Stockbrokers will have an alternative market for trading Australian shares for the first time on Monday when Australian Stock Exchange rival Chi-X opens for business.
Chi-X, a subsidiary of Chi-X Global, owned by Japanese finance group Nomura, has said it will reduce costs and increase efficiency in trading shares and will introduce competition in the Australian market.
The Australian Stock Exchange, operated by the listed ASXGroup, has until now been the only venue for trading of Australian equities.
Chi-X makes its debut after the ASX suffered a four-hour shutdown on Thursday, October 27, due to a technical glitch.
A total of 24 brokers have registered to trade on the new market, with 22 of those, including major firms such as Commonwealth Securities and Goldman Sachs, approved to start trading from Monday.
The rival exchange will operate in a trial mode for the first six days covering two three-day settlement cycles and will list only eight stocks, including BHP-Billiton, QBE Insurance, Woolworths and Leighton Holdings.
After the trial period, brokers will have the option of buying and selling Australian shares through the ASX or Chi-X.
Stock market observers will notice see no immediate difference in how market movements are reported as Standard & Poors, which compiles Australian share market indices such as the S&P/ASX200 and All Ordinaries, saying it will not consider including data from the new market unless “the index would benefit” from its inclusion.
Chi-X spokesman Hugh Fraser said the rival market was expected to start with extremely low volumes traded, giving no indication of its full potential until 2012.
The ASX Chi-X will be operating in the cash market trading space which represents less than seven per cent of the ASX’s revenue.
Most of the ASX’s revenue comes from derivative trading, an area which Chi-X chief operating officer Peter Fowler has reportedly indicated his group may target.
ASX chairman David Gonski said in September that the ASX was “ready for the new environment and has been working on its preparedness for several years”.
