It could be soon “ BYE BYE ASX” as Chi X gets closer to starting its own exchange here in Australia.
Australia’s securities market regulator will tomorrow outline steps to open the country’s equity market to foreign competitors for the first time in its 150-year history. Australian Financial Services Minister Bill Shorten will sign off on the Australian Securities & Investments Commission’s licensing plans later today
From ASX To Chi-X Australian trading exchange
Chi-X Australia Pty, a unit of Chi-X Global, sought to begin operating as early last October before rescheduling the launch to the first quarter of this year. The operator, which applied for a license in 2008 and won “in principle” government approval last March to start a rival service, has said it can’t give a start date until ASIC’s licensing timeframe is published.The Nomura-owned aspirant will probably get the formal licence tick-off from Financial Services Minister Bill Shorten in April, subject to a succession of minor administrative hurdles, the main one being the Australian Securities and Investment Commission’s market handbook, the Market Integrity Rules. Chi-X Europe is among Europe’s largest equity exchanges, allowing participants to trade equities across major European markets at significantly lower costs and faster speeds than many of the markets of listing.
The licence application has been held up mainly by concerns about whether Australia could face something like the "Flash Crash" of May 6 in the US, where a lack of co-ordination between rival sharemarkets caused orders to cascade from market to market, pushing the Dow Jones Industrial Average down by more than 1000 points at one stage.
Merger between Australian Exchange and Singapore exchange
Introducing competition in Australia’s exchange market is a key pillar of plans by the Labor Government led by Prime Minister Julia Gillard to help turn the country into a global financial hub. The licensing of foreign competitors may help pave the way for approval of a A$7.6 billion ($7.67 billion) merger between ASX and Singapore Exchange Ltd., which is facing opposition from some lawmakers in Canberra.
A start date for competing exchanges was delayed last year by the transfer of new powers to ASIC and a general election that returned Labor as a minority government. ASIC said Chi-X planned to have a phased soft launch, meaning not all ASX participants would be connected to the new bourse when it started operations.
Chi-X, which is owned by Instinet, a subsidiary of Japanese broking giant Nomura, operates in Europe, Canada and parts of Asia. In almost every case, it has done a deal with one of the major international clearing and settlement operators. In Europe it uses EMCF, which is jointly owned by Fortis and Nasdaq, and in Asia it uses LCH Clearnet’s EquityClear service. Put simply, it can use the one existing clearing and settlement facility if equal and efficient access occurs.
Singapore Exchange, which runs the city’s securities and derivatives market, offered to buy ASX on Oct. 25 in a cash and share deal then valued at A$8.4 billion, a 42 percent premium to ASX’s share price at the time. ASX shares this week fell to their lowest level since before the bid was announced as a computer glitch halted trading and cut turnover by more than A$2 billion from the daily average.