Jim Chalmers is the third treasurer in 15 years to attempt to break the ASX monopoly on clearing and settlement. The ASX is likely to fight back hard.
But he will face formidable opposition from an organisation that has successfully fought off the reform efforts of two previous treasurers – Wayne Swan and Scott Morrison.
Its historic price-earnings multiple is 38 times earnings, and its forward PE is 25 times, compared with a forward PE for the SASX’s strongest argument against tougher regulation and the breaking of its monopoly on clearing and settlement will be the $525 million it holds in margin collateral to cover the unsettled derivative contracts and cash market trades.
Several factors are working in the Treasurer’s favour as he seeks to introduce competition to a critical part of the Australian financial markets infrastructure. Another factor working in Chalmers’ favour is that the technology surrounding clearing and settlement has advanced significantly in the seven years since ASX attempted to build a new platform.Two issues could swing the competitive reform process his way. First, he could use mutualisation, which is already used for the $100 million National Guarantee Fund, to deal with the $525 million margin collateral issue.
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