Australian Securities Exchange (ASX)
Australian Securities Exchange (ASX) with headquarter in Sydney is the primary marketplace for securities trading in Australia.
The Australian Securities Exchange or ASX is the main stock exchange group in Australia and its owner is the ASX Limited, located in Sydney, Australia. The currency used is the Australian dollar. The total number of listings is 2192 as of June 2010. It has a market capitalization of 1.65 trillion Australian dollars as of June 2010. This is a multi-asset electronic platform that offers different investment products such as stocks, company-issued right and options, fixed-interest securities, exchange traded options, futures, contracts for difference, ETFs, real estate investment trusts and warrants.
The Australian Securities Exchange has shown tremendous growth in the last fifteen years. It is a fully electronic exchange which uses SEATS or Stock Exchange Automated Trading System to manage its trading. This exchange performs the function of a clearing house, market operator and a payments system facilitator. It also educates its retail investors by providing them with educational content like free online courses which relates to the products sold by the exchange.
Although there are plenty of other stock exchanges in Australia that mirror the ASX but this stock exchange is considered as the main hub for investing purposes. In the past it has made great returns for its shareholders and there are a lot of benefits for listing on the ASX and that is why a lot of companies choose to list it on the stock exchange for the purpose of making it public. One of these benefits is that these companies can get the attention of the public and media when listed with ASX and also it is a great way to raise funds.
The trading hours of the Australian Stock Exchange can be segregated into three parts:
Pre-market session - This session starts from 7am and stretches till 10 am AEST.
Normal Trading session - This session extends from 10am to 4pm AEST. In this session, all the investment products are traded on an integrated trading platform during the normal trading hours.
Post-market session - This session starts right after the normal trading session ends and it extends till 7pm AEST.
In addition to this there is a single-price auction that is takes place from 4.10pm to 4.12pm AEST everyday to set the daily closing prices. The trading hours applies to all days from Monday to Friday with an exception of public holidays, which are declared by Australian Securities Exchange in advance.
All the trading in the Australian Securities Exchange is conducted on two systems:
- ITS or Integrated Trading System - This system was used from 2nd October 2006 for the purpose of trading of warrants, shares, company-issued options and rights and fixed-interest securities. It is also known as the Click-XT system, it can process much more transactions in comparison SEATS and allows multiple-order transactions, i.e. up to five orders per transaction.
- SEATS or Stock Exchange Automated Trading System - This is an older system used by Australian Securities Exchange. It works on the basis of price priority, time priority, accepted market orders or limit orders.
Main Stock Indices
The stock indices of the Australian Securities Exchange are as follows:
- S&P/ASX 20 - This index comprises of 20 of the largest companies that are listed with Australian Securities Exchange; it is subject to qualifications.
- S&P/ASX 50 - This stock market index contains the list of 50 Australian companies that are listed on the exchange from Standard&Poor's. This exchange is a part of the Standard & Poor Global 1200.
- S&P/ASX 100 - It consists of 100 largest companies listed on this exchange.
- S&P/ASX 200 - This is a market capitalization weighted index, it is also float-adjusted. All the Australian stocks listed on this index are from Standard & Poor's.
- S&P/ASX 300 - Another float-adjusted and market capitalization weighted index, this one contains companies listed in the S&P/ASX 200 index and in addition to that it contains 100 smaller companies. The components of this index are reviewed by Standard&Poor's.
The Australian Securities Exchange initially comprised of six separate exchanges that were established in Melbourne, Hobart, Sydney, Brisbane, Adelaide and Perth separately. In the year 1937 the representatives of each of these exchanges came together to form the AASE or Australian Associated Stock Exchanges.
In 1987 the Australia Stock Exchange Limited was formed by legislation of the Australian Parliament. This legislation made the amalgamation of the six independent stock exchanges possible. After its demutualization, the Australia Stock Exchange Limited or ASX was the world's first exchange which had its shares quoted on its market. On October 14th 1998 the ASX was listed. In the same year ASX was the first major exchange which decided to demutualize and list the shares covered by it.
On March 27th 2006, the Australian stock exchange announced its cash-and-stock offer for the SFE. This happened seven years after the blocking of the abortive takeover by domestic antitrust officials. On 7th July 2006, the stock exchange merged with SFE Corporation.
Written by: Goran Dolenc
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