#ASX#Australian financial market#Chi-X Australia#financial infrastructure#Peter Fowler#stock exchange#trading platforms

New Kid on the Block: Chi-X Has Arrived in Australia

|Oct 27|magazine11 min read

Chi-X Global, a global provider of market infrastructure technologies and trading venues, is preparing to introduce its high-speed, low-cost, intelligent trading model to the Australian market.

Through regional trading platforms, Chi-X Global aims to provide investors around the world with the most efficient markets possible through its unique trading models. Already the daily turnover of the value of shares traded on Chi-X systems around the globe significantly exceeds the daily turnover of the ASX.

The time has come for Chi-X to enter Australia and pending the finalization of the appropriate rules by the ASIC, it will become a reality in the first quarter of 2011. The journey to drive change and launch a new financial market requires foresight and patience, as well as a commitment to value creation. Chi-X has a track record of delivering successful outcomes and remains committed to enhancing Australia’s financial markets.

BIG AMBITIONS

Chi-X’s main objective is straightforward—deliver a high-quality, fully functional, low-cost trading platform to investors in the Australian market. The stock market operator also plans on becoming an integral and valued component of Australian capital markets and financial infrastructure.

Additionally, Chi-X intends to lower the frictional cost of trading Australian equities, thus providing the right environment for the Australian market to grow and become a more liquid and deeper marketplace.

Already Australia has the largest freefloat market in the APAC region outside of Japan, and Chi-X is confident that choice in trading platforms and a reduction in trading costs will grow the Australian market further. “That’s good for Chi-X Australia, but also the overall Australian market and Australian economy,” says Peter Fowler, Chief Operating Officer of Chi-X Australia.

COMPETING WITH OLD FAITHFUL

Currently, the ASX is the primary stock exchange group and where some of the world’s major companies trade, including BHP Billiton and Rio Tinto. How can Chi-X compete with the leading market operator?

According to Fowler, “As can be seen in other markets where Chi-X trading venues already operate, we believe our state-of-the-art platform, featuring ultra low latency and extensive functionality, will achieve rapid utilization among many market participants. We are confident that given a level playing field we will compete effectively and hard, to the benefit of investors in the Australian market, against the incumbent exchange.”

While Chi-X Australia is yet to finalize its pricing, it is very confident that prices will be cost competitive.

Currently, Chi-X Australia is working with the Australian broking and investment community, conducting extensive liaison and testing to ensure connecting to Chi-X Australia is an efficient process. “We are confident all the big users and the bulk of the Australian broking and investment community are ready to connect to Chi-X Australia when our license approval process is complete,” Fowler says.

The key to being a worthy competitor is running a state-of-the-art platform that deploys technology very effectively. Fowler explains, “We are not burdened with extensive and expensive legacy systems, nor are we part of a large scale bureaucratic organization with hundreds of people. This low cost – but high quality in terms of service and functionality – base means we can afford to significantly reduce trading costs and fees for Chi-X users.”

CHI-X UNIQUE SELLING POINTS
 

  • Liquidity
Exchanges do not control or own liquidity; the market does. In a world where competition for global liquidity is fierce, liquidity moves to the most competitive and efficient outlet, whether that outlet is onshore or offshore, regulated or unregulated. It is in Australia’s interest to maintain an environment that attracts liquidity to regulated onshore markets and we believe Chi-X Australia’s platform, by making it easier, faster and cheaper to trade shares will significantly aid that objective and thereby boost liquidity.

As has occurred in other markets where Chi-X platforms have operated, Chi-X believes that its platform will bring new investors to trade on the Australian market.
  • Innovation and Service

Chi-X believes that truly competitive, technology-driven markets benefit all parties in the trading process – investors, brokers and the primary exchanges – by making the market more attractive to the global trading community, which ultimately helps to increase overall market volumes and improve investor performance.