Embattled ASX set to face beefed-up competition, in bid to boost investment

The Australian Securities and Investments Commission is set to boost the competition faced by the much-criticised ASX in an effort to clear roadblocks for investors and attract more foreign capital to Australia.

ASIC, which regulates companies and financial services, announced on Wednesday it was in the final stages of considering an application from an alternative trading exchange, Cboe.

The proposal would allow initial public offerings on Cboe Australia - allowing companies a further alternative listing option from the ASX - operated by a large global exchange group.

While Cboe is already trading, the proposed ASIC action would give it more scope in its operations and enable it to offer more investment options.

“Cboe Australia currently provides trading in ASX listed securities and admits exchange traded products through its own market,” ASIC said in a statement.

“This move is expected to enhance competition and attract foreign investment, providing more choice for investors and greater international alignment.”

ASIC has been deeply dissatisfied with the performance of the ASX, a public company, and recently launched an inquiry into it. It said at the time its “decision to initiate an Inquiry follows repeated and serious failures at ASX”.

ASIC announced its latest move at an investor roundtable run on Wednesday by Treasurer Jim Chalmers.

The regulator also announced it was “expanding the approved foreign markets to include Cboe’s US and Canadian exchanges, along with the Canadian Securities Exchange (CSE), prospective acquirer of the National Stock Exchange of Australia (NSX).

"This expansion will enable Australian investors to participate in certain transactions in these markets, further integrating Australia into the global financial system.”

ASIC is also looking at measures to streamline dual listings of foreign companies in Australia and other “innovative applications to attract international businesses to Australia’s public markets. These measures promote Australia as an attractive destination for international capital”.

The initiatives come ahead of the government’s economic reform roundtable later this month, where a major focus will be ways to attack excessive regulation.

At the investor roundtable, Chalmers released the Council of Financial Regulators’ review into small and medium sized bank competition and the government’s response.

The review made nine recommendations for the government and set out nine actions for regulators.

Many of the recommendations went to easing or streaming regulation.

Chalmers said the government accepted in principle eight of the recommendations.

He said the government would seek feedback on the final recommendation for the Australian Prudential Regulation Authority, “to introduce a lighter touch framework for very small banks, accompanied by adjustments to the Financial Claims Scheme”.

Chalmers’ investor roundtable was attended by representatives from the banks, superannuation funds and global asset managers. These investors control a combined $3 trillion in private capital.

The discussion centred on two priorities to boost productivity: unlocking investment in data centre infrastructure, and modernising regulation to unlock more investment capital.

The decision on local data centre infrastructure came after this week’s release of the Productivity Commission’s report that canvassed the future of artificial intelligence technologies.

AI will be a major issue of discussion at the August 19-21 roundtable.

Chalmers said, “Our goal is to unlock investment, unblock regulation, and unleash more productivity.”

“Artificial intelligence will completely transform our economy and we’re optimistic about the role it can play in lifting living standards for more Australians,” Chalmers said.

“To grasp this big AI opportunity we need to unlock more investment in data centres and that was an important focus of today’s investor roundtable.”