ASIC has been handed the supervisory role of financial market trading, effective from the third quarter 2010.
At present, the ASX refers problems to ASIC, but under the new system the corporate watchdog will assume full control. The extra powers sought by ASIC give it the ability to monitor trading activity directly and to have sole power over investment bankers, brokers and other traders.
ASIC chairman Tony D’Aloisio, says the move, unveiled by Treasurer Wayne Swan and Financial Services Minister Chris Bowen, effectively removes some of the conflict of interest implied by the ASX having supervisory control of the market that also provides it with its sole source of profits.
“Following our strategic review in 2007, ASIC is now closer to the market, more accessible, flexible, and able to take emerging trends into account more quickly,” he says.
“We have built up our market skills with a number of senior recruitments with market experience. We will be working closely with ASX to ensure a smooth transition of market surveillance and participant supervision responsibilities to ASIC.
“In addition, this will allow for a whole of market approach to market surveillance and participant supervision should the government issue licences for new trading market operators.”
The move is a welcome one, reducing much of the inherent conflicts in the present system, where the ASX earns its money from increased trading but is also the market’s regulator.
The ASX will still have control over the listing rules governing companies listed on the Australian Securities Exchange.
The move will save the ASX an estimated $15 million in supervisor fees.
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