New developments in Australian market structures with ASX SR15

Key Takeaways

• The Australian Securities Exchange (ASX) recently rolled out a range of technology updates and market structure changes.
• These changes are designed to boost market efficiency and align with global best practices.
• Exchange updates can bring both overheads and benefits to market participants – working with trusted partners is key to successfully navigating such changes.

Earlier this year, the Australian Securities Exchange (ASX) rolled out an ambitious range of market structure updates as part of Service Release 15 (SR15). Among the most impactful updates are the changes to the auction mechanisms and ASX trading session structure – reforms designed not only to enhance efficiency but also to bring the ASX in line with global best practices.

Why change was needed

Previously, the ASX operated with a staggered opening auction, dividing securities into five groups that opened sequentially. In this respect, the ASX was an outlier among major exchanges. A survey of market participants highlighted a widespread desire to align the ASX opening auction with global standards. It also raised a range of other potential benefits of ending the opening stagger. These included minimizing volatility and boosting liquidity during the opening period, and increasing pricing efficiency. Similarly, there were concerns that the lack of an ASX post-close trading session limited available liquidity.

In response to these concerns from both domestic and international market participants, the ASX launched SR15. This program of updates had clear goals: streamlining operations, reducing fragmentation, and aligning with the standards of leading global exchanges.

Key auction and session changes

The previous 15-minute staggered opening has been replaced with a randomized unified auction window for all cash market tradable instruments, namely, the Opening Single Price Auction (OSPA). This process is designed to determine the opening price of securities fairly and reduce fragmentation. The OSPA begins with a randomized 15-second window starting at 09:59:00 and lasts for between 30 and 60 seconds in total. During this window, order management is limited to cancellations only. New orders cannot be placed, and existing orders cannot be modified.

A new 10-minute post close session allows lit-order trading at the official closing price, mirroring practices on global exchanges like NASDAQ and HKEX. This is intended to boost post-close liquidity offering investors greater flexibility as to when they trade. It also aims to reduce potential slippage for participants carrying out end-of-day rebalancing. Securities that release late-breaking announcements can now still participate in the Closing Single Price Auction (CSPA). This ensures that material information is reflected in the closing price, improving price discovery and market integrity.

Global alignment and strategic benefits

These changes bring the ASX into closer alignment with major international exchanges. NYSE, LSE, and NASDAQ all operate with unified opening auctions and post-close trading windows. The inclusion of late-announcement securities in the closing auction is standard in markets like HKEX, ensuring fairer closing prices.

By simplifying session states and aligning them with global norms, the ASX is making it easier for both domestic and international participants to engage with the market. The introduction of FIX 5.0 SP2 protocols and multicast market data feeds further modernizes the ASX’s infrastructure, also making it more compatible with global trading systems.

Looking ahead

SR15 positions the ASX as a globally competitive, investor-friendly exchange. These auction and session reforms represent a strategic shift toward transparency, increased liquidity, and international integration. However, exchange upgrades always come with some level of overhead for market participants. Changes need to be reviewed, risks need to be assessed, and existing workflows may need to be revised. This is where trusted partnerships with providers who have an in-depth understanding of the market (and the technologies that underpin it) can add value. As markets around the world continue to innovate and develop, it’s more important than ever to build these connections, to ensure that you’re prepared for whatever developments the future brings.