With competition a key focus within the financial services industry at the moment, securities and derivatives exchange Chi-X says that competition makes it both drive product innovation and save investors money on execution.
According to Chi-X, since its establishment participant application fees had dropped an estimated 80 per cent. Equities trading and trade reporting fees had also dropped approximately 46 per cent over the six years since the exchange was launched.
The exchange calculated its total savings for brokers as over $157 million, constituting of $93 million in ASX execution fee savings, $33 million in Chi-X execution fee savings, and $31 million in trade reporting fee savings.
Chi-X chief executive, Vic Jokovic, said that this showed that “competition was a good thing”, while stressing that the exchange was not just a competitor but also a client of the Australian Securities Exchange (ASX).
“Creating a more competitive market, keeping trading costs low, being quicker with more sophisticated trading technology are just some of the benefits Chi-X is bringing,” he said.
Jokovic also pointed to innovation as a key reason Chi-X was benefiting the local market, saying that the Australian financial services industry had been relatively slow to invent since the Global Financial Crisis (GFC).
“Chi-X plays an increasingly important role in the development and growth of Australian capital and investment markets,” he said.
One such development Chi-X had introduced was trading in the middle of the market, with its mid-point integrated order book allowing every order crossing the spread the opportunity for price improvement.
This had saved investors $230 million since 2011 and was, according to Jokovic, “innovation that clearly happened through competition”.
The exchange accounted for 22.4 per cent of total monthly trades on the local securities market on average, offering 47 trading participants which were responsible for 97 per cent of value traded in the Australian equity market.
Major retail players were on Chi-X, including CommSec, nabtrade, Westpac Online and ANZ Share Investing. Furthermore, Jokovic said that Chi-X was currently talking to all key exchange traded fund (ETF) providers about becoming participants on the exchange, with it already accounting for approximately 35 per cent of all Australian listed ETF trades.