Multiple Exchanges Herald Better Pricing For Retail CFD Traders

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The Australian Government has announced support for competition between share exchanges. Chi-X, a leading global exchange, has today had their licence approved in principal and it is anticipated that further rival exchanges will commence operating in Australia later this year. This heralds a new dawn in share trading in Australia, with CFD trading company IG Markets posied to make this immediately available to their clients.

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By the end of this year, the face of shares trading in Australia is likely to change forever. Traders will be able to shop around to find the cheapest prices and best liquidity offered by competing exchanges.

The Minister for Financial Services, Chris Bowen MP, today announced the Government's support for competition between share exchanges in Australia. Chi-X, a leading global exchange, has today had their licence approved in principal and it is anticipated that further rival exchanges will commence operating in Australia later this year.

Key points

  • Competing exchanges anticipated to enter the Australian market later this year
  • IG Markets retail CFD traders to instantly compare prices across exchanges and trade at the best price
  • This functionality is already available to IG Markets Australian clients trading UK and European Share CFDs

CFD trading company IG Markets, Chief Executive Officer, Mr Tamas Szabo says “By the end of this year, the face of shares trading in Australia is likely to change forever. No longer will the ASX be the only exchange on which to trade Australian shares, traders will be able to shop around to find the cheapest prices and best liquidity offered by competing exchanges.”

"So, what does this mean for retail traders? Put simply, this will mean better prices and better liquidity and significantly lower fees to view live data than what is currently available today. For example, if a trader today wanted to buy BHP Billiton as a share CFD, IG Markets would offer a price that mirrors the underlying ASX exchange price. With the introduction of competing exchanges, the same CFD trader would be shown the best buy and sell prices across all exchanges, not just the ASX."

IG Markets already offers this service to anyone trading UK or European share CFDs (where there are multiple exchanges operating) and are at the forefront of this market innovation. Mr Szabo says, "Over 45% of all Direct Market Access trades on our UK share CFDs receive a fill, in some part, away from the primary exchange. These fills are saving our clients an average of 4 basis points when compared to the primary CFD price at the time of dealing. That’s an average saving of 40% on standard commissions which has got to be a good thing for anyone trading."

For clients trading UK or European share CFDs, IG Markets use a combination of aggregated pricing technology and smart order algorithms. The pricing technology works behind-the-scenes to combine the best prices from the various exchanges and displays them clearly on IG Markets range of trading platforms. It takes all the hard work out of finding the best prices and volumes to trade.

Once clients place an order, the smart order algorithm will calculate which exchanges the order needs to be sent to in order to achieve the best price. In addition, the smart order algorithm will seek out hidden orders that sit in various “dark pools” (trades that occur away from the market) helping to ensure client orders are filled at the best price available. If you are filled in the dark pool you are likely to enjoy the benefit of being filled at a price even better than what you can see on the ASX or any rival exchange. As a client you would notice nothing other than better prices and better fills over time.

A CFD (or Contract for Difference) is an agreement to exchange the difference in value of a particular asset between the time at which a contract is opened and the time at which it is closed.

About IG Markets

IG Markets specialises in financial derivatives, principally Contracts for Difference trading (CFD trading) on over 7,000 global share CFDs, along with indices, forex, commodities, options, binaries and more. IG Markets is part of the IG Group, a UK FTSE 250 member with over 75,000 active clients worldwide. For further information please call 1800 601 799.

Remember that CFDs and forex are leveraged products and can result in losses that exceed your initial deposit. CFD and forex trading may not be suitable for everyone, so please ensure that you fully understand the risks involved. Please consider the IG Markets PDS before you enter into any transaction with us.

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Paul Daly
IG Markets
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