AUSTRALIA STOCK EXCHANGES ENTER NEW ERA
The Australian Stock
 Exchange Ltd (ASX)
today took up the responsibility for administering a new
coordinated market made up of Australia's six former exchanges,
now operating as subsidiary trading floors.
    At the same time, rules prohibiting corporations and
non-stock-exchange members from holding more than 50 pct of
Australia's 101 brokerage firms were abolished, leaving brokers
exposed to greater deregulation.
    Industry sources said the moves will smooth the changeover
to screen-based trading and give the equities market one voice.
    Westpac Banking Corp <WSTP.S> was one of the first to take
advantage of the changes by announcing today it would double
its stake in the Sydney firm <Ord Minnett Ltd> to 100 pct.
    Brokers have been introduced to creeping deregulation over
the past three years after legislation passed in 1984 to end
restrictive trade practices forced the traditional partnerships
to open themselves at first to partial ownership by outside
institutions, and eventually to full ownership.
    The phase-in period has ended, and several major banks and
offshore financial institutions are investigating taking larger
stakes in Australian broking houses, industry sources said.
    Though deregulation was all but forced on brokers, most now
acknowledge that the influx of capital and contacts from
non-member shareholders has benefited the industry, they said.
    "Deregulation has brought an infusion of additional capital
and a broader base of products," ASX chairman Ian Roach told
Reuters.
    Roach said fears that major bank shareholders would impose
a restrictive and conservative "bank culture" on the dynamic
sharebroking industry were unfounded.
    "So far the banks have been mindful of the importance of
preserving the entrepreneurial aspect of sharebroking," he said.
    But some brokers said others are sceptical and expect that
the expiration of "golden handcuff" pacts, which tied partners to
their firms for a period after incorporation, could cause a
massive talent drain.
    Several leading brokers have already announced plans to
leave their firms and establish new private client businesses,
while others plan public floats.
    While bank shareholders have enjoyed dabbling in broking
during Australia's record two-and-a-half year bull run, they
could find themselves without the expertise they need during
more difficult times, some brokers said.
    Rene Rivkin, head of Sydney brokerage house <Rivkin James
Capel Ltd>, said many brokers will resist anything that
restricts their individuality and entrepreneurial spirit, and
this could leave new entrants into the business short-staffed.
    "If I were a bank I'm not sure I would have gone into
broking.... What's going to happen when a lot of these golden
handcuffs come to an end?" Rivkin said.
    "Only then will the banks know what they've got," he said.
    Rivkin's firm is 50 pct owned by Hongkong and Shanghai
Banking Corp <HKBH.HK> unit <Wardley Australia Ltd> and plans a
public float of between 25 and 30 pct.
    "My relationship with the Hong Kong bank is wonderful. They
leave me alone and give me all the support I need.... Maybe if
we weren't doing so well there wouldn't be that support, but
that hasn't happened," he said.
    Other firms might not be so lucky, he said, and they could
find it difficult to preserve their independence when the bull
market ends.
    In the last two years, the value of the Australian
sharemarket has leapt 118 pct with turnover value up 152 pct to
31.24 billion dlrs in the year to June 30, 1986.
    That growth put existing trading systems and clearing
houses under pressure, and unification of the six sovereign
exchanges should accelerate the development of screen-based
trading and a single clearing house, industry sources said.
    From July this year 30 leading stocks will be traded in a
pilot of the ASX's screen trading system which, depending on
its reception by brokers, is expected to replace trading floors
over the next four years, industry sources said.
 REUTER
