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CFR and Competition or close？

CFR and Competition or close?

The Treasurer, Scott Morrison MP welcomed the release of the Council of Financial Regulators’ (CFR) policy statements on the regulation of Australian cash equities clearing and settlement services, developed in collaboration with the Australian Competition and Consumer Commission (ACCC).

What does it mean?

Hopefully cheaper transaction costs, faster and better service for all stakeholders. The reason I say hopefully is that systems do not have always to be changed to make them work better, sometimes it is just the people and psychology involved. Other times it it is an engineering change that makes a huge difference or a new piece of technology. But a policy statement does not a success guarantee or a summer make, so please bear with me while I introduce some of the main stakeholders, or better, let them introduce themselves.

So who is the CFR?

The Council of Financial Regulators (CFR) is the coordinating body for Australia s main financial regulatory agencies. It is a non-statutory body whose role is to contribute to the efficiency and effectiveness of financial regulation and to promote stability of the Australian financial system. Its membership comprises the Reserve Bank of Australia (RBA), which chairs the CFR; the Australian Prudential Regulation Authority (APRA); the Australian Securities and Investments Commission (ASIC); and The Treasury. In the CFR, members share information, discuss regulatory issues and, if the need arises, coordinate responses to potential threats to financial stability. The CFR also advises Government on the adequacy of Australia s financial regulatory arrangements.

What is this Policy Statement about?

In advance of the Liberal party adopting a formal position, warning about the increasingly extreme proposals for Indigenous constitutional recognition

He goes on to tell Tony Abbott MP

Reforms to the provision of clearing and settlement facilities are part of the Turnbull Government’s competition law reform agenda and will support the competitive settings for a modern, innovative, 21st century Australian economy.

The release of the CFR’s Minimum Conditions for Safe and Effective Competition in Cash Equity Settlement in Australia takes the next step by issuing further policy guidance on competition in financial market infrastructure.

Minimum, why not more?

These minimum conditions are designed to provide potential applicants for settlement facility licences with sufficient clarity on the measures that the regulators would consider necessary to support a licence application.

It is important that, as Australia keeps pace with technological developments, the Government ensures that financial markets operate safely and effectively while delivering world class infrastructure.

As part of reforms to this market, the Government remains committed to developing and consulting on legislation to provide the relevant regulators with rule-making and arbitration powers to apply to clearing and settlement facilities.

The Governments minimum approach seems to be based on leaving options open to raise the standards once operational patterns become apparent, rather than having raised the bar too high and risk failure by participants not entering the “new” regulated market with momentum.

In some modelling of the changes to the system some brave assumptions have been made, namely around liquidity and certain asset classes remaining attractive despite more onerous providence requirements, so I have been advised by people familiar with the situation. We will soon find out if the modelling will be able to hold up to the reality.

Given the reputation of Malcolm Turnbull is under pressure, to deliver a good outcome, both from inside and outside the Liberal party, a risk averse less ambitious, minimal initial approach is understandable. This may be realistic but politically it is not what one would expect from a confident Government looking to gain momentum and reestablish its leadership credentials as far as the Economy, Financial Services and Banking are concerned.

Bill Shorten and Labor are waiting for their chance to launch a Royal commission into the Banks, any regulatory changes that fail to deliver a fairer and more equitable market will power their arguments.

Why is this so?

The Government is looking for more economic activity, the more activity the more the take in taxes, charges, license fees and so forth. Following its mantra of Jobs and Growth, Growth and Jobs.

Another important factor is the human element in both the market participants and regulators, inspectors and enforcement entities as well as public confidence and trust. The ACCC play an especially important role here, assuring confidence by the consumer and an ability if called up on to intervene and restore justice in the system and compensate injured parties.

In Australia we had a number of classic failures in the past decade where services companies collapsed and some transactions, likely fraudulent, where never fully recovered, despite a high level of forensic know-how in that area, as counter-parties fell short to meet obligations; leaving investors and intermediaries out of pocket.

Voters too, have been sensitised to leaders spending other peoples money or suggesting risk is low, while at the same time these leaders have no dollar of their own at risk.

For now:

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最后更新：2017-09-11 22:46:26

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