1. BY- Anil Vishnoi, 769

2. AN INTRODUCTION to STOCK MARKET
 A stock market or equity market is a public entity (a loose
network of economic transactions, not a physical facility or
discrete entity) for the trading of company stock (shares) and
derivatives at an agreed price; these are securities listed on a
stock exchange as well as those only traded privately. The stocks
are listed and traded on stock exchanges which are entities of a
corporation or mutual organization specialized in the business
of bringing buyers and sellers of the organizations to a listing of
stocks and securities together. Market participants include
individual retail investors, institutional investors such as mutual
funds, banks, insurance companies and hedge funds, and also
publicly traded corporations trading in their own shares.
 The size of the world stock market was estimated at about $36.6
trillion at the beginning of October 2008. The total world
derivatives market has been estimated at about $791 trillion face
or nominal value, 11 times the size of the entire world economy.

3. AUSTRALIA- ECONOMIC OVERVIEW
 The economy of Australia is one of the largest capitalist
economies in the world with a GDP of US$1.57 trillion.
With a relatively high-growth and low-inflation economy
supported by robust political and economic institutions,
and an internationally competitive business sector,
Australia now ranks as the 12th largest economy in the
world (measured by GDP), and the 4th largest in the Asia
Pacific region.
 This firm international standing is reflected in the fact that
Australia’s three largest trading partners – China, Japan
and the United States - are also the three largest economies
in the world; and its two largest investment partners - the
US and UK – are home to the world’s largest capital
markets. The Australian economy is dominated by
its service sector, comprising 68% of GDP.

4. Australia- Economic Overview- continued……
 Spurred by its healthy political and economic position, Australia
has become an attractive investment destination for global
investors as well as home to many major multinational financial
services providers. With a diverse investor group comprised of
40% foreign investors, 40% domestic institutional investors and
20% retail investors, the Australian equity market is well placed
in the global economy.
 The Australian Securities Exchange in Sydney is the largest
stock exchange in Australia and in the South Pacific and ranks
9th in the world in terms of market capitalisation.
 There are basically two main stock exchanges in Australia:-
 Australian Securities Exchange (ASX)
 National Stock Exchange of Australia (NSX)

5. Australian Securities Exchange (ASX)
 INTRODUCTION
 The Australian Securities Exchange (ASX) is Australia's primary securities
exchange. It was created by the merger of the Australian Stock Exchange and
the Sydney Futures Exchange in July 2006. Today, ASX has an average daily
turnover of $4.685 billion and a market capitalisation of around A$1.4 trillion,
making it one of the world's top-10 listed exchange groups, comparable to the
New York Stock Exchange, London Stock Exchange and Deutsche Boerse.
 HISTORY
The ASX Group's origins as a national exchange go back to 1987. The Australian
Stock Exchange Limited was formed in 1987 after the Australian Parliament
drafted legislation that enabled the amalgamation of six independent state-
based stock exchanges. Each of those exchanges brought with it a history of
share trading dating back to the 19th century.
 In 2006 The Australian Stock Exchange merged with the Sydney Futures
Exchange and originally operated under the name Australian Securities
Exchange.
 Later, however, ASX launched a new group structure to better position it in the
contemporary financial market environment. From 1 August 2010 the
Australian Securities Exchange has been known as the ASX Group.

6. Australian Securities Exchange (ASX)- Continued…….
 ASX Group is a market operator, clearing house and payments system
facilitator. It also oversees compliance with its operating rules, promotes
standards of corporate governance among Australia's listed companies
and helps to educate retail investors.
 REGULATION
 The Australian Securities and Investments Commission (ASIC) has
responsibility for the supervision of real-time trading on Australia's
domestic licensed financial markets and the supervision of the conduct
by participants (including the relationship between participants and
their clients) on those markets. ASIC also supervises ASX's own
compliance as a public company with ASX Listing Rules.
 ASX Compliance is an ASX subsidiary company that is responsible for
monitoring and enforcing ASX-listed companies' compliance with the
ASX operating rules.
 The Reserve Bank of Australia (RBA) has oversight of the ASX's clearing
and settlement facilities for financial system stability.

