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ASX should follow law firm lead, says compliance chair
With the structure of markets rapidly changing and the speed of trade accelerating, the Australian Stock Exchange could learn a lesson from global law firms, reports Stephanie Quine.
With the structure of markets rapidly changing and the speed of trade accelerating, the Australian Stock Exchange could learn a lesson from global law firms, reports Stephanie Quine.
| STILL FIGURING IT OUT: Australian thinking on stock market regulation lags behind international bourses |
At the conference to discuss 'New Trends in Sharemarket Regulation', Cameron likened the ASX merger debate to regulatory issues that seemed to make it "too difficult" 30 years ago to run interstate alliances of law firms, but which are now a non-issue.
"It was only 30 years ago ... that the idea that a Sydney firm and Melbourne firm would align was regarded as very radical, and now we are contemplating international law firms operating all over the world," said Cameron.
"There is a risk that the attitudes that have been taken toward exchange mergers are a bit in the past and don't reflect what is happening."
A takeover of the ASX, Cameron said, remained "extremely difficult" given that it requires ministerial approvals.
"A whole lot of other countries have managed to give up sovereignty over their allegedly national and iconic exchanges, [but] apparently we're not yet ready to do that," said Cameron, citing a current list of groups of international exchanges including the NYSE Euronext, Deutsche Börse, London and Tokyo exchanges and Baltic, Nordic and US NASTEC.
Cameron refuted Treasurer Wayne Swan's reasoning in his rejection, on 8 April 2011, of the merger on the basis of "national interest" and said the Treasurer had pandered to an "extraordinary range of hysterical and xenophobic reactions from a wide range of commentators and politicians".
"We're facing all sorts of new issues that we, as regulators, haven't had to think about. Issues such as latency - the time delay between when a message is sent from one computer to another - and clock synchronisation take on new importance," said Tregilis.
With the ASX trading engine now capable of processing one trade every 300 micro-seconds, the world of market trading is a long way from the noisy trading floors of the 18th, 19th and 20th centuries, where tickets were physically stamped.
While ASIC accepts the current laws are still applicable, Tregilis said the regulator was focused on ensuring market participants had proper controls in place to ensure compliance with law and regulation, as well as 'real time surveillance' and follow up investigation on detected market misconduct.
Concern about regulation was one area referred to as an issue in the Treasurer's rejection of the proposed merger with SGX.
But Cameron, affirming ASX head David Gonski's support for the choice of Singapore as a merger partner, said the SGX system is "complimentary to ours" and that "their regulatory, legal and technological arrangements [are] at a high standard aligned with our own".
Tendering to the audience as "exhibit A", Cameron showed the minutes of Foreign Investment Review Board (FIRB) discussions on the decision, painting it as a "largely blank" document.
With the speed and scale of market transactions only set to accelerate, Cameron said Australia would benefit from becoming a larger player of more regional relevance, with an expanded range of products and services and access to cheaper capital from a deeper pool of liquidity.
The NSW Law Society's Corporate Law Conference was held on 23 August at the NSW Supreme Court, Sydney.
