ASIC Annual Forum 2023: How digital innovation is transforming financial markets

Increased competition is required to drive efficiencies in Australia’s financial markets, industry leaders have told the ASIC Annual Forum.

Reflecting on the recent ASX CHESS replacement difficulties, including the announcement of a new design solution, founding CEO and Chairman of Chi-X Europe and Global, Tony Mackay said Australia was, “trying to move its whole market in one go”.

“We’ve heard a lot today about promoting competition and this is one area I believe where competition should be encouraged,” Mr Mackay said.

He noted the role of proportional regulation in setting guard rails for the transformation of financial markets.

“Competition with good regulation will sort out what technology wins. It’s not the job of the regulator to do that – they set the environment so we can have the best technology at best price,” Mr Mackay said.

Founder and Chief Executive Officer of FinClear Group, David Ferrall, agreed. “Technology is one leg of the stool but there’s also a regulatory side.”

Mr Ferrall said the delivery of the ASX CHESS replacement was critical to the proper functioning of Australia’s markets, but there needed to be a “dual track approach” to promoting competition.

“In the dual track, we must promote competition via alternative technologies that might sit outside the regulatory framework for the moment,” Mr Ferrall said.

A technology-neutral approach
ASIC broadly supports technology that will improve outcomes for market operators and users across the financial system.

We take a principles-based, technology-neutral approach to regulation – existing rules about controls, governance and accountability apply equally to existing and emerging technologies.

But while ASIC takes a facilitatory approach to new technology, ASIC’s Executive Director of the Markets Group, Calissa Aldridge said the regulator would not allow the fundamentals of financial market to be compromised.

“Our approach is to be as proactive as we can be and having that integrated role with the market means we’re very well placed to identify trends and respond,” Ms Aldridge said.

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