Chi-X Australia Pty. says its market share of Australian equity trading will grow to at least 25 percent within the next 12 months as banks and brokerages increasingly split trade orders between itself and ASX Ltd.
Chi-X’s share of local equity trading reached a record 18.4 percent on Aug. 27, with an average daily value of A$244 million last month, according to data compiled by Bloomberg. That will grow to at least 25 percent in 2014 after an increase in so-called passive order flow, or orders to buy shares that wait in a queue to be picked up by a seller, said John Fildes, chief executive officer at Chi-X Australia.
“We will see more split posting of orders,” on Chi-X and ASX, Fildes said in an interview in Sydney. “Now’s it’s about deepening the order book by building the passive side and it’s about brokers developing their capability to split-post orders.”
Chi-X, backed by Nomura Holdings Inc., which began trading in all companies on the benchmark S&P/ASX 200 Index in November 2011, competes with ASX, the former monopoly public venue for share trading in Australia. The outcome of a Sept. 7 general election will boost stock-trading volumes, Fildes said.
“We’ve heard from retail brokers and institutional brokers that they feel investors have been sitting on the sidelines because of uncertainty about who’s going to be in power and what their policies are going to be,” said Fildes.
“In the last few days, we have seen an appreciable up-tick in volume as people get a feeling of some certainty about the outcome. By next week, there will be a real outcome and that’s when people will really come off the fence and we’ll see volumes come back into the market.”
Daily average trading volume in Australian shares last week was higher than that of the past three months, according to data compiled by Bloomberg.
The Liberal-National coalition, led by Tony Abbott, is on track to defeat Prime Minister Kevin Rudd’s ruling Labor Party on the weekend, polls show. Abbott will inherit record-low interest rates designed to support an economy in which unemployment is rising.
Stock exchanges and alternative trading venues have struggled with weaker volumes in recent years amid uncertainty in the global economy and as investors execute trades in so-called dark pools, which don’t publicly display live prices. The number of shares changing hands daily in the U.S. has fallen by one-third since 2009 to 6.2 billion this year, according to data compiled by Bloomberg.
Chi-X Global Holdings LLC also owns an alternative trading platform in Canada.