ASX derivatives trading surges in August

Alison Bell

September 6, 2010

Derivatives trading on the local bourse jumped by at least nine per cent in August, but share trading volumes are still lacklustre compared to a year ago.

The Australian Securities Exchange Group (ASX) confirmed what industry researcher Investment Trends said in August - contracts-for-difference (CFD) trading has taken off in Australia.

ASX, which will lose its two-decade monopoly on securities trading later this year, reported a nine per cent rise in the total notional value of all CFD trades to $371.6 million in August, during which 16.3 million contracts were traded.

CFDs comprise a leveraged bet on future changes in the market price of a particular asset and are considered a niche online trading market that attracts self-directed investors.

ASX operates the only listed CFD market in Australia.

Its August results mirror Investment Trends' online survey in May of 9,644 local investors using a growing number of CFD issuers to trade the high-risk, leveraged derivatives over-the-counter.

Trader numbers in Australia grew 22 per cent to 39,000 over the year to June, but were still only six per cent of the online trading market comprising 650,000 people, the researcher said in August. Read on.