Innovations for the Stockbroking Industry in 2017

  • MFunds – Launched in March 2014 as an easy way to access unlisted managed funds by going “paperless” and reducing AML requirements. From February this year, products with long-form PDS such as hedge funds and derivative products were allowed on MFund for the first time. Until now, only products with short-form PDS were allowed on MFund.
  • New ASX futures trading platform – In March 2017, the ASX replaced ASX Trade 24 with an upgraded derivatives trading platform that permits more dynamic combinations for option strategies and has new order type features. The new platform is more flexible and scalable than its predecessor.
  • Replacement of CHESS System – The CHESS system was developed by ASX over twenty years ago. It is a core system for the stock market in that it performs the processes of clearing, settlement and asset registration. In January 2016, ASX partnered with Digital Asset Holdings to develop, test and demonstrate a working prototype of a post-trade platform that could replace CHESS using distributed ledger technology (DLT, which is more commonly known as “blockchain”). A key decision is expected to be made by ASX towards the end of 2017 on whether to commit to implement DLT with the purpose of replacing CHESS.
  • Chi-X Launch of New Indices* – Chi-X is planning to launch new indices in the near future, including the Chi-X 200 Index that will cover the top 200 Australian stocks. It is unique in the sense that it will not include chess depository interests (CDIs) and international stocks. Consequently, the index will exclude stocks that are listed on the S&P/ASX 200 such as Fletcher Building and Resmed. This index will be launched in conjunction with other benchmark indices and they hope to follow that up with an ETF based on the Chi-X 200 index. *Subject to final regulatory approvals
  • Chi-X TraCRs – Expected to be launched sometime this year, transferable custody receipts (TraCRs) will become available for trading on Chi-X. A TraCR is based on an underlying asset that is located on the primary index of an overseas market (e.g. NYSE and NASDAQ). It is an investment vehicle that can help diversify portfolios and offer exposure to overseas stocks. TraCRs offer the advantages of being listed on an Australian stock exchange, receiving dividends payments in Australian dollars and being protected by Australian regulations.
Sources*:
Dominic Stevens – Chief Executive Officer, ASX Limited
Dr Shane Miller – Director, Chi-X Australia
Blythe Masters – Chief Executive Officer, Digital Asset Holdings
*Attended the Stockbrokers and Financial Advisers Association Conference (SAFAA) 2017
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