Treasurer Scott Morrison expects the Australian Securities Exchange to act to allow competition to emerge in equities clearing and settlement.
The ball will fall into the ASX's court to issue a new code of practice that publicly commits it to act in accordance with new "regulatory expectations" to be issued by the Council of Financial Regulators on Wednesday.
The arrival of Chi-X in 2011 introduced competition for trading platforms, but ASX still has a monopoly on the clearing of trades, which represents around 7 per cent of its revenue.
The government said in March it would open up competition in the clearing of cash equities. It asked the Council of Financial Regulators (CFR) to develop the policy to allow this to occur.
Its regulatory expectations policy covers governance, pricing and access when ASX engages with, and provides services to, users of its cash equity clearing and settlement services. The document is "intended to support the long-term interests of the Australian market by delivering outcomes that are consistent with those that might be expected in a competitive environment," it says.
The CFR will also release on Wednesday a policy on the "minimum conditions" for equity clearing competition, designed to provide clarity to potential applicants on how licence applications will be assessed.
The reforms are part of the government's competition law reform agenda and demonstrate a commitment to the open and competitive markets that are fundamental to a vibrant economy, Mr Morrison said.
The government is also amending ASX ownership restrictions to provide the ASX with more flexibility to raise capital.
