ASIC Confirms Readiness for Competition

ASIC today confirmed Chi-X Australia Pty Ltd (Chi-X) has met its licence pre-conditions to commence as a provider of exchange markets in Australia and it can commence operations from 31 October 2011.

ASIC has introduced a new regulatory framework to facilitate competition in market services and new entrant Chi-X was granted a licence on 4 May 2011 to commence operations, once conditions were met. ASIC’s technology and people are ready for multimarket supervision.

ASIC has engaged extensively with industry on the application of the competition market integrity rules, through workshops and through newsletters. Chi-X has provided confirmation from their independent expert that the systems and market data connections of Chi-X and market participants have been tested and are operationally ready.

ASIC is satisfied that industry is ready for competition on the basis that Chi-X commences with a soft launch period, trading no more than eight securities for at least six days, (two completed settlement cycles), in the beginning of November. ASIC will monitor the soft launch and will continue its dialogue with Chi-X.

ASIC will continue to work with market operators Chi-X and ASX, as well as the broader industry, to ensure a smooth and orderly transition to a multimarket environment to maintain fair and efficient markets.

Background

On 31 March 2010, the Australian Government announced its support for competition between exchange markets for trading in listed products in Australia and its in-principle support for granting an Australian market licence to Chi-X.

On 4 May 2011, the Government granted a licence to Chi-X to operate an Australian financial market. The licence has pre-conditions that had to be satisfied before Chi-X commences operation.

* Chi-X can only start operating once it is adequately resourced, its compensation fund is in place, and it has taken, together with the participants, all necessary and reasonable steps to test the technology and the readiness of its market.
* An independent expert has to confirm the adequacy of the testing and verify that participants have attested that they are operationally ready.

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