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Broker Identification Codes, ASX is proposing to implement changes
post Posted: Feb 18 2006, 10:39 AM
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I'm happy with the new system, now everybody is even

Use the chart now

I confirm that am not a licensed investment adviser , or have any formal training, to give investment advice. Therefore you must seek professional advice. I may hold this stock. Jesse Livermore is my Hero. Australia is the next Iceland!
post Posted: Feb 18 2006, 09:42 AM
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QUOTE (drrc @ Saturday 18/02/06 08:51am)

An interesting article. No doubt a great 'short term' result for the ASX that may very well come back & 'bite them on the bum', imho.

< More transparency is always better than less, unless you have something to hide.>

< Not to put too fine a point on it, it's a shocker. Companies can't figure out who's dealing in their stock; neither can brokers for that matter - or journos. Funds can't monitor their brokers' execution and everybody has to wait three days, a lifetime in broking, to find out the details. >

< The rationale for dumping broker IDs had been liquidity: that is, if you can't see what anybody else is doing you'll do more punting. >

LOL !! Again ..... < More transparency is always better than less, unless you have something to hide. >

The article refers to it as ...... "market shenanigans"

Whoooops !! < The boys denied that the blackout was the result of pressure from a few big investment banks >

< And when they get fined, two-fifths of not very much, for market shenanigans, there is nary a press release about it. >

Of course, time will tell. Just MHO, only.


post Posted: Feb 18 2006, 08:51 AM
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Anonymity for brokers lauded
Kevin Andrusiak
February 18, 2006

THE Australian Stock Exchange boasted yesterday that its decision to mask broker identification on share trades was the right move, despite complaints from market watchers that it muddies share market transparency.

The ASX yesterday posted a 24.7 per cent rise in interim profit to $64.1 million, largely on the back of increased trading fees generated by the record share bull run.

ASX chief executive Tony D'Aloisio said the move to black out broker identification on buy and sell orders might have increased volatility on the market, but it improved liquidity.

The ASX was reviewing the decision as part of the implementation process, but management seemed to favour broker anonymity.

The number of trades has jumped by more than 50 per cent on some days compared with the recent average of 105,000 since the introduction of broker anonymity in November.

But it has been hard to prove whether that is due in any part to broker anonymity.

"The decision (to implement broker anonymity) was taken very carefully after lots of consultation," Mr D'Aloisio said. "It is too early to assess its impact at this stage. The early indication is that liquidity is improving.

"I definitely think it is the right decision."

Continuing the theme for many companies this reporting season, ASX stock was dumped immediately by investors after the result was announced.

The share price closed down 3.3 per cent to $33.24 despite the exchange's plans to return $106 million to shareholders via a fully franked 56.2c interim dividend and either a $50 million share buyback or capital return program.

The ASX also plans to phase in the new Integrated Trading System from October, replacing the SEATS platform. ITS has so far cost the ASX $15million and was delayed last November.

Mr D'Aloisio also revealed the ASX was contemplating a move from its Bridge Street headquarters in Sydney and its Collins Street offices in Melbourne. But he resisted giving an outlook on if and when a move would be made, and on projected revenues for the second half of the financial year.

He said the ASX had tried to shield itself from a downturn in the market by breeding new types of asset classes, including bio-techs, and introducing derivative products.

Revenue from equity trading fees increased 6.1 per cent to $62.4 million. Daily average equities trades increased 31.8 per cent to 105,271.

"We are getting the benefit of the strong market conditions, which is pushing our revenue up," Mr D'Aloisio said. The ASX result was largely in line with analyst predictions.

Deutsche Bank analyst Andrew Hill said the share price was trading at a stretched multiple and was due for a fall of around 15 per cent.

"Following 12 months of stellar share price performance, ASX is trading at a near record high PE multiple, 21 per cent above the average of the last five years," he said. "The last time ASX traded at these multiples the share price fell 21 per cent in the following six months."

CommSec analyst Carlos Castillo said the ASX was generating so much revenue it was starting to look like a "cash cow". "The cost savings they promised are starting to come through," he said.



Anonymous trading, though - that is, the exchange's decision last year to black out broker ID numbers - has not had a good reception.

Not to put too fine a point on it, it's a shocker. Companies can't figure out who's dealing in their stock; neither can brokers for that matter - or journos. Funds can't monitor their brokers' execution and everybody has to wait three days, a lifetime in broking, to find out the details.

