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Exchange-traded Australian Government Bonds

Retail investors will soon be able to buy and sell Exchange-traded Australian Government Bonds ("AGBs") as easily as they can buy and sell shares. It pays to know the ins and outs of these traditionally safe and stable investments.

As with any financial product, it’s vital to understand the potential rewards and risks. Now is the time to familiarise yourself with this important product and how they can help you diversify risk in your investment portfolio.

To understand the benefits and the risks of AGBs take the free online course and visit ASX Investor Education.

ASX has an array of tools to help you understand how Exchange-traded AGBs will work. You can learn from an overview, print off information PDFs and complete knowledge quizzes across five comprehensive, easy-to understand modules. Over the next few weeks, we will also be providing a 30-minute presentation from an industry expert available as a video, podcast, slides and transcript. You will also be able to access practical operational information that includes key product information and ASX codes for each bond, plus more.

AGB online course and Exchange-traded AGB Fact Sheet

FAQ

Q. When will the market commence?

A. The expected go-live date is in May 2013.

Q. What are the types of Exchange-traded AGBs that will be quoted on ASX?

There will be two different types of Exchange-traded AGBs:

1. Exchange-traded Treasury Bonds (TBs) are medium to long-term debt securities that carry an annual rate of interest fixed over the life of the security, payable six monthly.

2. Exchange-traded Treasury Indexed Bonds (TIBs) are medium to long-term debt securities for which the capital value of the security is adjusted for movements in the Consumer Price Index (CPI). Interest is paid quarterly, at a fixed rate, on the adjusted capital value. At maturity, investors receive the adjusted capital value of the security – the value adjusted for movement in the CPI over the life of the bond.

Q. Which Exchange-traded AGBs will be quoted on ASX?

A. All benchmark bonds issued by the Australian Government including Treasury Bonds and Treasury Indexed Bonds.

Q. How will I access the market?

A. Investors will access the market in the same way as they do for shares and other ASX quoted securities, via your ASX Participant, online broker or financial planner.

Q. Will I receive a CHESS Statement for my holdings of Exchange-traded AGBs?

A. Yes, as with shares, investors will recieve a CHESS Statement advising them of their holding of AGBs in CHESS.

Q. What will be the costs for transacting in Exchange-traded AGBs?

A. Fees charged to retail investors are determined by your broker. ASX expects these fees to be comparable to transacting in other ASX quoted securities. Fees charged by ASX to ASX Participants are those that apply for standard ASX Interest Rate Securities.

Q. What is the minimum parcel size able to be traded?

A. The face value of an Exchange-traded TB equals $100. The face value of an Exchange-traded TIB equals $100 plus CPI adjustment. The minimum parcel size is 1 (one) Exchange-traded AGB traded at the price quoted. ASX expects the average transaction parcel size to be between $30,000 and $50,000.

Q. How will Exchange-traded AGBs be quoted?

A. Exchange-traded AGBs will be traded on the Australian Securities Exchange (ASX) in the same way as listed shares. Exchange-traded AGBs will be quoted on a gross price in cents and traded to one decimal place, i.e. an AGB trading at $100.250, will be quoted on ASX Trade as 10025.0. The market price quoted is the price for one (1) AGB.

More Information

Retail investors

Exchange-traded Treasury Bond Information Statement provided by the Australian Government.
Exchange-traded Treasury Indexed Bond Information Statement provided by the Australian Government.
Taxation treatment of Exchange-traded Australian Government Bonds provided by Deloitte, March 2013.
AGB online course and additonal including an Investment Talk where RBS Morgans explains the new Exchange-traded Australian Government Bond market.

Please email info@asx.com.au for further information.

ASX Participants, advisers, financial planners and other intermediaries

Phone Graham O'Brien +61 (0)2 9227 0672 or email graham.obrien@asx.com.au

Market access and information providers

Please email marketaccess@asx.com.au

Market implementation Notices and Bulletins

Upcoming Important Dates for Exchange-traded Treasury Bonds and Exchange-traded Treasury Indexed Bonds.

Upcoming important dates for Exchange-traded AGBs (cessation of quotation dates)

ISIN Codes for all Exchange-traded Australian Government Bonds and underlying Australian Government Bonds including Reuters RIC Codes.

ASX Market Information FAQ on AGBs.

Media release - dated 1 November 2012. ASX welcomes the passing of legislation through Parliament for the trading of Exchange-traded Australian Government Bonds.

ASX Market Information Bulletin 37/12 - dated 10 September 2012. This Bulletin advises on the introduction of Exchange-traded Australian Government Bonds.

The ASX Group's activities span primary and secondary market services, including capital formation and hedging, trading and price discovery (Australian Securities Exchange); central counterparty risk transfer (ASX Clearing Corporation); and securities settlement for both the equities and fixed income markets (ASX Settlement Corporation).