After ASX cancelled a costly overhaul of its trading platform, the federal government said it was opening up the market to let other players in.

That required new legislation which was passed by the Senate on Wednesday. The legislation also gives the Reserve Bank of Australia and corporate regulator the Australian Securities and Investments Commission greater power to set operating standards and intervene on pricing and access disputes, the government said.

"It creates a framework for fair, transparent and non-discriminatory access to market infrastructure for any emerging competitors, allowing them to offer their own clearing and settlement services," said Treasurer Jim Chalmers in a statement.

ASX was not immediately available for comment. Its shares were 0.6% lower on Wednesday, in line with the broader market. The legislative change had been widely flagged by the government.

Though Australian financial regulators have called for greater competition in clearing and settlement functions for years, a failed overhaul of ASX's all-in-one legacy software system renewed pressure from market participants to challenge its near-monopoly.

In other major financial markets, clearing and settlement, or confirming the transfer of stock ownership and updating share registries, are managed by separate entities to the market operator.

(Reporting by Byron Kaye; Editing by Simon Cameron-Moore)