ASX dreams up new ideas to attract foreign listings

Friday 19th April 2002

In the news here, the ASX has been the villain for changing its foreign-exempt listing criteria, much to the chagrin of the NZSE, which must be fearing a shift of some of its biggest local companies to eventual primary listing in Australia. Attempts at intergovernmental level to get the Aussies to give Kiwi listings a soft deal under CER predictably fell over.

The ASX is going upmarket in the size of companies it will accept as foreign exempt and this applies to every country's stocks that might wish to list there. At stake is international prestige for the Aussie bourse as it goes cherrypicking foreign listings. Exchanges that want to borrow a cup of sugar need not apply.

A listed company, the ASX has profits to make and shareholders to feed. It was peculiar hearing it being accused of making a commercial decision about changes to foreign- exempt listing rules by an NZSE gearing up to demutualise.

One would hope that the revamped NZSE Mark II would be commercially-driven in its decision-making as well. Shareholders would expect as much.

The ASX's website reveals a slick, go-ahead exchange determined to keep its place in the international capital markets scene. The firm has been rolling out a range of products and services over 2001-2, with more planned to come.

Of interest, for example, is roll-out of the ASX World Link service, which allows Aussie punters to trade and invest in shares listed on the US and Singapore stock markets. Australian brokers are accredited by the ASX to offer World Link.

The client places an order with his broker for American or Singapore shares, and settles in Australian dollars, the currency in which he will also receive any dividends.

The ASX holds the foreign shares through an entity on behalf of the investor, who receives a Clearing House Electronic Subregister System (Chess) holding certificate as proof of beneficial ownership.

About 50 stocks are offered on the Singapore exchange, although it is strange that Brierley Investments was not on the list.

There were some of a colonial flavour, like Raffles Holdings and Straits Trading Company, others which remind us that the Lion City is primarily a maritime nation such as Neptune Orient Lines, and of course loads of "Sing stocks" - SingTel, Singapore Airlines, Singapore Airport Terminal, Singapore Exchange and so on.

I gave up counting the list of US shares available but they started at 3Com Corporation and finished at Yahoo! In the "A" though, there are ABN AMRO Holdings N. V., Amazon.com, American Express, AOL Time Warner, and Apple Corporation. Enron was not to be seen in the "Es."

All pretty thrilling for the Australian wanting to trade abroad. Nifty also are the fairly new ASX-listed mini-futures contracts, the Mini50 and ASX Mini200.

These track S&P/ASX50 and S&P/ ASX200 respectively.

The mini contracts trade at only $10 a point, instead of the usual $25 to $100, which gives them appeal to a wide range of traders.

The contracts are based on the runaway successes of the E-Mini S&P 500 and E-Mini Nasdaq 100, which are among the world's top 10 most actively traded futures.

By the end of this year the ASX hopes to roll out a new funds-management backroom service - ASX Fund Connect - that will administer unlisted managed funds.

The service looks very much like a wrap account, but the exchange seemed to avoid the name, perhaps because it is not for listed products also.

However, the new whizz-bang black box will introduce the paperless office to countless institutions and fund managers. It will handle transactions, payments, reporting and supply of information and prospectuses. The exchange may have been quite cunning to go down this route because it will gain a foothold in the managed-funds industry alongside its stranglehold on stock transactions.

At least the NZSE got the jump on the ASX by introducing its listed TeNZ index fund, but never shy to import a new idea, the Aussies have their own versions of Exchange Traded Funds (ETFs), launched as of August last year in partnership with State Street Global Advisors.

Apparently the Aussie bourse also does a roaring trade in share options, which can be covered against stocks held by investors via Chess.

The ASX looks to be an entrepreneurial company determined to copy or dream up new ideas to bring share trading and related activities into every Aussie home. It almost makes you want to go and live over there.

Quite a few NZSE listings probably will. It is a pity the lack of harmony in regulatory frameworks transtasman stymied the proposed ASX-NZSE merger.

What stands to be left of our own sharemarket will not have quite the same thrills on offer.

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