The ASX or Australian Securities Exchange is about to lose its virtual monopoly status as the country’s top stock exchange.

The ASX or Australian Securities Exchange is about to lose its virtual monopoly status as the country’s top stock exchange. Our money regulator, the Australian Securities and Investments Commission (ASIC) has permitted a small-time rival to be a full competitor to country’s gatekeeper for the companies that can or can’t list on our stock exchange publicly to attract funds from investors.

While this rival, CBOE Australia, is small here because it has been given a limited role with investments, going forward it will be able to list new companies just like the ASX. And the local ASX will be in for some real competition because the local CBOE operation is owned by the Chicago-based CBOE Global Markets, which has deep pockets and is used to the tough competitive world of US stock and options trading.

By the way, this US business came out of the Chicago Board of Options Exchange, which is the biggest options exchange in the world with revenues over US$4 billion a year, so the ASX can expect some real competition. Local companies and investors should benefit from ASIC’s decision. And CBOE sees some $US40 billion of trading go across its platform each year!

This ASIC decision comes after ASX had an embarrassing outage last year that stopped trading, along with the clearing and settlement processes that’s crucial to professional and retail investors who play the market.

While CBOE has had difficulties attracting business, they were innovative and were the first to introduce cryptocurrency and fixed income exchange traded funds (ETFs).

Anyone with any experience trying to list a company in Australia knows dealing with the ASX has been expensive and drawn out time wise, which has discouraged some businesses from going public.

Of course, While the ASX will remain the elephant in the room, over time CBOE Australia will be looking to eat the elephant’s lunch, and that will be a real plus for companies and investors.

Not only will there be competition on price, the ‘new kid on the block’ will undoubtedly look at all the customer-unfriendly practices that companies and investors have had to cop from the monopoly ASX and do its best to offer some real service.

The only investors who’ll complain about this ASIC move might be investors who are long the stock ASX Ltd. The chart below shows that the market suspected the ASX’s days of being a monopoly were numbered.

On May 9, the stock was at $72.59. Today it’s $58.06, a 20% slide that suggests maybe some smarties anticipated that ASIC was likely to end the ASX’s monopoly.

ASX Limited

Last year, the ASX made a net profit after tax of more than half-a-billion, which was a 7.5% increase on the previous year. This was similar to a huge business like Harvey Norman, which saw a 47% increase in its profit last year. And Gerry did that with a lot of competition from the likes of JB Hi-Fi and other great retailers.

That kind of money for the ASX might be harder to make going forward with a new rival. And the need for this monopoly to advertise, be more price competitive and consumer-friendly will be a long overdue change.

Well done, ASIC!