Australian Securities Exchange [ASX]: Learn The Vital Role It Plays In Global Commodities Markets


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In this guide to Australian Securities Exchange (ASX), we explain what the ASX is and how it works. We’ll also discuss membership requirements, fees for using this exchange, and we provide a list of brokers that give access to trading on the ASX.

What is the Australian Securities Exchange (ASX)?

The Australian Securities Exchange (ASX) is the primary securities trading exchange in Australia. The exchange offers a wide array of services including securities listings, trading, clearing and settlement across many different asset classes.

As one of the world’s leading financial exchanges, ASX plays an important role in global commodities markets.

Market Participants

ASX has listings for over 2,160 companies and issuers across multiple geographies and industry sectors. These companies and issuers have a market capitalization in excess of $1.3 trillion. ASX also runs the largest interest rate derivatives market in Asia and one of the largest in the world.

ASX Homepage

ASX’s diverse customer base includes the more than 2,100 companies and issuers it lists for trading, 180 market participants in the cash equities and derivatives markets and four exchanges for clearing and settlement.

These customers, in turn, serve corporations, pensions, fund managers and millions of retail traders.

How is ASX Regulated?

Two independent Australian government agencies – the Australian Securities and Investments Commission (ASIC) and the Reserve Bank of Australia (RBA) – oversee the securities industry in Australia.

These government regulators have broad powers to enforce the laws and regulations that govern financial markets in Australia, including the operation of ASX.

In addition, ASX has its own internal compliance group that ensures that the exchange operates within the procedures established by the entities that regulate it and the clearing and settlement facilities it operates.

ASX operates an Executive Office, which has authority to bring enforcement actions against market participants that violate the exchange’s rules and regulations. ASX has the power to administer its own enforcement actions or, in more serious cases, refer the matter to ASIC for further investigation.

Trading Products on ASX

ASX offers customers access to trading twelve different categories of products:

CategoryProductsTrading PlatformMarket Facts
SharesASX shares fall into one of three categories:
  1. Ordinary: The largest category of shares, they carry no special rights.
  2. Preference: These shares receive priority in payment of dividends.
  3. Partly-paid: Also known as contributing shares, these shares don’t require full payment of the issue price initially. The issuing company can require full payment in the future.
ASX Trade
  • Over 2,100 companies and issuers have shares listed.
  • ASX shares belong to one of two main categories - resources or industrial.
  • ASX shares are further divided into 13 sectors.
  • ASX is the eighth largest share market in the world and second largest in Asia-Pacific.
  • IndicesASX trades six broad categories of indices:
    1. Capitalization: Represent the sum of the market caps of the constituent companies
    2. Fixed Income: Measure the bond or short-term money markets.
    3. Residential Property: Measure the change in value of residential property.
    4. Sector: Benchmark the performance of a particular industry.
    5. Strategy: Track the performance of a particular strategy such as covered calls or high dividend stocks.
    6. Volatility: Measure the near-term volatility in equity indices.
    ASX Trade
  • Australia has been traditionally associated with 24 industry sectors unique to the country.
  • ASX indices are classified according to S&P’s Global Industry Classification Standard (GICS).

  • BondsASX quotes a variety of bond types:
    1. Fixed Rate: Pay a fixed interest rate for the life of the bond.
    2. Floating Rate: Pay an interest rate tied to current market rates.
    3. Indexed Bonds: Medium- to long-term bonds. The face value of these bonds adjusts to movements in a particular index.
    ASX Trade
  • ASX trades bonds issued by both corporations and governments.
  • ASX trades both simple and complex bonds.
  • Australia Ratings assigns a complexity rating to bonds so customers can understand the level of research required to understand the instrument.
  • Hybrid SecuritiesASX trades three types of hybrid securities:
    1. Convertibles
    2. Preference Shares
    3. Capital Notes

