Holmes Institute: Comparative Analysis of ASX and NSX (HC2091) Report

This report provides a comprehensive comparative analysis of the Australian Securities Exchange (ASX) and the National Stock Exchange (NSX). It begins by outlining the listing requirements for companies on both exchanges, including criteria related to shareholder numbers, free float, company size, and working capital. The report then delves into the various indices used by the ASX and NSX, explaining their features and importance to investors. Furthermore, it explores the financial products traded on the ASX, such as shares, bonds, and ETPs, comparing their key features, risk profiles, and potential returns. Finally, the report offers a historical overview of the ASX, detailing its formation, evolution, and current role within the Australian financial market. The assignment includes references to support the analysis.

Running head: ASX LISTING REQUIREMENTS
ASX Listing Requirements
Name of the Student
Name of the University
Author Note

1ASX LISTING REQUIREMENTS
Table of Contents
Question a....................................................................................................................2
Question b....................................................................................................................5
Question c.....................................................................................................................7
Question d....................................................................................................................9
References.................................................................................................................10

2ASX LISTING REQUIREMENTS
Question a
Listing requirement of ASX
To get listed in the Australian stock exchanges the companies have to follow
some specific requirement which are also known as the requirements. These listing
requirements are made to ensure that the ASX can maintain quality in its operations
and to provide correct and reliable information’s to the investors. The minimum
criteria that are essential to be disclosed by the companies includes, the structure
and size of the organisation, free float and number of shareholders.
For all these categories there are some general requirement which are
specified by the ASX these are stated in the tabular form
Criteria Requirement
Total number of shareholders There should be minimum 300 non-
affiliated investors
Free float 20%
Company size based on profit test
Company size based on asset test
For continuous 3 years the company
should make a profit of $ 1 million from
its operating activities and a
consolidated profit of $500000 form its
continuous business activities on the
last 12 months.
The value of the net assets should be

3ASX LISTING REQUIREMENTS
$4 million or
The market capitalisation should not be
less than 15 million
Beside these common rules there are some other points which are to be
considered for getting listed in the Australian securities exchange these are
explained below
Working capital requirement
If a company is seeking to get listed under the profit test method then no
working capital requirement is essential for such companies.
If the company wants to get listed by using the asset test then it should have a
working capital of 1.5 million.
This amount of working capital mist be available after considering the first
years budgeted administration cost and the acquisition cost of assets that are
referred in its prospectus.
The prospectus should also provide a statement in which it is to be declared
that the company has enough working capital to meet its day to day activities
(Shimeld Williams and Shimeld 2017).
Ongoing reporting requirements
 In Australia financial reports are to be prepared on half yearly and annually.
 The companies which does not earn profit also have to file quarterly cash flow
statements

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 The oil and gas exploration companies have to file their cash flow statements
on half yearly and quarterly basis.
Listing requirement under the NSX
 The general requirements are stated below
 The comp any which wants to get listed in the NSX must be duly incorporated
or else it should be formed as per the laws of the commonwealth of Australia
or the state laws.
 The corporation must be registered under the corporation act
 The business activity of the corporation must be suitable for listing.
 The applicant must have a track record under that particular management
which has shown character and honesty in performing their business
activities.
 In the case the organisation is a new one and wanted to get listed in the NSX
it has to disclose the latest 12 months audited financial reports.
 The securities which are to be listed should have the following features
 It should be easily transferable on the stock exchange
 The securities must comply with the requirement provided under the chapter 5
of the provisions of the guidelines of NSX.
 At least 25% shares of the corporation must be in the hand of normal public
that is they should not be the directors of the company. The minimum number
of shareholders should be 50.
 The minimum value of the market capital should be $500000.
From the analysis of the various listing requirement applicable for both ASX
and NSX it can be said that the ASX have more stringent rules in comparison to the

5ASX LISTING REQUIREMENTS
NSX. The basic requirements like the value of the companies and the percentage of
floating is more stringent in case of ASX rather than for NSX (Sigler Parker and
Martinus 2017).
Question b
There are several kind of indices in the ASX and the NSX all the features of
such indices are explained in derails
ASX indices
All technology indices
The all technology index of the ASX contains all the listed companies in
Australia that carry operations in the technology sector.
Capitalisation indices
This indices is the most commonly used indices in Australian equity market.
This indices represents the aggregate of the market capitalisation of the
organisations. The variations in this index indicates a change in the aggregate
capitalisation of the constituents of the index due to the change in the share price
(Okello 2018).
Franking credit adjusted index
This index gives a measurement of the after tax performance of the equities
which can be helpful for these investors who are interested for getting tax
exemptions and have superannuation portfolio (Shimeld Williams and Shimeld
2017).
Fixed income index

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This index consists of the performance of the bond market and the money
market. This an index that measures the changes occurred in the bond and money
market in Australia. This is useful for the investors who make investment in fixed
income generating securities.
Residential property index
Residential property index is used to measure the risk and return associated
with various residential properties available in different localities in Australia.
Sector index
The sector index is useful to measure the performance of a specific sector in
the stock market. Every company is classified as per its sector and according to such
classification the market sector indices is formed (Artiach Gallery and Pick 2018).
Strategy indices
The performance of investment strategy can be tracked from the strategy
indices. In disparity to capitalisation indices and the sector indices which classify the
companies according to their size and nature of business, the strategy indices
reflects performance of rule based strategy of investment (Sri and Arief 2018).
Volatility indices
The volatility index is an instrument to the investors to measure the level of
volatility in the equity market of Australia.
The various indices in the NSX are stated below
 NSX all equities index
 NSX all agricultural index

