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ASX joins global push

THE Australian Stock Exchange could be one of nine sharemarket administrators behind a push to create a twenty-four hour trading market valued at around $34 million.

An ASX spokesman confirmed the New York Stock Exchange, which is the driving force behind this globalisation push, had approached it to be a participant.

Other exchanges that have been approached are those operating the Hong Kong, Tokyo, Brazil, Mexico, Toronto and Euro Next markets. The Euro Next market comprises the Amsterdam, Brussels and Paris exchanges.

These exchanges will be meeting in the next couple of months to set in place the details as to how the new exchange will work.

The motivation that has been evident to this point is to achieve a seamless, twenty-four hour trading system with selected stocks being invited to participate.

It is presumed a seamless trading system would allow Australian investors to trade in Australian

currency.

The choice of stocks would be based upon their capitalisation and liquidity.

The system will be a quote driven one, similar to that already utilised in Australia.

The overriding consideration in the new exchange will be to achieve a truly global market structure with sufficient prudential controls in place to not inhibit trading that may occur.

Transparency will be paramount in the trades that will be undertaken.

It is hoped Australia will play a dominant role in the establishment of the controls required if this type of market does come to fruition.

The ASX has, over many years, been able to demonstrate that it has strong and effective controls on the operations of our stock exchange.

In fact, it is probably fair to say our exchange has been a leader in the establishment of prudential controls to regulate traders and investors.

Some analysts have expressed reservations as to the gravitation towards large capitalisation stocks on a worldwide basis.

An ASX spokesman pointed out that this is a phenomenon that already occurs in each individual market with the top 100 or so stocks attracting far more by way of trade than other, smaller capitalisation stocks.

The establishment of a world market will do nothing other than to achieve this on a global basis.

As long as the same transparency of transactions in the Australian market is transferred to this world market, it appears there are enormous benefits to be achieved.

However, it will become more important for investors to access good advice when undertaking transactions.

It is difficult enough to research the companies listed on the ASX now, let alone now looking at a much larger universe of stocks.

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