    ASX TradeHybrid securities have both debt and equity features.
    ETPsExchange traded products (ETPs) fall into six categories:
    1. Australian
    2. International
    3. Commodity
    4. Fixed income
    5. Currency
    6. Cash
    ASX TradeExchange-traded products are financial products traded on an exchange that invest in or give exposure to securities (shares) or other assets such as commodities.
    Managed FundsASX offers four types of listed managed funds:
    1. Listed investment companies (LICs) and trusts (LITs)
    2. A-REITs (Australian real estate investment trusts)
    3. Infrastructure funds
    4. Absolute return funds
    ASX TradeThese products pool the funds of individual investors and are managed professionally.
    WarrantsWarrants are a type of derivative that fall into one of two categories:
  • Investment: Medium- to long-term
  • Trading: Short-term
  • ASX TradeLeading investment banks in the world and Australia issue warrants traded on the ASX market.
    OptionsASX offers equity and index options.NTP (ASX 24 Market)Traders can use options for bullish, bearish or neutral trading strategies.
    Index DerivativesASX offers futures on stock, REIT, sector and volatility indices.NTP (ASX 24 Market)Index derivatives provide a leveraged way to trade indices 21 hours and 50 minutes each day / 6 days a week.
    Interest Rate DerivativesASX offers six types of interest rate futures:
    1. Australian short-term interest rate futures and options
    2. Australian bond futures and options
    3. Australian one session options
    4. ASX deliverable interest rate swap futures
    5. New Zealand short-term interest rate futures and options
    6. New Zealand bond futures and options
    NTP (ASX 24 Market)The ASX interest rate futures products are leveraged instruments that allow investors and traders to manage exposure to short and long term Australian and New Zealand interest rates.
    Grain DerivativesASX trades five grain commodity futures and options:
    1. Eastern Australia Wheat
    2. Western Australia Wheat
    3. Barley
    4. Canola
    5. Sorghum
    NTP (ASX 24 Market)ASX grain futures stipulate physical delivery.
    Energy DerivativesASX trades three energy commodity futures and options:
    1. Australian electricity
    2. New Zealand electricity
    3. Natural Gas
    NTP (ASX 24 Market)ASX offers base load and peak load futures for electricity and average rate options on electricity futures.

    ASX Trading Platforms

    ASX operates two trading platforms:

    ASX Trade

    This platform is a cash market trading platform modeled after one of the popular NASDAQ platforms. The platform incorporates three services that help facilitate an orderly marketplace:

    1. TradeMatch: This is the order book that gives traders the ability to enter various order types such as limit and market orders.
    2. Centre Point: This is Australia’s largest anonymous mid-point matching system and provides traders with the ability to enter more complex and advanced order types.
    3. Trade Sweep: This technology enables traders to access the features of both TradeMatch and Centre Point in the most efficient manner.

    The following ASX products use ASX Trade for executing orders:

    • Equities
    • Exchange Traded Funds
    • Exchange Traded Options
    • Warrants
    • Index Options
    • Interest Rate Securities
    • Australian Government Bonds

    NTP

    This platform allows customers access to products that trade around the clock.

    The following ASX products use NTP for executing orders:

    • Interest Rate Futures and Options
    • Equity Futures and Options
    • Agricultural Futures and Options
    • Energy Futures and Options

    Trading on the ASX takes place 21 hours and 50 minutes each day / 6 days a week.

    ASX Memberships

    To become a participant on the ASX, applicants choose between three classes of participants. Participants are allowed to obtain more than one class of participation:

    Trading: Traders can choose to be a trading participant and provide execution services for their organization and clients or a principal trader and transact only for their account and not clients.

    Clearing: Clearing participants can clear trades in the futures, cash and derivative markets. The derivative market requires traders to choose between being a general participant or a direct participant.

    Settlement: Settlement participants can settle trades for clients.

    Prospective traders should consult the ASX application brochure for additional requirements.

    ASX Becoming a Participant

    ASX Fees and Charges

    ASX charges members fees which fall into one of the following four categories:

    Fee CategoryDescription
    Participation feesParticipants pay both application and annual fees based on the participation class they obtain. In addition, ASX charges a $100 late lodgment for fees not paid on time.
    Cash market trading feesTraders pay fees in the form of basis points for trade executions. These fees are based on the security and order type and the platform used for execution.
    Designated trading representative feesDesignated Trading Representatives (DTRs) pay fees for exams and training by the exchange.
    Listed funds, warrant and structured product feesNew fund, warrant and structure product issuers pay application, turnover and annual fees to the exchange based on a variety of different parameters.

    For the full details on the amounts of these fees, traders should consult the brochure ASX Trade: Market Participant and Trading Schedule of Fees.
    ASXPricing
    Example of ASX Pricing

    Margin Requirements

    ASX assesses margin requirements based on the specific product category. Traders should consult the appropriate brochures on the ASX website as these rates are subject to change based on market conditions and regulations.