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 NSX all finance index
 NSX all investment index
 NSX all property index
 NSX all resources index
 NSX all technology index
All these indices are used to measure the performance of the respective
stocks of that particular sector.
Importance of indices among the investors
Indices are used by the investors to measure the performance of the stock
market and to take investment decision as per the condition of the indices. The
indices are the best indicators from which the investors will be able to guess the
overall condition of the market and accordingly take investment decisions (Borgstein
2016).
Question c
The three financial products that are traded in the ASX are the shares, bonds and
ETPs.
These products are gain classified in to the following sub categories these are
Shares
 Ordinary shares
 Preference shares
 Partly paid shares
Bonds
 Fixed rate bonds

8ASX LISTING REQUIREMENTS
 Floating rate bonds
 Indexed bonds
 Corporate bonds
 Simple and complex bonds
ETPs
 Exchange traded funds
 Exchange traded managed funds
 Structured products.
Key features of the various products that are traded in the ASX
Shares
Shares are instruments by investing in which the investors will get ownership
right of any particular company.
Bonds
Bonds are instruments which are issued by government or corporate bodies
to raise fund from the market. The bonds provide fixed income to the investors. It is a
kind of debt security (Chapple et al 2019).
ETPs
ETPs are financial instruments that give the investors to invest in various
securities or other kind of assets like commodities.
Risk return comparison

9ASX LISTING REQUIREMENTS
All these three financial products have risk and the investors by taking such
risk can get return. Among these three instruments shares have the highest risk and
it also provide the highest return to the investors (Bugeja et al 2016).
Bonds
In comparison to shares and ETPs bonds are less risky and provide a fixed
return to the investors. The fixed rate of interest is the only source from which the
investors get return from the bonds (Gani Wijeweera and Eddie 2017).
ETPs
In comparison to shares are less risky as it combines different type of assets
and for that reason the risk of one class of assets can be mitigated by another kind
of assets. The return provided by the ETPs are not higher than shares but it can also
provide a moderate return which is based on the entire performance of the financial
market (Ciro and Terzioglu 2018).
Question d
The ASX is first formed in the middle of 18th century and at that time along
with ASX six other separate exchanges were established in the British colonies in
Australia. The Australian stock exchange get its legislation from the Australian
parliament in the year 1987 and during this time all the other six exchanges merged
with each other and ASX becomes the most recognised stock exchange in Australia
(Aslam 2018).
ASX is the operator of the financial market in Australia which performs as the
clearing house and the payment system facilitator. It also look after all the

10ASX LISTING REQUIREMENTS
compliance related issues that the companies that are listed in the ASX to ensure
more transparency and to provide accurate and reliable information to the investors.
The ASX classified industries in to 24 sectors that are unique to the country
further these 24 sectors are gain classified into 69 industries and 158 sub industries.
Approximately 200 companies are listed in the Australian stock exchange as of
2019.
References
Artiach, T.C., Gallery, G. and Pick, K.J., 2018. A chronological review of the
Australian litigation risk environment surrounding IPO earnings forecasts. Pacific
Accounting Review.
Aslam, S., 2018. THE IMPACT OF CORPORATE GOVERNANCE AND
INTELLECTUAL CAPITAL ON CORPORATE SOCIAL RESPONSIBILITY
DISCLOSURES IN ASX LISTED FIRMS (Doctoral dissertation).
Borgstein, A.J., 2016. GLOBAL MARKETS: A COMPARATIVE ANALYSIS OF
SUSTAINABILITY REQUIREMENTS AND DISCLOSURES.
Bugeja, M., da Silva Rosa, R., Shan, Y., Walter, T.S. and Yermack, D., 2016. Life
after a shareholder pay'strike': Consequences for ASX-listed firms. CIFR Paper,
(130).
Chapple, L.J., Clout, V., Perry, A. and Truong, T.P., 2018. Sliding doors: Comparing
backdoor listing and front door listing for Australia start-ups. Australian Journal of
Corporate Law, 33(3), pp.341-363.

11ASX LISTING REQUIREMENTS
Ciro, T. and Terzioglu, B., 2018. Disclosures and Reporting of Financial Derivatives:
Evidence from Australia’s S&P/ASX 50 Listed Firms. JOURNAL OF BANKING AND
FINANCE LAW AND PRACTICE, 29(2), pp.92-108.
Gani, I., Wijeweera, A. and Eddie, I., 2017. Audit Committee Compliance and
Company Performance Nexus: Evidence from ASX Listed Companies. Business and
Economic Research, 7(2), pp.135-145.
Okello, S., 2018. Factors influencing listing of Small and Medium Enterprises to
Growth Enterprise Market Segment in Kenya (Doctoral dissertation, Strathmore
University).
Shimeld, S., Williams, B. and Shimeld, J., 2017. Diversity ASX corporate governance
recommendations: a step towards change?. Sustainability Accounting, Management
and Policy Journal.
Shimeld, S., Williams, B. and Shimeld, J., 2017. Diversity ASX corporate governance
recommendations: a step towards change?. Sustainability Accounting, Management
and Policy Journal.
Sigler, T., Parker, B. and Martinus, K., 2017, November. The Corporate Geography
of Australian Cities: Tracking change in ASX-Listed Firm Headquarters, 2013-2016.
In State of Australian Cities Conference, Adelaide (pp. 28-30).
Sri, W.I.F. and Arief, B.M., 2018. Relationship between Company Financial
Performance, Characteristic and Environmental Disclosure of ASX Listed
Companies. In E3S Web of Conferences (Vol. 73, p. 10024). EDP Sciences.