National Market System (NMS) in Australia: 2025 Guide for Investors

The National Market System (NMS) is a term that’s long been central to the US share market—but in 2025, it’s making waves in Australia. As the Albanese government and ASIC signal interest in market structure reform, it’s crucial for Aussie investors, brokers, and fintechs to understand what an NMS could mean for the local landscape. Could it revolutionise transparency, competition, and execution quality, or is it just another piece of regulatory red tape?

What is a National Market System—and Why Now?

The NMS originated in the United States in the 1970s, designed to foster fair, efficient, and transparent trading across multiple exchanges. Rather than trades being confined to a single exchange, the NMS links various trading venues, allowing investors to access the best available prices nationwide, regardless of where a stock is listed. In 2025, Australia is actively reviewing the merits of a similar system, driven by:

• Growing competition between the ASX and alternative trading venues (like Chi-X, now Cboe Australia)
• Increasing retail investor participation and demand for best-execution guarantees
• Calls for transparency and fairer access amid rapid advances in algorithmic and high-frequency trading

ASIC’s 2025 policy review, following the recommendations from the Council of Financial Regulators, is weighing up whether an NMS could streamline fragmented trading and ensure investors always get the best deal.

How an NMS Would Change the Game for Aussie Investors

If Australia adopts an NMS, the trading landscape could undergo significant transformation. Here’s what investors and industry players can expect:

• Best-Price Execution: Orders would be routed to the venue offering the best available price, not just the default exchange. This could mean tighter spreads and better outcomes for both institutional and retail investors.
• Greater Transparency: A consolidated tape would aggregate real-time price and volume data across all venues. Right now, access to this data is fragmented and often costly—an NMS could democratise information, levelling the playing field.
• Increased Competition: By reducing the ASX’s dominance, alternative venues could attract more liquidity, spurring innovation in trading products and services.
• Tech and Compliance Upgrades: Brokers and platforms would need to overhaul their routing systems and compliance protocols to align with new regulations and reporting standards.

Globally, the US NMS has had both fans and critics. While it’s improved price discovery and reduced costs, it’s also led to complexity and regulatory arbitrage. Australian policymakers are studying these lessons closely as they chart a local path forward.

Key Policy Developments and Industry Reactions in 2025

So where does Australia stand right now? The 2025 ASIC consultation paper, released in February, outlines several potential models for an NMS. Key proposals include:

• Mandating a consolidated tape provider to deliver real-time, low-cost market data to all investors
• Implementing order routing requirements for brokers to ensure best-execution across venues
• Enhancing market surveillance by giving regulators comprehensive visibility over all trades

The ASX has expressed cautious support, provided the system doesn’t undermine its market integrity. Alternative venues like Cboe Australia are backing reforms that promote competition. Retail brokers, meanwhile, are eager for clarity on compliance costs and the practicalities of routing across fragmented markets.

Some critics argue that an NMS could favour large players with advanced technology, or that it could dampen innovation by imposing a ‘one-size-fits-all’ regulatory regime. Others warn of potential cost increases if data access fees are not tightly controlled.

What Should Investors Watch For?

For everyday investors, the core questions are simple: Will an NMS mean better prices, lower costs, and a fairer market? Or will the benefits be swallowed up by complexity and compliance overheads? As policymakers continue consultations and industry feedback rolls in, watch for:

• Final recommendations from ASIC and the Council of Financial Regulators, due later in 2025
• Announcements from the ASX, Cboe Australia, and major brokers on their readiness and strategic responses
• Potential pilot programs or phased rollouts to test NMS technology and rules
• Impact on brokerage fees, market data costs, and the quality of retail trading platforms

Whether you’re an active trader or a long-term investor, the shape of Australia’s market infrastructure is set for a shakeup. Staying informed now could mean seizing opportunities—and avoiding pitfalls—when the dust settles.