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While the ASX currently holds a dominant position in providing post-trade services for the Australian market, potential future competition could emerge, particularly in clearing and settlement. Here’s a breakdown of the landscape:
Current Limited Direct Competition:
* Clearing and Settlement: Currently, ASX Clear Pty Ltd (ASX Clear) and ASX Settlement Pty Ltd (ASX Settlement), both subsidiaries of the ASX Group, are the sole providers for the clearing and settlement of ASX-quoted securities. Their operations are integrated through the Clearing House Electronic Subregister System (CHESS).
* Chi-X Australia: While Chi-X is a competitor to the ASX as a trading venue, trades executed on Chi-X are currently cleared and settled by ASX Clear and ASX Settlement using the Trade Acceptance Service (TAS) provided by ASX. So, in post-trade, Chi-X is currently a customer of the ASX rather than a direct competitor in these core functions.
Potential Future Competition:
* Regulatory Reforms: The Australian government and regulators (Reserve Bank of Australia – RBA, and the Australian Securities and Investments Commission – ASIC) have been exploring reforms to increase competition in clearing and settlement services. This could potentially pave the way for new entrants in the future.
* New Technologies: The ongoing replacement of CHESS with a new technology platform could also open opportunities for other providers or alternative models for post-trade services in the longer term. However, the specific nature of the new CHESS system and its implications for competition are still evolving.
* Global Post-Trade Service Providers: International post-trade service providers like Broadridge, OSTTRA, and Apex Group offer a range of services globally and could potentially look to expand their direct offerings in the Australian market if regulatory changes allow for more competition in core clearing and settlement functions. Currently, their involvement in Australia might be more focused on services that complement the existing ASX infrastructure.
* Marex: While Marex recently became a futures clearing and trading participant on the ASX, increasing competition in that specific area, their impact on the equities post-trade services remains to be seen.
Key Considerations for Competition:
* Network Effects: Post-trade services, especially clearing and settlement, benefit significantly from network effects. The established infrastructure and wide participation on the ASX’s platforms create a significant barrier to entry for new competitors.
* Regulatory Requirements: The clearing and settlement of securities are highly regulated activities due to their systemic importance. New entrants would need to meet stringent regulatory requirements and gain the necessary licenses.
* Interoperability: For competition to be effective, there would likely need to be interoperability between different post-trade service providers to allow seamless transfer and settlement of securities traded on various platforms.
In conclusion, while the ASX currently faces limited direct competition in the core post-trade services of clearing and settlement for Australian equities, regulatory reforms and technological advancements could potentially lead to a more competitive landscape in the future.

Video courtesy of ABN-AMRO

Video courtesy of ABN-AMRO