COMPETITION to the Australian Securities Exchange is being rushed for no good reason. Competition is a good thing when consumers benefit, but in this case, benefits are unlikely to materialise for retail investors.

The ASX monopoly has had its critics for years, but the fact remains that it has consistently operated an orderly market.

It has gone to great lengths to raise the standards of governance of the companies listed on its exchange and, most importantly, for average investors the cost of buying or selling a share has fallen with the advent of online brokers.

The ASX isn't perfect, and its profit-seeking nature hasallowed all manner of no-prospect micro-companies to be exposed to the unsuspecting investing public.

So what are the benefits of bringing in new players?

The introduction of computerised bids and offers may provide a small amount of extra liquidity, but this is unlikely to have any effect on retail shareholders in all major stocks, who can currently easily execute their transactions.

The competition may force the ASX to reduce the fees it charges per trade, but most retail shareholders' trades cost less than $25, so the savings will be minuscule.

Then there is the problem of moving regulatory oversight away from the ASX.

The Australian Securities & Investments Commission is to take over responsibility for issues such as market manipulation as a precursor to opening up the market to new entrants.

It will be a miracle if it is operational and effectively identifying wrongdoing and announcing enforcement action this year.

There is also a raft of system changes brokers will need to implement, and no doubt the consumer will bear the cost.

Ensuring orders get the best price available is one aspect brokers must incorporate and another is ensuring the regulator can recreate a share's trading history to investigate anomalies.

That the US still cannot tell if the recent 1000-point fall in the market was attributable to "fat fingers" or genuine panic is a poignant lesson for regulators.

At a minimum, brokers should have to advise their clients which platform the trade occurred on.

At present, the ASX has the National Guarantee Fund to protect investors in severe cases, but it is unknown what protection new entrants will offer, and investors have a right to know. Costly system changes may increase prices for retail investors.

If the ASX were to raise these issues it would be accused of acting with self-interest, but retail investors have cause for concern.

This article by Stuart Wilson, Chief Executive Officer of the Australian Shareholders' Association featured in his weekly Shareholder Opinion column in The Australian on Tuesday, 17 May 2010.