US electronic brokerage Liquidnet is looking to establish a trading operation in Australia that will compete directly with services provided by the Australian Stock Exchange (ASX).
The Australian Securities and Investments Commission (ASIC) says it has launched a consultation into whether it should grant licences to Liquidnet and to AXE, the ECN that is being established by NZX in partnership with Citigroup, CommSec, Goldman Sachs JBWere, Macquarie Bank and Merrill Lynch.
In a move that could break the ASX's monopoly on trading shares in the country's biggest companies, both Liquidnet and AXE have applied set up rival platforms for trading ASX-listed securities. The two firms would also establish rival market data operations.
ASIC's Chairman, Tony D'Aloisio, says: "These applications represent a significant development in Australian securities markets. They raise policy issues that our regulatory regime has not dealt with before."
"ASIC would like input from our stakeholders and market users to ensure that the regulatory regime going forward reflects the needs of the market, but overall market quality and integrity is maintained," adds D'Aloisio.
In a statement, ASX down-played the threat to its business and said it welcomed the ASIC's public consultation.
"The discussion paper highlights the importance of ensuring that the entry of new market operators should not result in a decline in the existing quality and integrity of the market for ASX-listed securities," says the statement.
The consultation period closes on Friday 17th August 2007.
Read ASIC's consultation paper here:Download the document now 195.1 kb (PDF File)