LCH.Clearnet Group Ltd. will press ahead with an Australian application to process over-the-counter interest-rate-swap trades after the government blocked plans to allow competition in equity clearing.
ASX Ltd., the operator of Australia’s main stock exchange, will maintain its monopoly on the clearing and settlement of equity trades for at least two years, the government said earlier today. Treasurer Wayne Swan accepted advice from the Council of Financial Regulators to defer for two years any license application from an equities-clearing facility seeking to compete in the Australian market.
“We will continue to watch the Australian cash equity clearing market,” LCH said in an e-mailed statement. “We still plan to apply for a licence for an Australian clearing and settlement facility license that would enable LCH.Clearnet to offer its SwapClear OTC interest rate swap clearing to Australian banks.”
ASX Chief Executive Officer Elmer Funke Kupper and Chairman Rick Holliday-Smith have argued competition may raise risks to market stability and push transactions overseas out of the reach of Australian regulators. London-based LCH.Clearnet, Europe’s largest clearinghouse, had applied for a clearing and settlement license within Australia.
The ASX’s monopoly on clearing and settlement services was cited by Swan as a reason for him rejecting a takeover bid in 2011 from Singapore Exchange Ltd.