The Australian Securities Exchange (ASX) is the primary stock exchange in Australia. The exchange is the eighth largest in the world and is made up of over 2,160 companies and issuers across multiple countries and industries. As of July 2022, the exchange has a market capitalization of $2 trillion. The ASX also operates the largest interest rate derivatives market in Asia as well as the world.
The ASX is located in Sydney, Australia and operates from 10:00 a.m. to 4:00 p.m. local time. The ASX also offers pre-market trading which lasts from 7:00 a.m. to 10:00 a.m. The exchange trades on every weekday except on eight designated holidays: Anzac Day, Australia Day, Boxing Day, Christmas Day, Easter Monday, Good Friday, New Year’s Day, and the Queen’s birthday.
In this article, we’ll take a closer look at the ASX. The topics covered will include a history of the ASX, a description of how the ASX is regulated, a listing of the trading products on the ASX, and an overview of the three classes of ASX membership.
A History of the ASX
The ASX was founded in 1987. However, the roots of the ASX date back to 1871. That’s when the Sydney Stock Exchange was established. The exchange merged with other state-based exchanges in 1987 to from the Australian Stock Exchange.
In 1937, the Australian Associated Stock Exchange was established independent of the Sydney Stock Exchange. This would become the predecessor to the ASX which was formed in 2006. That’s when the Sydney Stock Exchange merged with the Australian Securities Exchange. And in 2012, the Australian Liquidity Centre was formed with the purpose of housing the core trade executions of the ASX.
How is the ASX Regulated?
The ASX is regulated by the Australian Securities and Investments Commission (ASIC) and the Reserve Bank of Australia (RBA). These independent government agencies have broad enforcement and regulatory powers regarding the governance of financial markets in Australia, which includes the ASX.
The ASX also has an internal compliance group that ensures it follows the regulations placed upon it as well as its clearing and settlement facilities. Because the ASX operates as an Executive Office it has the authority to levy enforcement actions against member companies that violate rules and regulations. ASX also has the power to administer enforcement actions independent of the ASIC and/or refer the violation to the ASIC if it requires deeper investigation.
The two trading platforms for the Australian Securities Exchange are ASX Trade and ASX Trade24.
- ASX Trade – this platform allows individuals to trade equity securities in the ASX. This platform is based on the NASDAQ OMX system and is recognized as one of the fastest trading platforms in the world.
ASX Trade has three distinct services to facilitate orderly trading:
- TradeMatch – an order book that allows traders to enter a variety of order types including limit and market orders.
- Centre Point – Australia’s largest anonymous mid-point matching system allows traders to enter more complex and advanced order types.
- Trade Sweep – This enables traders to use the features of both TradeMatch and Centre Point in the most efficient manner.
- ASX Trade 24 – this platform is allows individuals to trade derivative securities on the ASX. This is a global platform with gateways in New York, London, and Sydney. As its name suggests, this is a 24-hour trading platform.
What are the Three Classes of Membership for ASX Companies?
The ASX offers three membership classes. ASX members have to fit into at least one of the classes. However, participating companies can become a member of more than one class. The three classes are as follows:
- Trading – These members are trading participants and provide execution services for their organization and clients. This also includes principal traders who make transactions only for their account and not for clients.
- Clearing – These members can clear trades in the futures, cash, and derivative markets.
- Settlement – These participants can settle trades for clients.
The Final Word on the ASX
The Australian Securities Exchange is one of the world’s leading exchanges. Like all exchanges, the ASX is connected to other leading financial hubs and facilitates its trades through electronic trading. In addition to trading, the ASX has a strong educational component and offers free resource for visitors, investors and listing companies.
