Source: Wall street journal

The introduction of a new capital market will end the Australian Securities Exchange's (ASX) monopoly on Australia's share trading monopoly. A number of firms with operations in Mongolia are listed on the ASX. Meanwhile other markets, such as the London Stock Exchange (LSE), are currently experiencing growth. The LSE is helping to develop the Mongolian Stock Exchange (MSE) into a modern capital market with new trading software, privatization, and policy advisory.

Chi-X Australia, which is owned by the Japanese investment bank Nomura Holdings, can begin operating its exchange 31 October with a “soft launch” that offers investors the ability to trade in eight securities through 22 brokers. Within a few weeks of the soft launch, Chi-X expects its trading operations to cover the full Standards and Poor’s (S&P) and ASX 200 stock index.

Earlier this year, Chi-X received permission for the government to operate as part of a policy to promote competition in Australia's financial markets. Until now, the ASX has been the country's only capital market. Chi-X could eat into the trading volumes of ASX when equities volumes are light and new stock issuance is low. If successful, the firm could also attract new competitors as well.

ASX will retain its hold on the clearing and settling of trades in Australia. A rival broker could boost stock-trading volumes. The most likely candidate for a rival is LCH.Clearnet. However, currently the LSE is pursuing the acquisition of that firm. If Chi-X were to expand to clearing and settling services, another 19 percent of ASX's revenue would be under threat. Chi-X has signed a five-year service agreement with ASX on clearing.