(Fees) Amendment Bill 2011 is a very simple piece of legislation that allows
ASIC to charge market participants (such as stockbrokers) fees to support its
supervision of exchange markets. The fees will be set in regulations to be
gazetted after the Bill becomes law.
The Bill is part
of a wider Government policy to improve Australia’s position as a financial
centre. Previous Government reforms have enabled other firms to operate
exchanges in addition to the ASX. As a result, Chi-X Australia will commence
operating a market for cash equity shares later in the year subject to a number
of conditions being met. This threat of competition has brought down ASX costs
to market participants by approximately $20 million annually with the potential
for further reductions. The ASX has also introduced a wider range of services
for market participants.
There are several
key reasons to support the Bill. In particular, it complies with the
Government’s cost recovery guidelines, which were developed by the previous
government in 2005. Simply, the finance industry is receiving a direct,
significant benefit from ASIC’s supervision of markets and stockbrokers are
responsible for a significant portion of the time and effort that ASIC expends
stockbrokers to pay for supervision prevents the complications of the
Government charging market operators, who would then pass on the costs to
stockbrokers. Brokers may be reluctant to give some of their business to Chi-X
or another entrant if the pass-through of costs affected the new entrant’s
competitiveness. Charging stockbrokers also prevents incumbent market operators
from cross-subsidising parts of their business subject to new competition.
ancillary issue in the inquiry is the fees that ASIC will charge under
regulations. This is currently the subject of Treasury consultation. Treasury
has issued a comprehensive consultation paper, which will serve as an
appropriate basis for designing the fee structure. Industry raised legitimate
concerns about proposals in the consultation paper. The committee anticipates
that Treasury will respond to these concerns, either through further explaining
its position or by making appropriate changes.
The Bill should
pass because it is an appropriate way of funding ASIC’s market supervision
activities. It is not the centrepiece of the shift to competition, but it is
informed by competition principles and will be an important part of the
I would like to
thank the organisations that assisted the committee during the inquiry through
submissions or participating in the hearing in Canberra. I also thank my
colleagues on the committee for their contribution to the report.
Julie Owens MP
Terms of reference
On 24 August 2011, the Selection Committee asked the
Committee to inquire into and report on the Corporations (Fees) Amendment Bill
Under Standing Order 222(e), the House is taken to have
adopted the Selection Committee’s reports when they are presented.