(Episode 855: 10 minutes 00) Listen on iTunes.
ASIC has cleared the way for Chi-X to start operating from the end of this month. What impact will it have on trading?
This isn't an exchange with its own listing, like the Nasdaq, for example. Instead it's an alternate means for traders to buy and sell shares listed on the ASX. In this edition of BTalk, Prof. Michael Aitken, chief scientist at the Capital Markets Cooperative Research Centre, says it's not a money-spinning operation --- the motivation is, pure and simple, to get the cost of trades down. The arrival of CHI-X in London, he says, dropped trading prices by as much as 90 percent.
So is it good for the economy? You could argue that it will increase the appetite for trading. Michael Aitken says the resulting high volume trading should ensure that a more accurate value is placed on listed entities. Or could it create the momentum that sees more stocks get out of kilter with their value faster?
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