The Australian Securities Exchange (ASX) has outlined plans to slash its trading fees and introduce a system aimed at high frequency traders as it prepares to face up to new competitor Chi-X.
Earlier this year the Australian government gave in-principle approval for Chi-X to launch a trading platform in the country, finally busting the monopoly long enjoyed by the ASX.
With its dominance about to be challenged, the bourse says that from 1 July headline trade execution fee will be reduced from 0.28 basis points (bps) to 0.15 bps. On-market crossing and off-market crossing execution fees will be reduced from 0.15 bps to 0.10 bps, and from 0.075 bps to 0.05 bps respectively.
The bourse is also rolling out technological upgrades, with new order functionality for the ITS central limit order book made available on 28 June 2010. The functionality will also be available on ASX TradeMatch, which will replace ITS when it is implemented on the new low latency ASX Trade platform in November.
In addition, VolumeMatch, a new large order execution facility will be launched this month with PureMatch, a trade execution service aimed at high-frequency traders anticipated to follow in the second half of next year. A smart order routing product and expanded co-location facilities will follow in 2012.
Says a statement: "A reduction in ASX headline fees will lower the direct costs of trading for ASX participants, while the new systems and order type functionality will continue to lower the market impact costs of trading on ASX markets. These innovations are important because market impact costs, such as price slippage, represent a far larger proportion of the overall costs of trading than the transaction fees charged by ASX."