(Pictured: Peter Hiom)
Allowing the trading of international shares may well be the next challenge for ASX as it rolls out its “investment supermarket” strategy for Australian investors, but right now the mFund initiative is taking precedence, according to a roundtable organized last week by BNP Paribas Securities Services.
A total of 18 fund managers, fiduciary investors and consultants attended the roundtable in Sydney to hear the ASX deputy chief executive, Peter Hiom, and general manager of listings and issuer services, Max Cunningham, outline the ASX plans and discuss a range of issues facing investors and their agents.
The “investment supermarket” concept has come about because the ASX has been widening its offering in the past couple of years. This has included trading of bonds, new derivatives, the mFund development which was launched in May, and a proposed revitalization of the retail bond market, to coincide with increasing demand from the growing retirement market.
Hiom said, however, that the ASX was not going to just throw things up for the sake of it. There has been renewed focus on providing a smorgasbord of new products and services so our customers have access to a world-class range of investment choices,” he said. “ASX wanted to make sure that the market had a genuine appetite for any new services to be introduced. He thought international shares would fit the bill too.
ASX has proposed an arrangement to provide trading in international shares before, Hiom said, but it had difficulty getting the idea past the regulator due primarily to issues around directors’ responsibilities and concerns about whether retail investors would be fully informed. Dual-listed stocks was an example of a communications challenge.
“Basically they would be unsponsored depository receipts,” Hiom said. “Perhaps we should take conservative steps and make it an institutional-only product to begin with, avoiding dual-listed stocks at first. Retail investor awareness and education could then follow. Max [Cunningham] and I have set ourselves the task over the next 12 months of revisiting the initiative and getting it right.”
With mFund, as has been previously reported, the ASX and managers are hopeful of attracting more investors from the SMSF market to buy and redeem managed funds through the ASX clearing system. For managers, this also potentially opens up a new distribution system of stock brokers.
Cunningham said that the SMSF investor was “front and centre” in ASX minds as offering potential for growth. “It’s a challenge for everyone to engage with that market,” he said. “I don’t think anyone has really mastered it as yet.”
He also said that the ASX was always aware it needed to maintain its neutral position in the marketplace. “It’s not our place to pick winners. ASX provides the infrastructure.”
Asked several questions about the regulators, Hiom said he believed ASIC and the RBA had done well through the global financial crisis, perhaps helped by being able to see what was happening in the US and learning from the experience.
Nevertheless he had doubts about some suggestions currently before discussion, such as allowing competition through additional clearing and settlements houses. The Australian market might not be big enough and the end investor might be worse off as a result. “With increased fragmentation often comes increased risk,” Hiom said. “You have to ask yourself whether it’s worth it.”
– Greg Bright
Pictured from left to right: Drew Vaughan and Peter Baker; Lisa McCallum, OneVue; Lounarda David, Sunsuper; Michael Gordon, Perpetual; Peter Baker, BNP, and Max Cunningham; Steve Knight, TCorp; Susan Roberts, Lazard.
– photos by Christine Bright
