ALAN CAMERON, AM CHAIRMAN AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION
Seminar on the Globalisation of Securities
ALLEN ALLEN & HEMSLEY
16 August 1999
International financial markets have, over the last two decades, been transferred by a number of key developments which, for regulators, have posed significant challenges to their traditional notions of jurisdiction, regulation and enforcement. The most notable of these developments is the rise of Electronic Commerce, catalysed by the globalisation of financial markets. E-commerce has become a fundamental regulatory issue of the late 90’s due to the magnitude of financial transactions that are now being conducted over the internet. To quantify this magnitude; the number of Australian households, with internet access has grown from 4 percent in 1996 to over 13 percent in late 1998, and over one third of households now own a home computer. The aim of this paper is to provide a brief overview of ASIC’s regulatory responses to these developments and outline some of its recent initiatives relating to the financial services industry. This evening I will briefly discuss: • • • • • The Global Market; The growth of E-Commerce; Current international regulatory activity; Regional initiatives; and International enforcement.
The Global Market
The globalisation of the securities market is reflected in a number of ways including: 1. the growth of cross-border and cross exchange securities transactions; 2. the number of secondary listings of companies on overseas exchanges; 3. the emergence of multinational securities firms servicing the business from offices across the world; and 4. the increasing number of strategic alliances and other connections between regulated financial markets in different parts of the world. The global financial market now crosses borders and jurisdictional zones, directly and via the Internet. Advances in information technology and the effect of electronic commerce will fundamentally change the basis of competition between markets for different financial products. This increase in competition will require the development of entirely new strategies for doing business. The increasing internationalisation of markets and the increasingly global nature of companies themselves, is exemplified by the number of foreign listings on the Stock
Exchange. As of March 1999, the ASX was a secondary listing for 74 foreign companies and was the home exchange for 130 companies also listed on other stock exchanges around the globe. I will discuss the other issues in turn, but will start with some reflections on the exchange alliances issue, if only because of its topicality in light of the rejection by the ACCC of the proposed merger between the ASX and the SFE. Needless to say I do not intend to canvass the merits of the ACCC’s decision; one clear outcome of the Wallis report was that they should retain the responsibility for competition regulation in the securities market, while we assumed the consumer protection role for the financial sector. My remarks are therefore not to be read as an implicit or explicit criticism of the ACCC’s ruling, finally concluded last Friday. I want in any event to focus not only the domestic mergers, although there are plenty of them underway - in the US with NASDAQ and the American Stock Exchange, in Hong Kong and Singapore in our region. My concern today is with the growing trend towards cross border alliances, the most prominent of which is the London Frankfurt alliance announced in September last year, and now expanded to include almost all the major markets of Western Europe. It seems to me that these alliances have not yet led to any seamless cross border trading platform of the kind which may have been expected by some when they were announced, but of course it may have been misreading the intentions of their promoters to have assumed that that...