*

ASX faces competition from CBOE Australia after regulatory

approval

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ASX criticized for governance and risk management issues

by

Reserve Bank of Australia

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ASX stock down 11.62% year to date amid regulatory

challenges

and competition

(Adds ASX share price performance in paragraph 9, adds CEO

quotes from paragraph 13)

By Scott Murdoch

SYDNEY, Oct 14 (Reuters) - Australian Securities

Exchange Chief Executive Helen Lofthouse said on

Tuesday she welcomed competition in the sector but said there

were benefits to having one "marketplace" for equities trading,

especially in price discovery.

Australian regulators last week approved a bid by Cboe

Australia, the local unit of the Chicago-headquartered exchange

operator, to list new companies on its boards, ultimately

providing direct competition to the ASX as a listing venue.

The ASX has been under regulatory pressure for a number of

failures in the past few years, primarily for equity trading

settlement delays and slow technology upgrades.

The Reserve Bank of Australia in September criticised the

ASX and said it must make "foundational changes" to its

governance, culture and risk management after last year's

trading settlement failure.

Lofthouse told a Citigroup conference in Sydney on Tuesday

that competition to the ASX could prove beneficial if it allowed

markets to grow and be more vibrant.

But she warned equity price discovery processes and

transparency could be fractured with more than one major

exchange operator.

"If you have one marketplace where everyone comes for that

price discovery, that is helpful for price transparency or

you're looking at settlement system, there are benefits for

customers if everyone is using the one settlement system," she

said

"That is the core challenge in the financial market

infrastructure, space, it's balancing the network benefits from

one provider with the competitive benefits you get from multiple

providers."

ASX's regulatory woes has weighed down the company's stock

price, with shares down 11.62% so far this year. The benchmark

S&P/ASX200 is up about 9%.

The exchange also came under fire earlier this year

after James Hardie said it had received an ASX waiver that meant

it did not need to seek its own shareholder approval to go ahead

with the $8.75 billion cash and stock purchase of U.S builder

AZEK.

Typically, companies issuing new shares worth more than

15% of its existing equity capital to fund an acquisition would

need a shareholder vote but the ASX has the power to waive that

requirement.

The ASX has said it would review listing rules around

that shareholder vote requirement and Lofthouse said the ASX was

calling for submissions on a consultation paper that would be

prepared.

"It's very understandable that investors want more

control particularly in those companies making decisions they

might not support but we need to be mindful about the vibrancy

of public listed markets," Lofthouse said.

"Companies have choices where to raise capital, there's

listed markets all around the world and private capital

options."