ASIC will today gather market and financial services leaders in a push to bolster competitiveness in Australia's capital markets, after new research finds Australia needs to move quickly or be left behind as other jurisdictions adopt financial market innovation at speed.
The roundtable is the next step in ASIC's work on promoting dynamism in Australia's public and private markets. Building on ASIC's work, alongside RBA, in supervising transformation in Australia's critical national markets infrastructure, ASIC is leading the first in a series of discussions bringing together senior leaders and principals across the public and private sector. Their focus is on considering practical ways to strengthen and modernise Australia's capital markets, matching innovation opportunities with growth opportunities and capital need.
The Innovation in Financial Markets and Financial Market Infrastructure report (REP 835), prepared by the Digital Finance Cooperative Research Centre (DFCRC) for ASIC, shows financial markets are increasingly becoming more automated, compressing settlement cycles and enabling extended hours in traditional markets, supported by technology developments.
Against the backdrop of accelerating globalisation of capital flows and offerings, this innovation is enabling new market models and blurring lines between digital-first and established financial services players. It raises new implications for capital markets as agentic AI and machine-speed, autonomous trading, and supervision tools enter the hands of traders, market participants, and market operators.
ASIC Commissioner Simone Constant said, 'The core of ASIC's mission is to facilitate and improve Australia's financial system, and to promote confident and informed participation in that system. Ensuring that Australia's financial markets remain competitive and efficient is central to that mission.
'Geographic moats look like a thing of the past. The geographic barriers that once constrained the flow of capital are being eroded by technological developments. This makes it easier than ever for investors - wholesale and now retail - to invest offshore. The large-scale tech IPOs we're seeing are a symptom of this, and they will only become more common.
'If Australia is to remain competitive - with capital raised, invested and used to help Australia and Australian businesses grow - then we need healthy capital markets underpinned by safe, resilient, modern market infrastructure. Regulators and industry can work together to harness opportunities to best serve the Australian economy.'
The report also shows how standards bodies, governments and regulators across major jurisdictions are reshaping market frameworks to accommodate developments in distributed ledger technologies (DLT), tokenised assets, AI, and enhancements to information technology systems, increasing pressure on Australia to keep pace.
These shifts create opportunities to:
- Improve capital and operational efficiencies through modernised market infrastructure, automated market surveillance methods, ongoing public-private collaboration and regular global cross-regulator coordination,
- Give firms clear and accessible pathways to test and operationalise new products with constructive regulatory support, and
- Enhance competitiveness by supporting responsible innovation while protecting investors.
However, some of these developments could introduce pockets of heightened concentration risk at a business- and economic-level through the use of external service providers and could also amplify retail risks in gamified and social trading. Maintaining resilience standards in the era of Frontier AI and rising cyber risk is also critical.
Commissioner Constant said, 'Today's roundtable is not about innovation for innovation's sake. ASIC's role is to provide the clarity necessary for responsible innovation, and the guardrails that keep markets stable and orderly and to keep the infrastructure operators who underpin the market, accountable and competitive. That's how we can catalyse change and continue to maintain confidence and integrity in our financial system so that innovation can be safely matched to meet the big challenges in our economy and the capital that supports it.'
This the next step in ASIC's work on promoting dynamism in Australia's capital markets (25-264MR) and ASIC's second report on financial innovation, building on its broader work to support responsible innovation in Australia's financial system (26-102MR).
ASIC will release a summary of the themes and practical actions from the roundtable. Discussions will be focused on what ASIC can and should do about the priority opportunities that innovation for safe growth offers.
