ASX Chief Warns Against Competition

Regulators have to be more careful about clearing and settlement services, especially where competition is concerned, as the market remains fragmented despite fast trading technology.

This was the warning sent by the  Australian Securities Exchange, following the Council of Financial Regulators planned assessment of the structure for clearing and settlement in the market.

The ASX’s competition, Chi-X, has broken down the monopoly on share trading. The ASX has meted poor results in the equities markets, and is also dealing with appeasing investors who have lost confidence, as a result of the European debt crisis.

The ASX’s net income ending June 30 was a $339.2 million. It was down 3.7 percent from last year.

ASX chief executive Elmer Funke Kupper was quick to defend however, that market condition have been growing worse over the years, while retail investors are becoming more and more concerned about the status in the European and US market.

The chief said that regulators should be more concerned about moving liquidity in a single lit market to an off-exchange, dark pool area. He also had some concerns about high frequency trading, which involves high risks.

The chief noted that changing ASX’s clearing and settlement services may further fragment and damage the market. He added that fragmentation is a real concern, even more so than high-frequency trading.