ASX Group, operator of the 151-year old Australian stock market, plans to offer trading in international shares in an effort to turn the exchange into a vital link in 24-hour global trading.
ASX plans to offer depositary receipts in miners Xstrata, BHP Billiton, Rio Tinto, bank HSBC Holdings and one other stock by July, subject to approval by the Australian Securities and Investments Commission.
The ASX is in talks with Standard & Poor’s to include the depositary receipts as part of the S&P/ASX 200 Index.
A consultation paper on the index question will be released this month.
“It is a game changer for the shape of the Australian market,” says Richard Murphy, general manager, equity markets ASX.
Australia’s asset managers, who control $1.8 trillion in assets, have been complaining that their local market is too small as assets under management rise.
Compulsory pension contributions will rise to 12 per cent from 9 per cent.
By 2030 Australian superannuation funds may have as much as $6 trillion under management.
“Funds are as hot as Hades for this,” says Murphy.
Many more depositary receipts may be issued based on demand, he says.
The ASX is in conversation with investment banks and funds about the depository receipts and is debating whether to change its current market hours.
The custodian of receipts will be the Bank of New York Mellon, which has
declined to comment.