ASX Joins Nasdaq in Strategic Alliance

The Australian Stock Exchange (ASX) and The Nasdaq Stock Market, Inc. (Nasdaq) today announced a strategic alliance which will provide new co-listing services and begin the process of developing the technology infrastructure to support future co-trading services to investors, enterprises, and market participants. While secondary listing on one market of the shares and products which have their primary listing on the other market is already in common use, the two exchanges have agreed to work toward a new approach called co-listing. They will encourage more effective use of secondary listing by focusing, with the assistance of market participants, on ways to bring greater liquidity to the securities they trade. Nasdaq intends, for example, to license its Nasdaq 100 Tracking Index Stock for listing on ASX. This will allow Australians to invest through ASX in Nasdaq's premier benchmark technology sector through a single vehicle. Conversely, Nasdaq will entertain listing appropriate ASX index-based products in the United States. Under the co-listing approach, enterprises planning to raise capital, in the form of IPO's or add-on offerings, can choose to bring the new listing to both markets and further capitalise on the joint marketing effort of the two exchanges. These co-listings could cover two situations. The first is where an enterprise wishes to raise capital on one market only, but wishes to list and trade on both markets from the time of the capital raising. The second is where an enterprise wishes to raise capital on both markets. In either situation, the two exchanges will work together to minimise the cost and complexity of co-listing on the two markets. The exchanges have also agreed to jointly promote these listings and to work with investment banks in both countries to help build the market in the dual-listed stocks. "Discussions with Nasdaq, which commenced in December last year, have resulted in this alliance which will not only facilitate co-listings for companies on Nasdaq and ASX, but will allow listed entities to tap into an enormous capital base," said ASX Managing Director Richard Humphry. "This alliance will benefit Australian investors and companies that wish to access a new and very compatible market," said John Wall, President of Nasdaq International. In addition to the development of co-listings, ASX and Nasdaq' in a new approach to co-operation, have agreed to move toward development of the regulatory and operational infrastructure needed for the co-trading of selected major products. Under this concept, Australian investors who wish to buy major Nasdaq products could do so through their Australian broker on ASX's Stock Exchange Automated Trading System (SEATS) as though they were buying an Australian stock on ASX. The reverse would apply to American investors. To provide this co-trading facility to investors will require the establishment of a new electronic linkage between the two markets. Moreover, co-trading and some aspects of co-listing will be subject to consultation with and agreement of regulatory authorities in both countries. Some elements of the new alliance between ASX and Nasdaq will need to be implemented incrementally. The Australian Stock Exchange market currently has a domestic market capitalisation of almost A$600 billion. Listings on Nasdaq, the pre-eminent technology-based stock exchange in the United States, are capitalised at approximately A$4.4 trillion. ASX continues to explore opportunities to enhance its service to customers. "There was an acknowledgment by both parties that co-listing would be one of the most expeditious ways ASX and Nasdaq could enhance customer service and broaden investor appeal," Mr Humphry added. As part of this cooperation, ASX will examine the introduction of computer and biotechnology indices for the ASX market using principles adopted by Nasdaq for their indices. This process will be subject to industry consultation. As previously announced to the market, ASX has had initial discussions with Nasdaq, examining the potential for the two organisations to exchange web site information. Those discussions continue. Mr Wall said that, since its debut as the world's first electronic stock market, The Nasdaq Stock Market has been at the forefront of innovation, using technology to bring millions of investors together with the world's leading companies. On Nasdaq, trading is executed through an advanced computer and telecommunications network that serves as the model for stock markets worldwide. Today, The Nasdaq Stock Market lists nearly 5,000 companies, trades more shares per day that any other major U.S. market, and in the first four months of 1999 became the biggest market in the world as measured by dollar volume of trades. Technical Notes. 1: ASX will accept SEC fundraising documents used in relation to Nasdaq listings as the disclosure base for parallel listings, thus eliminating potential duplication. An Australian-registered prospectus will not be needed unless the Australian Corporations Law requires it. In general, the Corporations Law will not require an Australian-registered prospectus unless there is an Australian fundraising that is not excluded from the prospectus requirements. 2: Nasdaq will review its procedures to ensure that there are no unnecessary obstacles to companies initiating ADR programs and listing the ADRs on Nasdaq at the same time as they list on ASX.