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Date Submitted: 05/18/2013 06:29 AM
Chapter 9
Australian equities market
1
Table of Contents
1. Process of trading shares 2. Nature of securities traded 3. Market participants
3.1 The ASX 3.2 Brokers 3.3 Fund managers 3.4 Individual investors
4. Trading methods
4.1Pre‐opening and opening call auction 4.2 Normal trading 4.3 The Price Information Window 4.4 Order depth window 4.5 Closing call auction 4.6 Off‐market trading 4.6 Off‐market trading 4.7 Trade History 4.8 Information dissemination procedures
5. Settlement procedures
1. Process of trading shares
• In this lecture we will discuss:
– The trading of a company’s equity securities – How the Australian equities market operates
• Some background information
– In Australia, shares are traded on the Australian Securities Exchange (ASX) – The issue of new shares to the public is referred to as the ‘primary equity market’ – Subsequent trading in stock markets is referred to as the ‘secondary equity market’
3
1. Process of trading shares
1. Investor contacts a stockbroker, who opens an account for the investor to deposits funds into 2. Investor places an order with the stockbroker by phone or internet. Orders may be: 1. Market orders ‐ the broker is instructed to buy or sell shares ‘at the current best market price’ 2. Limit orders ‐ the broker is instructed to buy or sell only when the market reaches a maximum/minimum price specified by the investor
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1. Process of trading shares
3. The stockbroker attempts to execute the order via a counterparty
– Using ASX Trade (http://www.asx.com.au/trading_services/asx‐trade.htm) – By contacting another client directly (by telephone) and trading “off‐market”
• Usually for large amounts
4. Settlement takes place, where the ownership of shares is transferred in exchange for a transfer of cash
5
Table of Contents
1. Process of trading shares 2. Nature of securities traded 3. Market participants
3.1 The ASX 3.2 Brokers 3.3 Fund managers...