The Australian Securities Exchange, or ASX for short, is the main stock exchange in Australia. Its modern form began in 2006 as a merger of the Sydney Futures Exchange and the Australian Stock Exchange. It’s earliest beginnings were in the six different stock exchanges of Adelaide, Perth, Melbourne, Hobart, Sydney, and Brisbane. Buying and selling on the ASX is not as difficult as first-time investors may fear.
There are two times in which shares can be purchased. The first is when a company goes public for the first time and offers shares in order to raise some revenue. This is known as a float. The second point is after the float when investors must purchase stocks from other investors in the share market. Stocks purchased on the ASX can only be bought from brokers.
Stockbrokers will require you to provide the money upfront before taking an order to buy shares. Most brokers will ask you to set up an account with them. This may take anywhere from 24 hrs. to a week to complete. They may also require you to have a cash-management account with an authorized bank. The broker will have access to this account in order to transfer your money as payment for shares, and to pay you for any shares that you sell.
Traders can place an order at current market price, or set rules for purchasing when a share hits a certain price level. When dealing with a broker in-person or over the phone, always confirm the details of your purchase. Make sure to ask for the current market prices. Inform the broker of the details of your trade, including the amount of shares, and any other rules for buying or selling.
In the ASX trading system, orders get placed by licensed brokers from established firms. Orders get matched and sales happen in the order that they were placed into the system. This gives an equal playing field to both small orders and larger trades. Traders will then receive a contract note that holds all of the details of the trade.
Shares must change title within three days of a trade. Payments must be made and shares must be provided within this limit. Shares can also be held in an electronic system called C.H.E.S.S. This stands for Clearing House Electronic Sub-register System. Traders must use a broker to act as their sponsor in the C.H.E.S.S. system.