How trading on ASX works
ASX offers broad range of trading products in Equities, Warrants, Interest Rate securities and Exchange Traded Options. All these products are traded electronically on ASX Trade. ASX Trade is a NASDAQ OMX ultra-low latency trading platform based on NASDAQ OMX's Genium INET system. Equities old trading system SEATS (Stock Exchange Automated Exchange System) was decommissioned in Oct 2006 and ITS combining Equities and Derivatives trading was implemented. The ITS (Integrated Trading Platform) was decommissioned in Nov 2010.
Members of the public do not have direct access to ASX Trade and can place orders on ASX Trade by telephoning their broker or by trading on-line. Brokers enter these orders into ASX Trade on behalf of their clients. If you trade on-line, your order is sent to your Broker's office and entered onto ASX Trade. Depending upon your Broker's setup, your order may be entered into ASX Trade automatically through Automated Order Processing. When viewing your order or stocks through your online account, you may see some codes next to the stock. An explanation of these codes is available.
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 system means that trades are now executed automatically on a price/time priority basis.
How does the ASX Trade work?
Orders are entered into a Participant's ASX Trade terminals and transmitted to the market via the ASX's host computer which in turn are 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.
Brokers can either use their own systems for entering orders, or they may use the exchange supplied ASX Trade Workstation. The ASX Trade Workstation was launched in July 2006, and is a modern windows based product that allows brokers to view multiple markets and multiple order depths on one screen. Users can create their own watch lists, trade history views and custom made search functions unique to each person's needs.