Securities Industry Could Not Handle Privatisation
Sydney Morning Herald
Wednesday September 2, 1987
Australia's securities industry would be unable to handle the sudden and massive increase in private share ownership from privatisation without electronic share transfer systems, according to the ANZ bank's general manager, investment and trust services, Mr Doug Watson.
"Experience in Britain shows that each public sector organisation which was privatised added 25 per cent to the volume (of stockmarket turnover)," Mr Watson said in a statement.
"The back offices of stockbrokers, registrars and custodian companies alike in Australia would find this increased load impossible to handle under existing systems."
Mr Watson, whose unit includes ANZ Nominees, said the impact of privatisation in Australia will largely depend on whether share issues are in big or small parcels. The paper work would be enormous if every Australian telephone subscriber is offered 100 shares in Telecom.
"The only solution is to adopt electronic share transfer systems which will make it unnecessary for paper to change hands," the statement said.
Governments, the stock exchange, stockbrokers and share registrars must agree on a common approach, establish timetables and bring forward the implementation date.
"It is reported that 1990 is the earliest practical date for the new electronic system," he said.
"This would need to be brought forward substantially to ensure that it was operating effectively before the impact of privatisation was felt on the market.
"If Australia fails to move fast on this matter, it will not only make privatisation a technical impossibility, but it will also affect our ability to compete internationally as an efficient securities market."
Australian stockmarket turnover this year is already double that of one year ago, he said.
Australia should pay careful attention to the experience in Britain, where backlogs have reached $14 billion dollars and the stock exchange is introducing fines.
© 1987 Sydney Morning Herald