Chi-X Brings Foreign Competition to Australia and ASX’s PureMatch High Frequency Trading Platform

As reported by Bloomberg’s Eleni Himaras, Chi-X Australia Pty, the country’s first foreign-owned stock exchange operator in 150 years, opened for trading today, pledging to drive down prices as it battles to take market share from monopoly bourse owner ASX Ltd. (ASX)

ASX faces its first competitor just days after a network error crippled its trading platform for four hours on Oct. 27. Chi-X, which is trading just eight securities this week, plans to offer an alternative platform for brokers buying and selling all shares in the S&P/ASX 200 Index from next week. The newcomer would be able to keep trading in circumstances such as last week’s halt, Chief Operating Officer Peter Fowler said.

“The whole advent of competition is going to lead to lower charges,” said Angus Gluskie, who oversees more than $300 million at White Funds Management Pty. in Sydney. “But if you fragment the market too much and have a multitude of participants, you’re also likely to have less robust infrastructure, and that means a greater number of outages or technical issues.”

Chi-X, as the only foreign-owned market operator since Australia’s original stock market opened in the southern city of Melbourne in 1861, says it will compete with ASX predominately on price. It is the first rival to ASX under a plan by the Labor Party government of Prime Minister Julia Gillard to turn Australia into a financial hub by introducing competition in the Asia-Pacific’s fourth-largest equity market.

It may be harder for Chi-X to garner market share in Australia as ASX has already cr

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eated new platforms including VolumeMatch, an anonymous platform for block equity trades, and PureMatch, a platform for high-frequency traders, which are similar to the Chi-X offerings. ASX has also lowered its prices.

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