7. Australian Securities Exchange (ASX)- Continued…….
 PRODUCTS
 Products and services available for trading on ASX include
shares, futures, exchange traded options, warrants, contracts for
difference, exchange-traded funds, real estate investment trusts,
listed investment companies and interest rate securities.
 The biggest stocks traded on the ASX, in terms of market
capitalisation, include BHP Billiton, Commonwealth Bank of
Australia, Westpac, Telstra, Rio Tinto, National Australia
Bank andAustralia and New Zealand Banking Group.
 The major market index is the S&P/ASX 200, an index made up
of the top 200 shares in the ASX. This supplanted the previously
significant All Ordinaries index, which still runs parallel to the
S&P ASX 200. Both are commonly quoted together. Other
indices for the bigger stocks are the S&P/ASX 100 and S&P/ASX
50

8. Australian Securities Exchange (ASX)- Continued…….
 TRADING SYSTEMS
 ASX Group has two trading platforms - ASX Trade,[ which
facilitates the trading of ASX equity securities and ASX Trade24
for derivative securities trading.
 All ASX equity securities are traded on screen on ASX Trade. ASX
Trade is a NASDAQ OMX ultra-low latency trading platform
based on NASDAQ OMX's Genium INET system, which is used
by many exchanges around the world. It is one of the fastest and
most functional multi-asset trading platforms in the world,
delivering latency down to ~250 microseconds.
 ASX Trade24 is ASX global trading platform for derivatives. It is
globally distributed with network access points (gateways)
located in Chicago, New York, London, Hong Kong, Singapore,
Sydney and Melbourne. It also allows for true 24-hour trading,
and simultaneously maintains two active trading days which
enables products to be opened for trading in the new trading day
in one time zone while products are still trading under the
previous day.

9. Australian Securities Exchange (ASX)- Continued…….
 SETTLEMENT
 Investors hold shares in one of two forms. Both operate as uncertificated holdings (rather
than through the issue of physical share certificates):
 Issuer-sponsored. The company's share register administers the investor's holding and
issues the investor with a security-holder reference number (SRN) which may be quoted
when selling.
 Clearing House Electronic Sub-register System (CHESS). The investor's controlling
participant (normally a broker) sponsors the client into CHESS. The investor is given a
holder identification number (HIN) and monthly statements are sent to the investor
from the CHESS system when there is a movement in their holding that month.
 Holdings may be moved from issuer-sponsored to CHESS or between different brokers
by electronic message initiated by the controlling participant.
 SHORT SELLING
 Short selling of shares is permitted on the ASX, but only among designated stocks and
with certain conditions:
 ASX Trading Participants (brokers) must report all daily gross short sales to ASX. The
report will aggregate the gross short sales as reported by each Trading participant at an
individual stock level.
 ASX publishes aggregate gross short sales to ASX participants and the general public.
 Many brokers do not offer short selling to small private investors. LEPOs can serve as an
equivalent, while contracts for difference (CFDs) offered by third-party providers are
another alternative.
 In September 2008, ASIC suspended nearly all forms of short selling due to concerns
about market stability in the ongoing global financial crisis. The ban on covered short
selling was lifted in May 2009.

10. Australian Securities Exchange (ASX)- Continued…….
 OPTIONS
 Options on leading shares are traded on the ASX, with standardised sets of
strike prices and expiry dates. Liquidity is provided by market makers who are
required to provide quotes. Each market maker is assigned two or more stocks.
A stock can have more than one market maker, and they compete with one
another. A market maker may choose one or both of:
 Make a market continuously, on a set of 18 options.
 Make a market in response to a quote request, in any option up to 9 months
out.
 In both cases there is a minimum quantity (5 or 10 contracts depending on the
shares) and a maximum spread permitted.
 Due to the higher risks in options, brokers must check clients' suitability before
allowing them to trade options. Clients may both take (i.e. buy) and write (i.e.
sell) options. For written positions, the client must put up margin.
 MARKET INDICES
 The ASX maintains stock indexes concerning stocks traded on the exchange in
conjunction with Standard & Poor's. There is a hierarchy of index groups called
the S&P/ASX 20, S&P/ASX 50, S&P/ASX 100, S&P/ASX 200 and S&P/ASX 300,
notionally containing the 20, 50, 100, 200 and 300 largest companies listed on
the exchange, subject to some qualifications.

