The New Zealand Exchange (NZX) has decided to cease operations of its alternative Australian trading venue AXE-ECN, leaving Chi-X Australia the only potential direct competitor to domestic bourse the Australian Securities Exchange (ASX).
In a notice published today AXE-ECN's shareholders, which comprise banks Citigroup, Macquarie, Merrill Lynch, Goldman Sachs and Commonwealth Bank as well as NZX, said they “do not see opportunities for its business model to generate sustainable economic returns”. As a result, NZX has indicated that there will be a non-material payment made to NZX by the other shareholders.
The Australian equities market is readying itself to allow competing trading venues to challenge the monopoly currently held by the ASX. This was made possible last year after the ASX passed responsibility for supervision of market participants to domestic financial regulator the Australian Securities and Investment Commission (ASIC).
An Australian market licence has already been granted in principle to Chi-X Australia but it will not be allowed to begin trading until ASIC has completed a public consultation on market structure, which runs until 21 January. AXE-ECN was established in 2006 and first applied for its own market licence in 2007.
Authorities in Australia and Singapore are currently examining an offer from the Singapore Exchange to purchase the ASX in a deal that would create the world's fifth largest exchange group.