ASX Profit Gains as Trading Volumes Rise With Equity Markets

ASX Ltd., the operator of Australia’s main stock exchange, posted a 2.7 percent increase in full-year profit after trading volumes climbed.

Net income in the 12 months to June 30 rose to A$348.2 million ($312.7 million) from A$339.2 million a year earlier, the Sydney-based company said in a statement today. That was in line with the A$348.8 million median estimate of four analysts surveyed by Bloomberg. Trading volumes of equity derivatives and interest-rate futures increased.

ASX Chief Executive Officer Elmer Funke Kupper has expanded the exchange’s over-the-counter clearing service for interest-rate swaps, raising A$553 million this year to comply with new regulations for operators into European markets. Equity trading volumes were buoyed by a 17 percent surge in Australia’s S&P/ASX 200 Index in the year through June 30, even as competition grew from Chi-X Australia Pty and dark-pool operators, which don’t publicly display prices until after the transaction has taken place.

“The global economy was generally more stable,” Funke Kupper said in a statement. “This flowed through to improving activity levels in Australia’s financial markets as the year progressed.”

ASX gained 14 percent this year through today, giving the company a market capitalization of A$6.8 billion. The Bloomberg World Exchanges Index gained 15 percent this year through yesterday. ASX shares fell 1.4 percent to A$35.12 at the close in Sydney today and the S&P/ASX 200 Index lost 0.5 percent.

Monopoly Victory

The Australian bourse won its battle in February to maintain a monopoly in the clearing and settlement of equity trades for at least the next two years. Clearers act as central counterparties in derivatives contracts to dilute the risk of default. Derivatives last year comprised 32 percent of ASX sales, the largest component.

The Group of 20 nations has ordered a global overhaul of rules governing derivatives contracts, mandating the use of central-clearing parties by traders. Regulators have sought tougher rules for over-the-counter derivatives since the 2008 collapse of Lehman Brothers Holdings Inc. and the rescue of American International Group Inc., two of the largest traders of credit-default swaps.

Since the Australian exchange operator had a $8.3 billion merger with Singapore Exchange Ltd. vetoed by the government in 2011, Hong Kong Exchanges and Clearing Ltd. took over the London Metal Exchange and the Japan Exchange Group Inc. was formed from a merger of rivals in Tokyo and Osaka. Regulators approved IntercontinentalExchange Inc.’s bid for NYSE Euronext in June.

Any further mergers “will be driven by Europe and North America where the pressures for consolidation are greater than they are in our timezone,” Funke Kupper said in a Bloomberg TV interview in Sydney. “We have no pressure to do anything, we have no plans to do anything. But of course we are very well positioned whatever that future holds.”

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