ASX Sales Rise as Analyst Says Competitive Concern Reducing

ASX Ltd. shares rose to the highest level in more than two years after the operator of Australia’s main stock exchange reported a 9.5 percent increase in third-quarter sales and analysts said concern from competition is reducing.

Operating revenue in the third quarter climbed 9.5 percent to A$152.3 million ($158 million) from a year earlier, the Sydney-based company said in a statement. Sales in the nine months through the end of March increased 0.6 percent to A$457.1 million and underlying profit dropped 0.3 percent to A$260.7 million, the company said. The shares rose 0.4 percent to close at A$37.77 in Sydney, the highest since February 2011.

ASX Chief Executive Officer Elmer Funke Kupper successfully fought to keep the exchange’s monopoly in the clearing and settlement of equity trades, is expanding its over-the-counter clearing service for interest-rate swaps and has cut fees for stock-trade reporting and market data to fend off competition from Chi-X Australia Pty and dark-pool operators. Exchanges from the U.S. to Europe and Hong Kong are relying more on derivatives and other services as stock-trading profit wanes.

“The market has now formed the view that we have held for a long time, that regulatory and competitive risks were overplayed,” George Gabriel, a Melbourne-based analyst at Evans & Partners Pty Ltd., said by telephone. “It’s a positive that third-quarter momentum has been strong.” Gabriel has a “positive” recommendation on ASX shares, meaning he sees the shares beating returns on the benchmark S&P/ASX 200 Index in the next 24 months.

ASX maintained its full-year 2013 earnings forecast. Investors will now be looking to ASX’s April activity report, scheduled to be released May 3.

Clearers act as central counterparties in derivatives contracts to dilute the risk of default. Dark pools are private trading venues that don’t display prices until after trades take place.