ASX Equity Trade Clearing Costs in Line With Peers, Report SaysAdam Haigh
ASX Ltd.’s charges for clearing and settling Australian equity trades are in line with its global peers, according to a report commissioned by the country’s main exchange operator.
ASX expenses were comparable with 13 other countries, considering a range of investors with differing average trade sizes, according to the report by London-based research firm Oxera Consulting LLP. The document was presented today to Australia’s Council of Financial Regulators, which oversees local financial markets.
ASX in February 2013 won a battle to maintain its monopoly on the clearing and settlement of equity trades in the country for at least two years. Chi-X Australia CEO John Fildes has said removing ASX’s monopoly would reduce costs for investors and improve the nation’s standing among the world’s largest markets. ASX Chief Executive Officer Elmer Funke Kupper has argued that competition may raise risks to market stability and push transactions overseas out of the reach of Australian regulators.
“Given the size of the market, ASX prices are in line with its peer group,” Fod Barnes, a London-based partner at Oxera, said in Sydney today.
The Australian exchange last year introduced a code of practice with industry members and regulators that required the firm to carry out the study.
Australian post-trade fees, which include both clearing and settlement, are less than in Hong Kong, while being higher than those in Canada and the U.K., according to the report. The analysis confirms a conclusion by the Council of Financial Regulators in 2012 that ASX’s fees were “broadly comparable” to those of markets with a similar size, Barnes said.
ASX is fighting to stave off competition in equity trading from Chi-X Australia Pty and dark-pool operators as volume declines. The firm had revenue of A$42 million ($39 million) from cash equities clearing and A$40 million from settlement in the 2013 financial year.
London-based LCH.Clearnet Group Ltd., Europe’s largest clearinghouse that already clears over-the-counter interest-rate swaps for Australian banks, has applied for a license to clear and settle equity trades within Australia if ASX’s monopoly is revoked. Clearinghouses stand between buyers and sellers to reduce the risk of default.