Comments on: ASX Does Not Want a Competing Exchange to Operate in Australia

By: cb

cb — Mon, 05 Oct 2009 05:08:13 +0000

Interestingly, the futures exchange was absorbed by the ASX not that long ago. But, hey, the failure of Ansett did not preclude the subsequent success of Virgin in this country, did it? So, let there be competition, I say, and let those spoiling for a fight, have it.

By: Sandra

Sandra — Mon, 05 Oct 2009 02:01:36 +0000

Well said Jared

(finally a real mann …

By: Jared Mann

Jared Mann — Sat, 03 Oct 2009 03:54:40 +0000

Yes your spot on with ASX playing the game trying to protect their monopoly, it was the same deal with the NYSE specialists when they owned the market. In 1996 the average spread of a listed stock was 0.28 then came decimalization, de-regulation and a fair level playing field for other exchanges to compete, now the high frequency traders make markets and as a result the average spread on listed stocks has gone down to 0.016 purely as a result from arbitrage, so the ASX is speaking pure bullshit and I say bring on a competing exchange, I will definitely be providing liquidity on it, and we should all get lower commissions plus tighter spreads and more accurate asset pricing.

By: cb

cb — Sat, 03 Oct 2009 02:42:36 +0000

Ohooh, PF, won’t such practicalities once again spoil an otherwise good yarn?

By: Peter Fraser

Peter Fraser — Fri, 02 Oct 2009 23:25:53 +0000

Kris Sayce, discussing the main theme of this article, I’m not against creating competition for the asx, but remember we had a number of state stockmarkets that amalgamated because each one was not really viable as an efficient organisation on its own.

If you look at recent history when Keating let in foreign banks, we did have about twenty at one point, and now we are back to the same big four with a few minor players.

Telecommunications ia another area where we tried to instil competition, and after the fall of One Tel and co we really only have two, and one of them can’t supply decent coverage.

Therefore before we just create another exchange, do we have any research or due diligence that lends support to two viable healthy exchanges. If one is just a poor cousin struggling to survive, it will not be competition but just be a distraction in the market, and will impede growth for companies that list with it.

If the US can only support two real alternatives, can we?

I’m not against the idea, but do you have any real argument to support this idea other than a general warm feeling about creating competition?

By: cb

cb — Fri, 02 Oct 2009 06:37:32 +0000

darn these typos, ‘real estate agents’, I meant to say, of course.

By: cb

cb — Fri, 02 Oct 2009 06:36:04 +0000

spot on, PF. RR’s job does not depend on keeping any particular boom or bubble alive, but on the overall accuracy of his calls and the soundness of the justificantions he brings in support of them. His motivational structure is quite different from a real estats and politicians with whom he is being lumped together by Sayce and Co.

By: cb

cb — Fri, 02 Oct 2009 06:30:50 +0000

BB, you said:
“If credit is strangled and the cost of servicing loans becomes higher how will this not impact on prices despite the strength of any demand issues?”
This is a good conditional argument, but by its very nature, its consequent obtaining depends on the truth of its antecedents, and any other conditions that might be built into the argument. There are three of these to be considered:

1. Credit is being strangled. Credit, unfortunately has been quite seriously tightened, and I have been personally despairing over the fact. But perhaps it would be an exaggeration to say that credit has been strangled. Well rated borrowers can still obtain credit. Also, it is not known whether, and for how long, tightened up conditions are going to last, so we have a potential element of uncertainty here with regard to one of the antecedents that should weaken confidence in the materialisation of the consequent.

2. The cost of servicing loans is going to become higher. Again, this is what the RB jawboning will have you believe, not to mention the obligatory mantra of any opposition that “the sky is falling in.” You need to take this with a grain of salt, I would say, for although we will at some point see higher interest rates, we will not see sharp rises, unless the economy picks up serious steam. I do not see this happening for a while. If anything, we will be facing ongoing headwinds from the global downturn, and recovery will be subdued.
Now, this could change here in Australia, if we entered an insane housing boom like they did in the US following 9/11. This is not very likely, nor would it be desirable, as it would, almost for sure, end in a spectacular bust, just like it did overseas.

3. If demand from population growth increases, it can still overwhelm the dampening effects on prices from tighter credit and higher servicing costs. It just depends which one works out to be the stronger. It is impossible to tell this in the abstract, but we cannot assume that dampening effects will overwhelm that demand. They may, and may not. With increased population growth, there might just work out to be more people eligible for loans than tightening conditions disqualify. It is a possibility, and hence, it is a third condition on account of which the consequent of the argument might not obtain.

By: Peter Fraser

Peter Fraser — Fri, 02 Oct 2009 06:01:25 +0000

cb – Yes anyone who works for an organisation who is perceived to have a vested interest suffers from that “spruiking” name calling. However these guys make calls on the economy very publically and of course sometimes they are wrong. But if they are not right most of the time their credibility suffers, and they are then unemployable in that role.

I think that they have a vested in interest in being right to maintain their employment, but suffer from being only human. Even Keen who was so wrong on his call, I do not think that he made that call for any other reason other than he thought he was right, so I don’t think less of his ethics beacuse of that. Everyone (yes even me) is wrong sometimes.

By: cb

cb — Fri, 02 Oct 2009 05:54:17 +0000

And, should I add, when it comes to predictions as important as this, there should be no excuses being marshalled in defence of anyone. It is a well known fact that politicians and banksters have have huge stakes in the economy and that they will take every opportunity to meddle. And if so, this must be taken into consideration, something that RR did, and SK failed to do. If meddling is what made the difference, then so be it. The bottom line is that RR has shown himself to be on top of his game.