SINGAPORE, Dec. 20 (UPI) -- The Singapore Exchange Ltd., or SGX, and Australian Stock Exchange Ltd. -- ASX -- were the first two exchanges in the world to launch a live direct securities co-trading linkage, with the joint venture debuted Thursday. The new trading arrangement is designed to deepen the pool of investors by providing direct links for investors in both countries.
Stock exchanges around the world have been seeking out joint ventures, alliances and mergers, as they strive to increase liquidity and reduce trading costs in a global economy.
Through this linkage, investors in Singapore are now able to trade selected Australian securities directly in ASX, and vice versa, through local brokers in their home countries, during such hours when both stock markets are open.
The ASX has already expressed its interest to extend this linkage to derivatives too, while the SGX is also exploring similar opportunities for equities and derivatives with the Tokyo Stock Exchange, a SGX spokesman said.
"Today, we witness history in the making. With the launch of the SGX-ASX link, we begin a new chapter in global securities trading. It is a significant day, not just for the Singapore and Australian stock exchanges, but also for the investors, brokers and listed companies of both markets. Today's launch represents the realization of a shared vision to build a gateway across markets that adds value to our customers by its cost effectiveness and ease of use," said SGX CEO Thomas Kloet at the launch presentation.
Under the new trading link, Australian investors will have access initially to 50 stocks quoted on the SGX, while Singaporean investors will have access to 49 Australian stocks plus two indices. These securities were selected on criteria such as inclusion in a share price index, liquidity, market capitalization or familiarity. It is expected more securities will be added to the list as market interest develops.
Investors will be able to buy shares in the other market through their own brokers, in their own currency, buying directly into the market where the trade in those securities is most liquid.
Once a transaction is settled, the securities will be held in an omnibus custody account with each exchange's nominated custodian on behalf of the investors, just as usually occurs now with institutions overseas-held securities.
Citibank Worldwide Securities Services was appointed by The Central Depository Limited, the securities clearing and depository division of SGX as securities custodian and settlement agent for Australian securities traded via the co-trading linkage between SGX and Australian Stock Exchange. Bank of New York has been appointed for the Australian side, an ASX spokesman said.
Singapore brokers said there was likely to be more interest on the part of Singapore investors initially.
On the first day of trading an overall total of 422,000 shares traded with a value of $399,500 ($782,000 AUSTRALIAN).
Kloet said "We are encouraged by the positive response on the first day of trading. We will continue to work closely with the Australian Stock Exchange and our broking community to educate investors on the opportunities presented by the SGX-ASX co-trading link."
