Separate dark pools licence proposed in HFT crackdown
A Treasury options paper that looks at reforming Australia's financial market licensing regime includes a proposal for implementing tailored or multiple licences so dark pools would be classed separately to public exchanges.
'Australias Financial Market Licensing Regime: Addressing Market Evolution includes two main options; the first would create flexibility in the Corporations Act allowing the Minister for Financial Services and Superannuation, Bill Shorten, to tailor licence obligations for each market type and decide which obligations should and should not apply.
The second option proposes multiple licence classes for dark pools and public exchanges, each with different obligations, similar to the arrangements currently in place in the US and Europe, according to a Treasury statement.
"The current licence approach was based around large public exchanges, like the [Australian Securities Exchange]. Australia's licence regime should be able to accommodate these new market developments such as dark pools, and should be flexible enough to properly regulate any additional market types that may emerge in the future," Shorten said.
The Government is looking to introduce appropriate rules to govern high frequency trading and to ensure those rules can be enforced to protects markets and investors, Shorten added.
Submissions to the paper close on 1 February 2013.
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