21 May 2008
APX Launches Individual Licensed Markets
Australia Pacific Exchange Limited will provide Individual Licensed Markets for organisations or managers who do not want to list on the ASX but want or need a regulated market in their securities.
An Individual Licensed Market is:
Individual to each organisation
Regulated by APX under its Australian Market Licence
Transacted on each organisation’s own website
Designed to meet the specific requirements of the organisation
APX CEO Sean Kennedy commented:
“We have launched the Individual Licensed Market in response to client requests and to provide a low-cost solution to the problem of unregulated secondary, or grey, markets.
Many organisations don’t want the rules or characteristics associated with an ASX listing but do want a fair and transparent market for their investors. This group includes cooperatives, companies with restricted articles or employee ownership (rules) or companies and trusts with low stock turnover and low price volatility.
Other broader users of such a market include issuers of debentures, unit trusts and other fungible trading instruments, where a market-based price discovery mechanism provides greater liquidity and transparency than remaining unlisted.
These organisations can design the type of market which most suits its objectives. This would usually be achieved in conjunction with its broker / adviser and we envisage that each market would have its panel of brokers who would research and support the company.
Many smaller and mid-cap organisations do not like short selling and its consequent market implications. Individual Licensed Markets disallow short selling.
Addressing the problem, there are hundreds of unregulated secondary markets frequently transacting in shares, units, managed investment schemes (MIS), fixed interest, life policies and other investments.
Many of the practices in these unregulated markets are often questionable. For example:
Issuers redeeming investments before maturity and charging substantial penalties
(which can effectively mean buying below market price).
Managers buying units for the Management Company or other trusts managed by
them and with greater information than the selling investor creating the perception that
transacting at NTA is fair and reasonable to the selling investor.
In addition, some online sites are offering secondary markets in unlisted investments
such as Forestry MIS.
ASIC has investigated some of the activities in fixed interest markets and announced an inquiry into unlisted property securities.
We will again submit that unregulated secondary markets are highly undesirable in any financial securities and that many of the problems can be overcome by information and price transparency including the input of research and advisory organisations.
The introduction of the Individual Licensed Market provides ASIC with an opportunity to streamline its market supervision operations and address the majority of the issues highlighted. ASIC currently has authorised 45 Exempt Markets which it regulates. Each of these markets could adopt the Individual Licensed Market with compliance undertaken by APX.
The trend in financial markets is for greater transparency with a major aim of protecting investors.
We strongly believe that organisations should have a transparent, regulated market in financial securities; or none at all.
We invite you to contact APX to discuss Individual Licensed Markets. Enquiries can be
directed to:
Sean Kennedy Lorenzo Petroro
CEO Department Manager
APX APX
T: (03) 8601 2074 T: (03) 8601 2036
M: 0414 185 797 M: 0412 747 325
www.apx.com.au