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NEW ASX Equity Research Scheme - helping listed companies achieve greater investor awareness and increased liquidity

Jobs, exports and earnings generated by Australian companies are a key driver of growth in our economy, and companies and Trusts listed on ASX are at the forefront of this growth.

Growth and raising capital go hand in hand and a fundamental benefit of being listed is the ongoing ability to tap the market for additional capital in a cost-effective way. But to do this you need to maintain an environment of investor confidence, which requires a commitment to keeping the market well informed, and ongoing communication with your investors.

Investor confidence is backed up significantly by quality research provided by well-regarded banks, brokers and other research providers.

The problem - Lack of equity research in Australia
In Australia, the availability of equity research falls away significantly outside the top 100 to 200 stocks. There are a number of reasons including economies of scale issues, the increasing cost of producing research and the wide selection of company listings needing to be covered by a limited number of research providers and analysts. Companies that are not in the top echelon lose out because they’re not researched and so investors are less likely to look at them.

Studies in markets around the world have shown a correlation between equity research and increased liquidity – the key measure of stock market liquidity. NASDAQ connects under-researched companies with multiple independent and broker research providers. SGX and the Monetary Authority of Singapore offer a Research Incentive Scheme to enhance research coverage of stocks listed ion the SGX.  The Paris bourse Euronext and the Malaysian Exchange also offer similar services.

Potential Solution - New Equity Research Scheme
To begin to address this lack of research for ASX listed companies falling outside the top 100-200, ASX has worked with Finsia, the banks, stock brokers, and other equity research houses to design and implement the ASX Equity Research Scheme, which will extend research availability to a wider range of ASX listed companies. 

Benefits of the Scheme

The intention behind the new ASX Equity Research Scheme is that it will increase turnover and improve valuations of participating listed companies thereby making an ASX listing more attractive, and the capital raising process easier. 

The benefits of the Scheme for investors include research independence, additional information on listed companies, a wider choice of investment opportunities and improved liquidity leading to lower spreads and transaction costs.

The benefits for ASX and Finsia arise from the broader benefit to the market that such a scheme is believed to engender in terms of a healthier capital raising market and greater liquidity.   

How will the Scheme work?
1. The Scheme will be trialled for two years (starting in early 2007) and will be available to ASX listed companies with a market capitalisation between $70m and $700m as at 30 June 2006.
2. Companies will pay a fee to be included in the Scheme (see fees table below).
3. Coverage will include an initiation report, reports for the interim and final results each year, and a report on any major developments.
4. The Scheme terms do not mandate form of content – i.e. the research generated will be of the same quality as the research providers generally provide to their customers in the normal course.
5.  Research providers who have agreed to participate in the Scheme include:

  • Aspect Huntly Morningstar
  • E.L&C. Baillieu
  • Macquarie Bank
  • Property Investment Research
  • Wilson HTM

Final discussions are being held with another major provider, which will bring the number to seven. The Research Providers are required to meet certain criteria in terms of their experience and ability to generate research in stocks outside the top 200.

6. Finsia will administer the scheme, allocate participating companies to the participating Research Providers and be a key distribution platform for the research reports.

7. Research Providers and participating listed companies will be bound to a two year trial contract. If the trial proves successful, ASX will examine the development of another scheme to accommodate listed companies whose market cap falls below $70 million.      

8. Companies and Research Providers will not be able to choose whom they wish to be allocated to, although Finsia will take into account a number of factors such as industry expertise or any potential conflicts of interests.

Research reports will receive broad distribution through Finsia’s website ( and research providers’ distribution channels. Linkages will be provided from the ASX website to the Finsia website. 
Independence and Integrity
To ensure that the Scheme operates with the highest level of integrity and independence, neither the Scheme nor ASX will play any role in preparing the research or issuing recommendations. Finsia who is the largest financial services professional body and educator in Australia and New Zealand will be responsible for the allocation for participating companies to research providers.

The scheme will be offered on a fee-for-service basis. The fees will be used to cover the additional costs and administration costs incurred by Research providers. The fees for participation are outlined below.

Fee Structure Amount

Participation fee
Administration fee

$24,000 per annum*

* All fees are GST inclusive

Next Steps
Listed companies who fit the participation eligibility criteria of the Scheme will be contacted by ASX shortly.

For more information on the new ASX Equity Research Scheme please visit or contact Barry Newling, Marketing, ph: 02 9227 0720

All rights reserved 2006.
The information in this article is intended to provide a general summary only and does not constitute financial product or investment advice. You should consider obtaining independent advice before making any financial and/or investment decisions. Whilst every care has been taken to ensure the accuracy of the information as at the date of publication, ASX makes no warranty with respect to the reliability, accuracy, currency or suitability of content. To the extent permitted by law, ASX excludes all liability. Reference to ‘ASX’ means ‘ASX Limited’, ‘ASX Operations Pty Limited’ and all other related bodies corporate.