Revenue for the period was $47.9 million, compared to $42 million for the previous corresponding three months. This growth was driven by an increase in the overall level of market activity - in particular a 36% increase in daily average equity trades to 53,583 for the quarter compared to 39,304 for the first quarter of 1999/2000, which also resulted in increased demand for market data.
However, the overall outlook for the year will remain largely dependent on the level of market activity for the remaining nine months. While over the last ten years, equity trading volumes have been increasing by an average of approximately 19% per annum, over the short-term they are inherently unpredictable.
The average fee per equity trade for the first quarter was $5.11, reflecting the introduction of price reductions for Australia's equities clearing and settlement system, CHESS, which took effect from 1 July 2000. The changes were initiated as part of ASX's ongoing commitment to set its fees at levels competitive with international best practice and to reflect efficiencies arising from CHESS.
In addition, to growth in equities trading volumes, there were 51 new listings during the period compared to 37 for the first quarter of 1999/2000.
Daily average option trades were 36,872 compared to 40,978 for the previous corresponding quarter. However, the number of new warrants issued for the period increased to 171 from 146 and total warrant series were 581 compared to 435 at the end of the previous corresponding quarter.
Further progress was also made during the quarter on ASX's strategy of expanding its range of products and services to diversify its revenues, with the announcement of two initiatives:
An agreement with State Street Global Advisors (SSgA) to jointly develop exchange-traded funds (listed securities designed to track the performance of an established index or predetermined basket of securities). Under the agreement, ASX will work with SSgA to develop a range of exchange-traded funds (ETFS) to meet the needs of Australian investors.
Internationally, ETFs have proved popular with investors looking to diversify their portfolios. ASX believes SSgA's worldwide experience in exchange-traded products provides a strong foundation for the introduction and development of ETFs in the Australian market. At this stage, ASX expects the first ETF to be available by April 2001.
An alliance with Bridge DFS Limited, Australia's leading provider of order management services to professional financial market participants, under which ASX has taken a 15% stake in Bridge DFS. One of Bridge DFS' core operations is the provision of the Bridge DFS IRESS Order System product (I0S), an order routing network currently operating between a high proportion of Australian and New Zealand institutions and institutional brokers.
Bridge DFS has an excellent track record of customer relationship management for institutional investors, a significant part of the investment community. The alliance will allow ASX to pursue a number of opportunities to enhance the products and services it is able to provide to this part of the market. In addition to further development opportunities for order routing, ASX has also agreed to pursue a number of specific initiatives under a Memorandum of Understanding.
Since the end of the period, the Minister for Financial Services and Regulation, Mr Joe Hockey, has announced the Government's intention to increase the ownership limit on ASX from 5% to 15%. This decision follows an approach by ASX to the Government and, although the move is yet to be passed by both houses of parliament, ASX welcomes the decision. ASX believes that in the international market place in which the company now operates, the lifting of the ownership cap will provide it with greater flexibility in pursuing commercial relationships and thereby improve the company's ability to implement longer-term strategies for the benefit of the company and the Australian market.
Under ASX's Constitution, shares exceeding the 5% ownership limitation are immediately classified as "default" shares and carry no voting rights. In addition, the Board has the power to require divestment of the excess shares. Until such time as the legislation required to increase the 5% ownership restriction is enacted, the ownership restriction of 5% will still apply as will the divestment and default provisions of ASX's Constitution.