More transparency is always better than less, unless you have something to hide.

The Tonemeister told yesterday's results briefing that the blackout was under review for 12 months and the ASX hadn't fully made up its mind yet. The rationale for dumping broker IDs had been liquidity: that is, if you can't see what anybody else is doing you'll do more punting.

And ASX's director of markets-land, Colin Sculley, went in to bat for the decision, pointing to higher trading volumes, a phenomenon that could also have been ascribed to the greatest boom in stockmarket history.

The boys denied that the blackout was the result of pressure from a few big investment banks, but you could be forgiven for being sceptical. The big banks are the exchange's biggest clients, originating its floats, researching and promoting its stocks, executing the bulk of its transactions.

And when they get fined, two-fifths of not very much, for market shenanigans, there is nary a press release about it.


post Posted: Dec 7 2005, 06:08 AM
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ASX hits brokers for fees
By Kevin Andrusiak and Geoffrey Newman

December 07, 2005

THE Australian Stock Exchange is softening-up the broking industry for a hike in trading fees, possibly to be announced before the end of the year.
Hot on the heels of the introduction of broker anonymity, which some broking houses believe has reduced turnover in the market, the ASX is poised to announce a new fee structure that is expected to result in lower margins at some firms.

The new price regime is expected to hit major investment banks hardest, with talk that rebates for large-volume transactions will be slashed.

The ASX yesterday declined to comment on the new fee structure, but said that it wanted to benchmark local fees with other global exchanges. It did not disclose the fee formulas it is using to calculate charges for trades on the exchange.

Market watchers are positive there will be an announcement before Christmas, possibly on December 15 when the ASX will introduce initiatives aimed at improving coverage of small cap stocks.

"Most definitely fees will go up," said one broker from a major investment bank. "The ASX has told analysts the fees they charge are among the lowest in the world."

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Another source said that broking houses would consider lodging a joint protest with the ASX in the event of a fee rise.

At the exchanges annual meeting in September, chief executive Tony D'Aloisio said the pricing structure should be more globally competitive and less complex.

ASX spokesman Gervase Greene said the company was committed to finalising the fee review before the end of the year, with an announcement "soon after". Any new fee structure would not be introduced before July.

Many trading houses are already unhappy with the ASX over the removal of broker identification, with smaller brokers and fund managers hit out at the removal of broker identifications, saying they have already led to reduced liquidity in smaller stocks.

Wilson Asset Management director Geoff Wilson said the system had put his business, which specialises in investing in undervalued small caps, at a significant disadvantage. "It's increased the volatility in smaller stocks and it will reduce the liquidity," he said.

Mr Wilson said the ability to deal in smaller stocks was dependent on buyers and sellers being able to identify each other given that large trades had the ability to distort the market in a small, illiquid stock.

Goldman Sachs JBWere head of broking sales Simon Greenaway agreed small cap fund managers were suffering. "I think it's harder for these guys to source liquidity and as a result turnover is falling," he said. "We think it's a disaster so far. We hope they (the ASX) review it."

Some brokers and fund managers have resorted to employing teams to make dozens of phone calls each day to identify buyers and sellers since the ids were removed.

Mr Wilson said it was a cost he himself could not afford but the burden would discourage trading in such stocks, which made up the majority of the market by number. "All it does is make the strong get stronger and the weak get weaker," he said.


post Posted: Dec 6 2005, 05:11 AM
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Few hiccups for ASX's new system

Date: December 6 2005

By Stephen Bartholomeusz

A WEEK into the ASX's controversial new regime of opaque trading and the market is still there and functioning, it appears, rather well.

The ASX's decision to withdraw from the start of last week the ability of brokers to identify the firms behind every transaction on the ASX provoked a significant outcry from smaller brokers and fund managers on the basis the exchange was removing transparency from the market.

The reaction, and the basis for the complaints, was peculiar given that the brokers were prohibited by their agreements with the ASX from divulging broker ID information to third parties. In practice, of course, institutional investors were able to gain access to that information whenever they chose.

The old status quo was indefensible, given that it gave the privileged access to sometimes quite valuable market intelligence while individual clients - and more particularly the increasing number of investors using transaction-only firms, straight-through processing or online access to the market - either had no access or could not have exploited it if they did.

