Australia is boosting the powers of its corporate watchdog to include supervision of trading in the financial markets as the country vies with Hong Kong and Singapore to establish itself as a regional finance hub.
The changes announced Monday will remove a potential conflict of interest involving the stock exchange and also give the Australian Securities and Investments Commission power over trading, investment banks and brokers.
Currently, markets such as the stock exchange monitor trading themselves and refer legal problems to the commission, which is responsible for enforcing securities laws.
A statement from Treasurer Wayne Swan said the reforms "enhance the integrity" of Australia's financial markets and represent another step in establishing the country as a financial services center in the Asia Pacific region.
Financial Services Minister Chris Bowen said the reforms came about due to concerns there was a conflict between the Australian Securities Exchange being the profit-making operator of the stock market and also its regulator.
"Certainly the government took the view that it was not desirable to have a private sector operator with supervisory obligations over market participants, and that this was a role better and more suitably undertaken by a government entity," Bowen told Australian Broadcasting Corp.
The stock exchange operator would retain responsibility for ensuring companies comply with listing rules.
The reform is subject to legislative approval, and Swan hopes it can be in place by the third quarter of 2010.
ASIC has advised the government that it may need three months after parliamentary approval to prepare itself to take on the new role, Swan's statement said.