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Australian Operator Moves Step Closer to Launching China-centric Exchange
Source: Thomson Reuters Accelus  
By Nathan Lynch, head regulatory analyst, Australia & New Zealand Apr 30 2013

The Australian market is one step closer to seeing a new competitor to the Australian Securities Exchange (ASX) with the government approving the Asia-Pacific Exchange's (APX) proposed market integrity rules this week. The application is different to the successful application for a market licence from Chi-X, as the APX will run a full exchange with its own listings. Chi-X only operates a market for ASX-listed securities.

The APX has had a market licence in Australia since August 2004. It had attracted a number of boutique listings, including Sigma Company, Sydney Futures Exchange Corporation, Becton Development and SPC Ardmona. In its previous form, however, the APX had been a minor sideshow to the ASX market.

In October 2008 the exchange was acquired by George Wang's AIMS Financial Group, with the goal of converting it into a full-service exchange targeting both Australian and Chinese listings and capital. AIMS Financial Group is very active in this space and has provided the funding to allow the APX to push ahead with its regional ambitions.

Following the acquisition of the APX in 2008 (which was then known as the Australia Pacific Exchange) AIMS cleared out its listing board to allow it to be restructured as an Asia-focused market.

The APX's new Listing Rules were approved by ASIC and the Australian Federal Treasury in November 2011. It is now working on the implementation of its new trading system. APX aims to be operating with its new Listing Rules, Business Rules and trading system in the second half of 2013.

"APX is now in a more competitive position to develop a regional approach with a focus on opportunities in Asia — especially China," Wang said.

The APX also plans to take advantage of the new agreement to make the Australian dollar and Chinese yuan directly convertible. It will eventually offer trading in both currencies.

Government support

In an announcement yesterday Bill Shorten, minister for financial services, said he had approved the changes to the APX's market licence, market integrity and operating rules and compensation arrangements. The exchange operator now has to satisfy a number of regulatory conditions — including compliance and IT requirements — before it can re-launch in Australia.

Shorten said the government was strongly in support of the proposals to forge stronger ties between Australian companies and Chinese capital, and vice versa.

"Earlier this month in Beijing, I discussed the important role that Australia's financial services industry can play in China, for our mutual benefit. This decision means that the Australian-owned APX market will offer stock market listing in Australia for Asian companies, with a particular focus on Chinese companies," Shorten said.

"This will improve access and increase opportunities for Australian investors, including superannuation funds," he added.

Bernie Ripoll, parliamentary secretary to the treasurer, said the new exchange would give greater choice and new opportunities to investors.

Convertible yuan
The new market integrity rules (MIRs) have incorporated ASIC's new requirements around market integrity, including managing the volatility associated with high-frequency trading. The government has also approved variations to the APX's Australian Market Operator Licence and new APX Business Rules, both of which are required to re-launch the APX market.

The conditions that the APX exchange must satisfy include an independent verification of the readiness of the market's technology platform, and confirmation that it has the necessary financial and human resources to operate the market.

Ray Schoer, chairman of the APX, said the approvals were fundamental to the re-launch of the APX market as a China-focused exchange. The APX is currently working on attracting Chinese listings to the Australian market. It will also look to attract Australian companies that are keen to access Chinese capital.

"APX will provide an attractive new venue for corporates to raise capital and be publicly listed, and bring competition, and new investors and corporates, in the listing and trading markets in Australia," Schoer said.

Wang, who is deputy chairman of the APX in addition to his role at AIMS, said the new MIRs would place the APX market on an equal regulatory footing with the ASX and Chi-X, and will give investors assurances about the quality of the APX market.

He said the APX was aiming to attract corporates, capital and investors from both Australia and Asia, but with a focus on China. The APX will offer Chinese market participants an alternative listing venue to the Shanghai and Shenzhen stock exchanges in China, according to Wang.

"This new regulatory framework reinforces the strong reputation of the Australian market regulatory environment and will further encourage companies to list and trade on the APX market," Wang said.

He said that, all going to plan, the APX market should be ready to re-launch "in the coming months".

"We are focused on building an exciting new venue that will substantially deepen Australia's links and integration with Asia, particularly capital flows between Australia and China, and the Australian financial services sector," Wang said.

This article was first published by the Compliance Complete service of Thomson Reuters Accelus. Compliance Complete ( provides a single source for regulatory news, analysis, rules and developments, with global coverage of more than 230 regulators and exchanges.

Australian Operator Moves Step Closer to Launching China-centric Exchange.pdf