Chi-X - a formidable disruptor

Last year was the first year that Australia's 'secondary' stock exchange - Chi-X - traded through $1 trillion in Aussie equities, a substantial milestone according to Chi-X chief executive officer, Vic Jokovic.

"It was an unusually busy 2020 right across the finance industry, and certainly for exchanges, so the ASX and Chi-X had big years in terms of volumes," he said.

Gaining market share

It may have started as a bit player when it launched nearly 10 years ago but today almost every stock that trades on the ASX is also available to trade on Chi-X and it has around 17 to 19 per cent market share in cash equities.

"Most days well over 1000 companies trade on our exchange. If you can trade a top 1000 corporate name on ASX it's probably trading on chi-x as well," Jokovic said.

Jokovic doesn't expect the exchange to overtake the ASX anytime soon in market share, although it is not completely out of the question, and definitely not out of the question for some products like warrants and listed products.

In the warrant market Chi-X has about 30% to 35% of volumes every day - versus the ASX's 60% to 65% - and there have been some days where it has been close to 50%.

"And in the ETF market we've had days where we've been up above 40%," Jokovic says.

Listed fund focus

A targeted marketing strategy to get some big-name fund managers listing their products on Chi-X has also paid off, with 11 funds listing on Chi-X over the past 12 months.

"What we've tried to do is try to list managers who are household names - Janus Henderson, Perennial, Kapstream, Magellan, Switzer - brands that are pretty well known," Jokovic told Industry Moves.

"We have a lot of interest from a lot of established product issuers...either listing new funds or taking funds that are currently available in an unlisted format and bringing those funds into a listed world."

He expects to have somewhere between 5 and 10 additional funds listing over the next quarter and 100 funds on the exchange in the next 12 months.

Price is an attraction for fund managers looking to list products on Chi-X, as it is cheaper than the ASX, but the newer exchange is also prepared to work with issuers in a "slightly different way," according to the CEO, and is not beholden to an existing set of rules.

"We will work with the fund managers and the regulator to sort of find a way," he says.