a one-off significant impact on this year's profit, but said it was too early to say if it would represent a windfall or cost for the ASX. At the same time he said the move would not provide the annual boost to earnings over the next few years as some analysts had been anticipating.Mr Elstone noted the transfer in market supervision to ASIC "will present a significant new challenge" for the securities regulator.The ASX has long argued in favour of its markets supervision division, which employs 110 people."Whether or not the ASX agrees with the Government's specific supervisory reform decision, we acknowledge its right to enact reform," he said. "Ultimately, it is the Government that is charged with acting in what it believes to be €“ and being held accountable to €“ the public interest."Separately, Mr Elstone noted equity and futures market activity continued to stage a recovery in the first quarter of financial year 2010 following signs of a rebound from April.Secondary capital raisings for the quarter were well up on last year, he said, adding ASX handled an unprecedented $90 billion of capital raisings last financial year as companies sought to strengthen their balance sheets. While the number of new sharemarket listings remained lacklustre there were some prospects of recovery in line with growth.
© 2009 Sydney Morning Herald