Exchange competition heats up as ASX confirms date for HFT platform

Australia’s latest low-latency, high-frequency trading-friendly trading platform will go live 28 November.
By None

Australia’s latest low-latency, high-frequency trading-friendly trading platform will go live 28 November.

The Australian Securities Exchange (ASX) has received approval to launch PureMatch by financial regulator the Australian Securities and Investments Commission (ASIC), and will launch in just over two weeks.

The order book has been set up for trading the most liquid ASX-listed stocks and domestic exchange-traded funds (ETFs). The move by the ASX aims to limit any loss of volume that may arise from the 31 October launch of alternative venue Chi-X Australia, which is presently seeing average daily turnover of around A$5 million, compared to ASX’s A$5 billion.

Securities available for trading on PureMatch will be introduced in two stages. Ten securities will be initially available for trading on PureMatch – ANZ Banking Group, Rio Tinto, BHP Billiton, Telstra, Commonwealth Bank, Wesfarmers, National Australia Bank, Westpac, Newcrest Mining and Woodside Petroleum.

Pending regulatory clearance, by 12 December ASX aims to provide access to all S&P/ASX 200 stocks plus ETFs through PureMatch.

Trades will cost 0.15 basis points for passive liquidity, reduced to 0.05bps for participants reaching volume qualification thresholds, and 0.15bps for aggressive liquidity. From launch to 28 February 2012, the passive volume threshold will be set at zero, meaning all market participants that rest orders on PureMatch will be charged 0.05 bps.

“ASX PureMatch will meet the growing needs of the trading community for order books that offer the most liquid stocks across the fastest available platform,” said Elmer Funke Kupper, chief executive of ASX. “A low latency, contemporary equity trading platform further improves the competitiveness and relevance of Australia’s financial markets.”

In February, ASX also plans to open a new A$36 million data and co-location centre in Sydney to further accommodate high-frequency traders.

ASX said the circumstances surrounding an ASX Trade outage in October had been isolated and would not affect the operation of PureMatch. On 27 October, trading on ASX Trade was suspended for more than three hours due to what the ASX called a “connectivity issue”.

Regulator ASIC has given a waiver to participants so they do not need to include PureMatch market data in their consolidated best bid and offer data until 1 March 2012.