The benefits of quoting on ASX
Quoting an investment product on ASX offers significant benefits to product issuers and provides very clear and tangible benefits to both institutional and retail investors.
Benefits for product issuers
Increased price and product distribution
Quoting on ASX creates the opportunity to use ASX Participants (stockbrokers) and financial planners as highly effective, low-cost distributors for your product.
ASX has an extensive network of stockbrokers nation-wide covering the full breadth of services from full-service institutional stockbroking to online, no-advice retail broking. An ASX quotation means these intermediaries can act as your distributor to their own retail and institutional client bases.
More recently, financial planners have been offering direct advice on quoted investments through an ASX broker. This effectively extends the distribution reach available through ASX to include the extensive network of financial planners. The effectiveness of this distribution channel is further increased through the inclusion of ASX quoted investments into Master Trust platforms and WRAP accounts.
Without visibility even the largest distribution channel can be rendered ineffective. Through a network of vendors including IRESS, Reuters and Bloomberg, over 40,000 professional investors worldwide and more than 80,000 active retail investors gain access to prices and key product characteristics of products quoted on ASX.
This exposure is further increased through the internet, where typically between 1.4 and 1.5 million investors visit www.asx.com.au each month seeking information such as prices, announcements and product education or information.
Growth of FUM
Increased distribution and visibility and the potential opening of new customer markets can collectively assist to increase demand and thereby drive a growth in funds under management of your product.
In addition, because ASX trading and settlement systems largely administer investor activity, a quotation on ASX allows the fund manufacturer or issuer to focus on core business development activities.
Greater administration efficiency
The ASX settlement platform can reduce the cost of your back office and client administration functions.
The use of the ASX sub-register and settlement system, CHESS should deliver significant efficiencies in back-office operation.
- Streamlined management of client registration details and functions, through ASX Participants.
- Automatic production of client holding statements each time a movement occurs in a client account.
- Fully automated reconciliation through CHESS DvP settlement which eliminates settlement risk and provides immediate access to cleared funds.
New customer markets opened
Institutional investors can be limited by their mandates, regulatory or other legal constraints from investing in unlisted products. A quotation on ASX can open this otherwise closed market to product issuers.
Readily available market information, distributed by vendors, also has the potential to open new overseas wholesale customer markets that would otherwise be difficult to reach.
The AQUA Rules framework provides a simple and effective framework to enable international products to be quoted on ASX.
A local party may become the 'sponsor' or distributor of a product in Australia, or 'white label' products for distribution on the Australian market, provided they comply with the requirements under the AQUA Rules.
This effectively provides a simple and quick solution for investment banks or other local issuers to bring any international product that complies with the Rules framework to the Australian market.
Key advantages :
- Allows international products to be listed on ASX by someone other than the product issuer.
- Allows the local issuer to comply with the Rules, not the international product issuer.
- Provides a white-labelling service allowing international banks and product manufacturers a simple and cost effective way to bring their international product ranges to the Australian market.
ASX quotation as a distribution channel
Many products have multiple distribution channels and a product issuer may wish to add an ASX quotation as one of these channels. In this instance, the issuer will only wish to quote a small portion of the products units on ASX; prior to the AQUA quotation Rules, this was not possible on ASX.
The Traded on ASX emblem provides issuers with an instantly recognisable symbol to differentiate investment products traded on ASX from the non-listed products available. Only issuers of investment products on the ASX are eligible to use this emblem.
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Benefits for your investors
ASX trading and settlement systems allow investors to move into and out of their investments easily and without delay, a feature not readily available in an unlisted environment.
The ASX trading system enables investors to readily see prices and liquidity, thus facilitating trading decisions. This information is readily available through the internet, market data vendors and through traditional media outlets such as newspapers and magazines.
Settlement through CHESS ensures investors transactions are settled in three days (T+3) with settlement risk eliminated through the operation of transfer of entitlement against cleared funds (delivery versus payment). This is a significant improvement upon the variable environment for unlisted products, where access to cash can take up to 30 days.