NSX Limited and Australian Securities and Investments Commission

This matter concerned an application by NSX Limited (NSX) against a decision by the Australian Securities and Investments Commission (ASIC) regarding the regulation of ASX Limited (ASXL) under the Corporations Act 2001 (Cth). The dispute centred on whether ASXL, as the operator of the primary Australian securities exchange, had a conflict of interest in its regulatory role concerning NSX, a competitor seeking to operate alternative markets. The decision was made by Deputy President Bernard J McCabe of the Administrative Appeals Tribunal.

The Administrative Appeals Tribunal was required to determine whether there was a specific and significant conflict, or potential conflict, between ASXL's commercial interests and its obligations under section 792A(1)(a) of the Corporations Act, which mandates that market licensees must do all things necessary to ensure that the market operated in a fair, orderly, and transparent way. NSX contended that ASXL had a commercial interest in hindering NSX's development and operation of alternative markets, thereby creating a conflict with ASXL's regulatory duties.

Deputy President McCabe reasoned that ASXL's interest in outcompeting NSX in the market for operating alternative exchanges could be considered a specific commercial interest of sufficient magnitude. He found that a fair-minded observer might perceive a significant risk of conflict between these commercial interests and ASXL's obligations under the listing rules, particularly if NSX proposed to deploy new settlement technology. The Tribunal accepted that ASIC might have reached a different conclusion after further investigation, but on the available information, the Tribunal was satisfied that a specific and significant conflict, or potential conflict, existed.

The Tribunal ordered that the parties have seven days to confer on proposed orders to give effect to these reasons, with provisions for submitting agreed or individual proposed orders and supporting submissions if agreement could not be reached. The reasons were to remain unpublished for 14 days to allow for submissions regarding potential redaction or suppression.