11. National Stock Exchange of Australia- NSX
 National Stock Exchange of Australia (NSX) is a stock exchange based
in Newcastle, Australia. It is owned and operated by NSX Limited, which is
listed on the Australian Securities Exchange on 13 January 2005. It also operates
SIM Venture Securities Exchange. On 20 December 2006 the Newcastle Stock
Exchange formally sought approval and was granted a change of name by the
Minister to National Stock Exchange of Australia and still trades by the
acronym of "NSX".
 The NSX lists various companies within Australia and overseas that meet its
listing rule requirements. Trading is all-electronic based on time and price
priority using NETS (the NSX Electronic Trading System) which is based on
the NASDAQ OMX X-stream trading platform. Settlement of securities is
electronic and on a T+3 basis utilising the ASTC CHESS system.
 HISTORY
 The NSX was founded in 1937 and in the past had listed as many as 300 local
and regional companies. Some grew to become significant businesses, such
as Brambles Limited. It was reactivated in its present form in 2000 with about
70 listed companies.
 In 2011, National Stock Exchange of Australia featured on 2011 Mines and
Money Australia conference on mining and investments

12. NSX-Continued……..
 TRADING SYSTEMS
 The National Stock Exchange of Australia has been
operating as an Australian Market Licencee since
February 2000. In April 2005 NSX of Australia
acquired the Bendigo Stock Exchange (currently
known as the SIM Venture Securities Exchange or
SIMVSE). Both markets operate on international
standard electronic trading systems and settlement is
available electronically via ASX Clear CHESS system or
manually for non-CHESS enrolled securities.

13. NSX-Continued……
 TRADING SCHEDULE
 National Stock Exchange of Australia has a start-of-day
enquiry session from 2:30am to 3:00am, a pre-open
sesstion from 3:00am to 10:00am, a normal trading
session from 10:00am to 4:00pm, and a post-market
session (end-of-day enquiry) from 4:00pm to 11:00pm
(all times in AEST).
 Current holidays: Good Friday, Easter Monday, Anzac
day (25 April), Queen's birthday (June) and Christmas
Day (25 December) and New Year's Day (1 January).

14. NSX- Continued……..
 MARKET INDICES
 Below is the list of all NSX indices:
 NSX All Equities Index
 NSX All Agriculture Index
 NSX All Finance Index
 NSX All Investment Index
 NSX All Property Index
 NSX All Resources Index
 NSX All Technology Index
 SIMVSE All Equities Index


15. NSX- Continued………….
 SIMVSE Joint Venture with FEX
 FEX Group owns 50% of the SIM Venture Securities
Exchange (SIM VSE) in a joint venture with the National
Stock Exchange of Australia, which was launched in July
2010. SIM VSE operates a securities market specialising in
driving investment in the clean technology, renewable
energy, biological science and related technology and
service industries. SIM VSE has trading capability in cash
equities executed using the NasdaqOMX X-Stream trading
platform. Orders are entered by market participants via the
electronic market interface. The trading platform compares
bid and offers entered into the system and automatically
executes trades in strict time/price priority. Trades are
settled through CHESS.

16. Australian Stock Market Report
Thursday 10, October 2013

SUMMARY CLOSE MOVEMENT PERCENTAGE
CHANGE
All Ordinaries 5151.60 3.50 0.10
All Industrials 5153.00 3.60 0.10
50 Leaders 5317.80 4.00 0.10

17. Australian stock market to improve
in 2014: UBS
 UBS anticipates the Australian stockmarket will improve in
2014 as the lower Australian dollar and interest rates begin
to have a positive impact and business confidence lifts post
the federal election.
 The investment bank thinks the Australian market
currently offers good value based on price-earnings
multiples and forecasts earnings per share (EPS) growth in
the next financial year to be between 6-7%, against the
market estimate of 10%.
 The bank listed four reasons as to why the Australian
market has dropped by over 10% since May: it was looking
expensive, it was too heavily overweight yield compared to
other markets, the pullback from foreign investors amid
the falling dollar and increased fears about the Australian
economy.

18.  However, the effects of interest rate reductions and
lower $A are beginning to kick in, which will boost
corporate earnings in the medium term.
 The investment bank estimates the drop in the $A to
93 cents from $1.04 will boost Australian companies'
aggregate market earnings by 4% in 2013-14, and by 2%
excluding the resources sector.

19.  "While the economy and earnings cycle will likely continue
to work through the current soft patch, the foundations are
likely being laid for a better CY14 rather than a slide into
outright contraction," UBS said.
 But UBS said the key risk to this is the domestic economy
outside of negative shocks from China, with increased talks
about a recession dampening sentiment.
 "Sentiment towards the economy has clearly soured in
recent months as the capital spending cycle has begun to
weakn while the non-mining economy remains subdued,"
the bank said.