Exchange traded options and futures are traded on a screen based trading system called the ASX Trade. Brokers have terminals in their office from which they can view the market, and execute trades with the click of a mouse button.
ASX Trade is a NASDAQ OMX ultra-low latency trading platform based on NASDAQ OMX's Genium INET system. Many exchanges around the world use a trading platform supplied by NASDAQ OMX.
Why was the screen based trading introduced?
An important change brought about by screen based trading is the switch to an order-driven market where the prices on the screen represent firm orders submitted by traders.
Until screen based trading commenced operation on 31 October 1997, options were traded on a system of open-outcry on the trading floor. Under the open-outcry system, traders provided quotes that were merely indicative, and which could not be dealt on until both parties agreed to trade.
The move to the order-driven screen traded system means that trades are now executed automatically on a price/time priority basis.
How does ASX Trade work?
Orders are entered into a Participant’s terminal and transmitted to the market via the ASX’s host computer which in turn can be seen by all Participants’ terminals.
Orders are then executed on a price and time priority basis. Execution is performed by responding to a bid or offer that appears on the ASX Trade screen in the current market.
The following online demos takes you through a hypothetical options or futures trade. Please allow about 20 seconds for each demo to load. You are not required to download software to view these demonstrations.
Each demo takes around three minutes.
Who uses ASX Trade?
ASX Trade links brokers across Australia through screens in Participants’ offices. ASX Trade is operated in each Participants’ office.