THE corporate regulator will have new powers to make and enforce market integrity rules when it assumes the role of sharemarket supervisor next year, under draft reforms unveiled by the Federal Government.
A draft legislation and consultation paper, released by Corporate Law Minister Chris Bowen yesterday, also proposes a new disciplinary panel that would hold public hearings on possible breaches of market rules.
It follows Mr Bowen's decision in August that the Australian Securities and Investments Commission will take over as market supervisor next year, in place of the market operator, the Australian Securities Exchange. The move is designed to minimise potential conflicts of interest in the ASX's dual roles, and to eventually allow the ASX's competitors to enter the market.
The Government will introduce the laws in Parliament's autumn session, which starts in February, and plans to finish the handover of powers from the ASX to ASIC by the end of September.
Those affected by the process must lodge submissions by December 24.
Under the draft reforms, ASIC would levy fees on market operators - such as the ASX or its future competitors - to pay for the new regime, a move not intended to have ''a significant impact on investors'', the Government's consultation paper said.
ASIC's new market integrity rules would be tabled in Parliament and subject to its scrutiny.
ASIC suggested establishing a committee of ''market experts'' to assess possible breaches of integrity rules by participants including stockbrokers. The committee would also set penalties, and ASIC proposed the panel hearings be held in public for ''transparency reasons'' but a panel member could rule for the hearing to be private ''if there is sufficient reason''.
Market operators such as the ASX would have the power to set rules governing day-to-day running of their markets, and could continue to run their own tribunals to arbitrate the rules' breaches.
''As expected, it's very high-level, with the detail still to come,'' said Doug Clark, policy executive at the Australian Stockbrokers Association. He said he would be surprised if the new panel held public hearings. ''The ASX doesn't run its hearings in public, and ASIC has the power to ban people from the industry, and it runs those hearings privately,'' he said.
An ASIC representative said yesterday it had formed a team to manage the transition, headed by former ASX executive Greg Yanco. Mr Yanco is also a former chief executive of one of the ASX's possible future competitors, AXE.
Yesterday, the release of the draft legislation was welcomed by another potential ASX competitor, Chi-X Australia.
The ASX plans to respond to the proposed reforms.
