Niche securities exchange Asia Pacific Exchange Limited (APX) moved another step towards commencing operations after the Australian government approved variations to its market licence, integrity and operating rules and compensation arrangements.

After a number of regulatory conditions are complied with, the changes will permit APX to commence operating an exchange market in Australia.

APX was granted a stock exchange license by Australian Securities and Investments Commission (ASIC) in August 2004.

It was purchased by AIMS Financial Group (AIMS) in 2008.

“We have spent the last one and a half years working on regulations around market integrity, listing rules and new operating systems,” George Wang, deputy chairman of APX and chairman and chief executive officer of AIMS Financial Group, said on Tuesday.

He said APX is looking to bridge the gap between the Australian and Asian, particularly Chinese, capital markets by offering an alternative exchange for Australian and Chinese companies.

APX will be targeting growing companies rather than focusing on companies of any particular size as these are the ones most attractive to Chinese investors.

While not being sector specific, Wang said he expects that APX will attract companies from the mining, property and high-tech sectors, as well as franchises.

Wang said Australian companies that want to open up marketing in China and attract Chinese capital will also want to list on APX.

APX has a service centre in Shenzhen to attract Chinese companies and undertake due diligence on those seeking to list on APX.

Wang said while APX is still working on the details around the regulatory conditions, he “hopes to have the first company listed and trading by the end of the year.” 

APX doesn’t intend to rush things because it wants to do thorough testing to ensure there are no mistakes.

Wang founded AIMS in 1991. It is a financial services and investment group that does mortgage lending, funds management and securitisation. It has originated over $5 billion of prime home loans since 1997 and issued over $3 billion in residential mortgage-backed securities (RMBS) since 1999.

Eventually Wang hopes that companies can also issue renminbi-denominated shares on APX but that isn’t finalised yet.

In April Australia and China entered agreement to trade directly between the Australian dollar and Chinese renminbi.