The Australian Securities Exchange (ASX) is one of the world’s foremost stock and commodity exchanges, being one of the world’s top ten exchanges in terms of market capitalisation. As a commodity exchange, it is especially well placed to take advantage of the energy commodities and agricultural commodities that will flow from the development of Australia’s vast interior in the 21st century.
The Australian Securities Exchange has its roots in the stock exchanges that were set up in each of Australia’s state capitals in the 19th century, as economic development gathered pace in the six colonies then comprising Australia. The first was set up in Melbourne in 1861, and by 1889 exchanges had been founded in Sydney, Hobart, Brisbane, Adelaide and Perth. Though the six colonies federated in 1901 to form the Commonwealth of Australia, it wasn’t until 1937 that moves to provide a nationwide stock exchange system became something other than informal with the formation of the Australian Associated Stock Exchanges. This relationship was finally formalised in 1987 with the creation of the Australian Stock Exchange.
The other strand of the ASX’s history comes from commodity exchanges rather than stock exchanges. Though commodity trading has a long history in Australia, the first formal commodity exchange, the Sydney Greasy Wool Futures Exchange, was founded in 1960. More commodities were added to this embryonic exchange, with it eventually gaining the title of the Sydney Futures Exchange.
Finally in 2006 the Australian Stock Exchange and the Sydney Futures Exchange merged to form the Australian Securities Exchange. This merger created one of the world’s top ten exchanges, one whose importance will only increase as the next few decades are likely to see ever greater demand for Australian energy commodities and agricultural commodities.
The Australian Securities Exchange has two systems for participants (members) to trade on the ASX. The first, also named ASX, allows trading in equities and related derivatives from 10:00am to 4:00pm AEST. The second, ASX 24, allows trading on these products over 24 hours, and also allows trading in a number of other products such as commodity futures and options. It is self-evident that the latter is much more attractive to foreign individuals and organisations that wish to trade on the Australian Securities Exchange.
Benefits for traders signing up to either of these systems include permission for limited use of ASX branding, listing on the ASX’s online ‘Find a Broker’ service, and protection from adverse events by inclusion in the National Guarantee Fund. The corollary is, of course, that ASX Participants must agree to be regulated by the Australian Securities Exchange.
The Australian Securities Exchange includes a mix of traditional and newer commodities on its list of products, going from basic agricultural and energy commodities through to emerging classifications such as environmental commodities.
The commodities traded on ASX are:
- Agricultural commodities: Australian Canola, Australian Feed Barley, Australian Milling Wheat (NSW), Western Australia Wheat, Broad Wool, China Type Wool, Fine Wool, Greasy Wool.
- Energy commodities: Australian Electricity, New Zealand Electricity, Natural Gas (Victorian Wholesale Gas)
- Environmental commodities: Australian Emissions Units (AEUs), Certified Emission Reductions (CERs), Renewable Energy Certificates (RECs). A Water Trading market is proposed by the ASX, with research into viability ongoing.
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