    Market Data Available From ASX

    ASX derives a variety of types of market data directly from its trading platforms:

    Price Data: Participants and customers of the exchange can enter into license agreements with ASX to obtain either real-time delayed or end-of-day market data depending on their needs.

    Company News: ASX offers a proprietary news service called ASXComNewsTM. The service reports announcements in real time by all of the companies listed on ASX. The information is displayed in graphically-enhanced PDF documents.

    Voiceline: ASX offers a loudspeaker service that announces sensitive company information as soon as it becomes available. The service is designed for professional dealing rooms.

    ReferencePoint™: A market information service that provides reports on the following:

    1. Corporate Actions: ASX processes 13,000 company announcements annually that can affect share trading. ASX makes this information available either intra-day or end of day.
    2. Dilution Factors: A file that shows change in capital for companies.
    3. Derivatix: A file that shows complete information on ASX derivative markets.
    4. Broker Trades: A trade-by-trade historic record of broker transactions.
    5. Market Shares: This end-of-day report shows broker activity by shares.
    6. Course of Sales: A complete list of every trade transaction on every instrument with broker IDs masked.
    7. Daily Official List: A theoretical portfolio valuation price and closing price, volume and value information.
    8. Master List: Contains full reference data on issues and instruments for all ASX trading instruments.
    ASXReferencePoint
    ASX ReferencePoint Announcements

    Regulated Brokers: Where Can I Trade Commodities?

    Start your research with reviews of these regulated brokers available in .

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    CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 71.00%-89.00% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

    FAQ

    Below we answer some common questions about the ASX.

    Who governs ASX?

    ASX Group is the brand name utilized by the publicly traded company ASX Limited (ASX: ASX). ASX Limited is governed by a management team and board of directors with decades of experience in financial markets.

    NamePositionAppointment
    Rick Holliday-SmithIndependent ChairmanMarch 2012
    Dominic StevensManaging Director and CEO, Executive DirectorAugust 2016
    Yasmin AllenIndependent, Non-Executive DirectorFebruary 2015
    Melinda ConradIndependent, Non-Executive DirectorAugust 2016
    Dr. Ken Henry ACIndependent, Non-Executive DirectorFebruary 2013
    Peter MarriottIndependent, Non-Executive DirectorJuly 2009
    Peter NashIndependent, Non-Executive DirectorJune 2019
    Heather Ridout AOIndependent, Non-Executive DirectorAugust 2012
    Damian RocheIndependent, Non-Executive DirectorAugust 2014
    Rob WoodsIndependent, Non-Executive DirectorJanuary 2020

    What is the history of ASX?

    In 1987, the Australian Parliament drafted legislation that combined six independent state-based stock exchanges in the country. Each of these six exchanges traced its roots to the 1800s. The combination of these entities led to the formation of the Australian Stock Exchange.

    In 2006, the Australian Stock Exchange merged with the Sydney Futures Exchange and began operating under the name Australian Securities Exchange.

    In 2010, the Australian Securities Exchange created a new corporate structure to better position itself in world financial markets. The new entity became known as the ASX Group.

    What is distributed ledger technology (DLT)?

    ASX is replacing the system used to process trades in Australia. For the past 20 years, CHESS (Clearing House Electronic Subregister System) functioned as the system for clearing and settling trades in Australia. As with systems in other developed countries, CHESS relies on a T + 2 settlement framework, which allows trades to settle with almost no errors.

    However, ASX believes that distributed ledger technology (DLT), which is the same technology used to create cryptocurrencies, offers the potential for better and more efficient results for market participants. ASX is working to develop, test and demonstrate a working prototype of this system.

    Such a system, if successful, would revolutionize the settlement of trades in the cash equity market.

    Does ASX have vendor partners?

    ASX partners with a number of vendors that provide specialized data services to ASX market participants.

    A complete listing of these partners and the ASX platforms for which they provide data is available in the publication Australian Securities Exchange Information Vendors Guide. Traders may find this list useful since it gives a good summary of the services available to traders on the ASX platforms.

    What type of educational materials does ASX provide?

    ASX offers a vast array of educational resources on its website.

    Courses: Traders can take basic, intermediate or advanced courses each of the different product categories traded on the exchange. Each course typically consists of several modules that take between five and 30 minutes each to complete.

    Games: ASX offers games on share markets for adults, teachers and school children.

    The ASX also offers free email newsletters, finance seminars, videos and webinars.

    ASX Course

    Further Reading

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