Market turmoil causes trading volume surge

RECENT turmoil on financial markets caused trading volumes for derivatives on the Australian Securities Exchange (ASX) to surge 80 per cent but ASX Ltd said this will be short-lived. ASX Ltd today booked a 7.4 per cent rise in net profit to $352.3 million for the 12 months to June 30, and said trading volumes had jumped in the seven weeks since its balance date. Investors spooked by European sovereign debt woes and Standard & Poor's downgrade of US Government debt drove heavy falls in August on major global equity exchanges, outgoing chief executive Robert Elstone told analysts. While the All Ordinaries index lost 7.4 per cent, the average daily traded value on ASX cash markets was $5.7 billion from July 1 to August 16, up 20.5 per cent on a year earlier, he said. The local derivatives market was a key beneficiary, with average daily trading volumes reaching 135,309 contracts, or 79.8 per cent more than a year earlier. Start of sidebar. Skip to end of sidebar. End of sidebar. Return to start of sidebar. On the ASX24 futures market, the average daily trading volume was 521,298 contract, or 85.7 per cent higher than a year earlier. Mr Elstone said this pattern was unlikely to continue, and warned analysts it would be "extremely dangerous" to extrapolate these figures for the purpose of forecasting volumes for the remainder of 2011/12. Volumes over the last three days had normalised, he added. Mr Elstone will step down from the top job on October 11 after 11 years as chief executive of listed market operators. He decided not to extend his contract which expired last month. His departure will come as Chi-X Australia enters the local market in late 2011, breaking the ASX's two-decade near monopoly as the country's equity market operator. Deputy chief executive Peter Hiom (Hiom) said he did not know what impact Chi-X's entry would have on market volumes. He also said the ASX was unlikely to change its fees for high frequency traders until the second half of 2011/12 at the earliest. Mr Elstone reassured analysts that ASX Ltd was alive to the possibility of competition in each of its business activities. But he doubts the Australian market is big enough to support multiple exchange operators. "The US and European precedents are being overblown and over-quoted as those markets (are much larger)," he said. ASX Ltd's period of cost stability had passed, with staff costs likely to rise by five per cent in 2011/12 from $78.7 million in 2010/11, Mr Elstone said. ASX's shares gained seven cents, or 0.24 per cent, to $29.57 by 1240 AEST.