Book Review > National Market, National Interest

This is a history of the Australian Stock Exchange (ASX) over the past 30 years from the “wild west” days of the Poseidon boom and bust to the recent merger of the ASX with the Sydney Futures Exchange (SFE).

Edna Carew has written a scholarly work, exhaustively researched and well indexed. It is not a bedtime read but a book for serious students of the history of the Australian Securities Markets and can be frustrating and tedious at times. The text is littered with acronyms but thankfully the author has listed two pages of these at the beginning for easy reference. Some are familiar, such as CHESS, SEATS, ACCC, ASIC while others are obscure such as JORC (Joint Ore Reserve Committee) and other odd ones such as CLERP (Corporate Law Economic Reform Program).

Carew also lists the key events affecting the ASX, many of which will be familiar:

• 1972 - national listing for all securities
• 1978 - the six states agree on regulations
• 1979 - the federal government announces the Campbell inquiry
• 1984 - Australian stock exchanges are deregulated
• 1987 - Federal government removes double tax on dividends
• 1990 - Trading floors close and stocks are converted to SEATS
• 1998 - ASX demutualises
• Introduction of T+3 settlement
• 2000 - ASX launches ASX Online
• 2001 - stamp duty on shares abolished
• 2006 - ASX and SFE agree to merge

More exciting is the coverage of the brokers and their seats on the exchange with their puffed up egos and their brokerage charges to match. This behaviour of the brokers led to the establishment of SEATS (Stock Exchange Automatic Trading System) which emptied the trading floor.

There were two other ingredients in this mixture fueling spirited argument and extreme frustration. Each state capital originally had its own exchange which was loosely coordinated under the heading of the Australian Associated Stock Exchanges and to quote the author “To merge the exchanges would entail laying to rest long-held rivalries, assuaging high-profile egos and addressing the challenges of allocating assets and changing legislation.” A daunting task in itself. Add to this the intense distrust and rivalry between the large exchanges of Sydney and Melbourne and you have the ingredients for a big fight.
Imagine trying to break up the “boys club” of lawyers, accountants, politicians and the classic performances of brokers such as Rene Rivkin – it must have been akin to the Mad Hatters Tea Party!!

Investors were losing confidence in the market, politicians were concerned with Australia’s reputation as a fit place to invest.

A number of reforms followed, reliable indexes were developed, greater disclosure was required, stamp duty was dropped by the states and low cost internet brokers aided the smaller investors.

It has to be said that in many ways the book is bland. It was commissioned by the ASX and funded from a grant and the author was probably under some pressure to note the many people involved in the lengthy processes and to temper any negative criticism. When the history is written without this handicap it might be far more exciting. Like a lot of history it does not always tell us a lot about the future so as a topic the ASX is still a work in progress.

Colin Dowzer is a member of the Victorian Committee of the AIA.