It is the latter development - the emergence of the CommSecs and ETrades - that made the counterintuitive case that fully anonymous trading would be more equitable than fully transparent trading, although the big institutional brokers that dominate trading in the large stocks and conduct large-scale trading on their own account agitated for anonymous trading to prevent predatory trading, or "front- running", at their expense.

While it is far too early to come to any definitive conclusion about the withdrawal of the broker IDs from the market there was far more controversy before the change than there has been since it was implemented.

The ASX (which can identify the firms behind each trade) is monitoring trading closely to ensure that nothing aberrational or untoward is occurring and will continue to do so until what is effectively a 12-month trial of the change has been completed.

Last week, whether by coincidence or as a response to the changes, trading volumes were solid but in line with the normal volumes of just over 100,000 transactions a day recorded before the ID information was withdrawn. However, volumes of transactions in the options market were down, raising the possibility that the big market players could be shifting to the physical market transactions that may previously have been executed with derivatives.

It will take more time and information to see whether the change affects industry practices but already some of the bigger firms are saying last week was a bit of a non-event.

The international experience with anonymous trading (the ASX, as part of the two-year lead-up to the change, commissioned research on the overseas experience) is that it leads to greater liquidity and narrower buy/sell spreads. Increased volumes are obviously in the ASX's own financial interest but are also good for the market and its participants.

A transparent market can drive large transactions off-market and onto private trading platforms - concern about predatory trading is cited as a major factor in the growth of proprietary electronic networks around the world. Or it can cause the big firms to try to camouflage their trading by splitting it with smaller firms (which explains why the smaller firms have been complaining loudest).

The ASX also believes that its market has a significantly lower proportion of principal trading and hedge fund activity than comparable markets offshore, which might also have been a function of the transparency of the trading in the past. Speculative activity does provide depth and liquidity to a market, which creates more efficient pricing and therefore better outcomes for the ultimate investors.

One of the key elements of the changes is that the ASX will publish some limited market share information on the brokers' trading in individual stocks each day and then complete breakdowns of every trade three days after they occur. It will be possible to deconstruct trading three days after it occurs.

That means fund managers, and rival brokers, will be able to work out which brokers are consistently most active in particular stocks and investigate any aberrational trading.

A common fear among the smaller brokers is that not only will they lose a useful source of income if the big firms no longer use them to cloak their trading but that the major investment banks will be able to use their balance sheets and ability to conduct principal trading to effectively make the markets in any stock they target.

They have, of course, always had that ability. The changes mean, however, that third parties won't be able to piggyback as easily on the big firms' trading.

If there are market participants who don't like the new regime they can blame themselves, given that the ASX's preferred option was rejected by just about everyone. The ASX had offered up a hybrid structure under which participants could choose whether to reveal their broker ID on an order-by-order basis.

While somewhat complicated, the hybrid option would at least have levelled the playing field - either all market participants would know the firm behind the trading, or none.

Interestingly, some fund managers and broking firms recently investigated their own version of that hybrid option - setting up their own private exchange of broker IDs - but were warned off by the ASX, which waved its licensing agreements with the brokers at them.


post Posted: Nov 29 2005, 12:17 PM
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In reply to: theflasherman on Tuesday 29/11/05 01:15pm

ok ... thnx flash.

Have a crack, ... and let life decide.

post Posted: Nov 29 2005, 12:15 PM
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In reply to: kosmo on Tuesday 29/11/05 02:00am

Hey Kosmo

I used Netquote's Equitypro and that gave me the split between brokers during the day but I couldn't see which brokers were doing what until one hour after close. It wasn't as good as the brokers got but it was a partial solution and enabled me to see if a single seller was buying or selling large chunks. I can't get this info anymore.

[b]Later, Flash[/b]
post Posted: Nov 29 2005, 12:12 PM
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In reply to: theflasherman on Tuesday 29/11/05 12:46pm

flash never a truer word spoken

I am aware that brokers are calling other brokers anyway and working out who is flogging and wanting stock so there is still some advantage in the broking industry


post Posted: Nov 29 2005, 12:00 PM
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In reply to: bri on Tuesday 29/11/05 12:53pm

hey bri

really? wow ... what did you trial? I use TraderDealer formerly AOT.


Have a crack, ... and let life decide.
post Posted: Nov 29 2005, 11:53 AM
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In reply to: kosmo on Tuesday 29/11/05 08:51am

the trial version i used had them


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