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The Australian Stock Exchange has been goaded into action over the threat posed to its business by New Zealand Exchange's move across the Tasman.
ASX has announced changes to its fee structure, including cutting charges for off market "crosses" by almost 75 per cent.
Crosses are trades between a buyer and seller by the same broker. They account for about 30 per cent of turnover on the ASX which earns about A$18 million ($20 million) from them each year.
ASX's fee cuts are being seen as a response to NZX's AXE ECN joint venture with the five top investment banks. An ECN or electronic communications network is an alternative high-speed, low-cost trading platform that enables large investors to report crosses.
AXE ECN's initial clients will be Citigroup, CommSec, Goldman Sachs JBWere, Macquarie Securities and Merrill Lynch, who are NZX's partners in the venture.
While the ASX has denied the changes to its fee structure were a response to AXE ECN, which is due to commence business by the end of this quarter, AXE chief executive Greg Yanco was in no doubt it was.
"Absolutely, it's directly targeting the business that we're doing."
However, Yanco, a former ASX insider, said AXE's business case was not threatened by the ASX move.
"We've headed for competition on three fronts - price, technology, and innovation. We've clearly been successful in achieving the first goal. The prices we're looking at are still south of what ASX has come up with so it's still full steam ahead for us."
Yanco said AXE was continuing to work with the Australian Government and Investment and Securities Commission to obtain a licence and he was confident an ASX rule requiring all off market trades to be reported to it would be amended or waived.
Yanco believes AXE's initial business, provided by its shareholders, will attract more order flow.
