Financial System Inquiry Submissions Focus on Australian Superannuation

Industry Super Australia (ISA), representing Australian Superannuation funds, wanted the government’s financial system inquiry to impose taxes on high-frequency trading (HFT). ISA is the umbrella organization for the industry superannuation movement, and it manages collective projects on behalf of its members.

High-frequency trading uses powerful and sophisticated computers to rapidly trade large number of securities and stocks and is characterized by short retention period of portfolios. The platform utilizes complex algorithms that analyze markets, which automatically execute orders based on market conditions.

Financial System Inquiry Submissions Focus on Australian Superannuation

The Australian mentioned that global attention on high-frequency trading was triggered by allegations made by noted US author Michael Lewis that the HFT industry was taking in billions of dollars in profit at the expense of the rest of the market.

Australian Superannuation, through ISA policy head Zac May, pointed out that high-frequency trading practice tilted market balance in its favor to the detriment of the share market to the tune of $2 billion annually.

Australian Superannuation arrived at the figures by multiplying a quarter of all market trades by the average time that elapsed between the bid and offer prices for stocks representing the top 200.

May, formerly connected with the US Securities and Exchange Commission, shared the same view as Lewis by demanding levy on HFT transactions and enactment of rules to slow the pace of trading, reported the Sydney Morning Herald.

He added that Australian superannuation invested money on real companies and Australian economy. High-frequency trading, on the other hand, does not, according to the Australian superannuation head.

Westpac Banking Group (Westpac), in its submission to the financial system inquiry, wanted the government to convince Australian superannuation members to invest some of their money in bank deposits to help lighten the economy’s capital deficit. Westpac made the suggestion amid fears of a widening fund shortfall that could leave banks with little capital to finance further expansion of the economy.

The Australian Superannuation stated in its submission to the financial system inquiry that raising productivity levels is necessary given the challenges that the economy faces from “an ageing population and the end of the mining sector boom.” It adds that based on its research “the regulated superannuation sector is one-third more efficient than the banks at capital formation.” Continue Reading here¬†

Australian Superannuation suggested superannuation will become the banking industry’s partner in funding further growth of the economy considering that it expects superannuation to surpass the financial assets of banks in the next 15 to 20 years.

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