The primary stock exchange in Australia is the Australian Stock Exchange.Founded in 1871 the Australian Stock Exchange began as separate state-based exchanges. These exchanges actually were first established in the state capitals of Sydney (1871), Hobart (1882), Melbourne (1884), Brisbane (1884), Adelaide (1887) and Perth (1889).In 1903 at Melbourne Cup time the state based exchanges came together for the first interstate conference.The exchanges then met on an informal basis until 1937.At that point theAustralian Associated Stock Exchanges (AASE) was established, with representatives from each exchange. Over the coming years the AASE established uniform listing rules, broker rules, and commission rates. When tradingbegan it was wasby a call system, where an exchange employee called the names of each company and brokers bid or offered on each. This changed to a post system in the 1960s. Exchange employees called “chalkies” wrote bids and offers in chalk on blackboards continuously, and recorded transactions made. Two significant events happened in 1987 when all of the separate echanges merged to form the ASX and the electronic SEATS trading system was introduced.At first the electronic system only supported a limited range of stocks but eventually all stocks were moved to it and the trading floors were closed in 1990.
The exchange is now a public company and islisted on the exchange itself.Today trading is completely done with all electronic orders.In an interesting move the Australian Stock Exchange (“ASX”) changed its name to Australian Securities Exchange (“ASX”) on 5 December 2006.
In terms of their market capitalization the largest stocks traded on the Australian Securities Exchange include BHP Billiton, the Commonwealth Bank of Australia, Telstra Corporation, the National Australia Bank and the ANZ Banking Group. The mining sector also makes up a relatively high proportion of the market.By comparision there are veryfew manufacturing stockslisted.
One of the basis of the Australian Securities Exchange are the listing of stocks by index.This is an indication to the potential investor as to the most profitable segments of the market.An index listing of the top 200 shares in the ASX is know as the major market index or the S&P/ASX 200. This took the place ofthe previously significant All Ordinaries index, which still runs in tandem to the S&P ASX 200. These indexesare commonly quoted together.The other index that is commenly used is the S&P/ASX50.This index lists only the biggest stocks. The Australian Securities Exchange has become a public company and trades its own shares.Individual holdings are restricted to a small fraction of the company due to limitations by the corporations charter.The Australian Securities and Investments Commission (ASIC) regulates the Australian Securities Exchange since self-regulation is impossible in the market arena.
Trading is between 10:00am to 4:00pm on normal weekdays. The market opens in phases over the first ten minutes, with a small random time built in to prevent exact prediction of the first trades.Between 4:10pm and 4:11pm here is a closing single-price auction to set the daily closing prices.1774 stocks were listed on the Australian Securities Exchange as of June 30, 2005with a total market capitalisation of $975 billion (approximately $731 billion dollars US).
Prominent brokers that make up market share in Australia (in decreasing order) include Macquarie Bank, UBS, Citigroup, Goldman Sachs JBWere, Merrill Lynch, CSFB, Deutsche Bank, ABN AMRO, CommSec and Morgan Stanley.20% of market turnover is retail investors.30% institutional, 40% foreign, and 30% retail make up the break down of market ownership. .
The delays in entering orders into the system are minimal because the system is all electronic.A potential investor need only contact a Internet-based broker who can then generally justpass client orders straight into the system, with no processing beyond a credit check (this is called Automated Client Order Processing).As with all markets if a potential investor is considered a foreigner (i.e. not Australian based) then foreign investor rules must be adhered to.Another interesting feature to be noted of this market is that there are no market makers or specialists for ordinary shares, transactions are made directly between investors helping to ensure one of the most complication-free transactions on world-wide stock exchanges today.