ASX Launches High-Frequency Trading Platform to be Head-to-Head with Chi-X

The Australian Securities Exchange ( ASX ) launched its high-frequency trading platform, ASX Purematch, in a bid to boost its competition with the Chi-X Australia, which has gained over 2 per cent market share in less than one month of trading.

PureMatch became available on Monday, with the initial roll out covering the top 10 stocks, namely: BHP Billiton ( BHP ), Commonwealth Bank of Australia ( CBA ), Rio Tinto ( RIO ), Westpac Banking Corporation ( WBC ), National Australia Bank (NAB), Australia New Zealand Bank (ANZ), Telstra Corporation (TLS), Woodside Petroleum Limited (WPL) and Wesfarmers Limited (WES).

Its full launch of the ASX 200 and ETFs will be on Dec 12, with trading hours from 10 a.m. to 4:12 p.m. The platform features continuous trading, with no opening, closing or intraday auction.

Among the market information products available at PureWatch are: MarketSource, PureMatch Test Facility, Signal B, ASX ReferencePoint, Broker Trades T+3, Market Shares and ASX VWAP Report.

According to the Steve Grob, director of group strategy trading systems of Fidessa Fragmentation Index - which provide free accessible data on market share, volumes traded and other vital information on the stock market and opened an office in Australia - Chi-X Australia made a stronger start compared to its counterpart in Japan since it took the latter six months to achieve what Chi-X Australia reached in two weeks.

However, Fidessa stressed that Japan, which now has a 3 per cent market share, has a more complicated clearing and settlement situation, plus is limited by a short selling ban. The site also pointed out that it is too early to draw any meaningful conclusion.

Chi-X's average trade size is about one third of the market average, which could be an early indicator of more trading activities or could just be more noise for the buy side.

The three Chi-Xs, including Chi-X Canada which has a 12 per cent market share, make very thing margins on high volumes of order through its offer of lower fees. Based on Chi-X Australia's initial performance, brokers said the new bourse would likely aim between 5 and 10 per cent market share in the next 12 months.

However, Chi-X Global Chief Executive Tal Cohen declined to disclose targets for Chi-X Australia.

"We measure our own success from our ability to take a disproportionate measure of growth in the market and the creation of a healthy ecosystem in which both the high-touch and high-frequency trading firms can both benefit from interacting with the platform," Mr Cohen told Financial News.

"Right now, the competition are happy to let Chi-X do the hard yards, breaking down regulatory burdens and making sure everyone gets smart routing technology in place. But you could guarantee that if Chi-X were to be a runway success it would find it had some competitors," Mr Grob told Financial News.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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