Dynamic markets and product innovation
ASX supports our customers as they manage their own sustainability risks, opportunities and programs.
Exchanges have a crucial role to play in the journey towards net zero. ASX is uniquely positioned to offer the products, connectivity and price transparency, to support our customers by providing liquid and transparent derivative markets to hedge transitional price risk. This will support market participants in meeting their emission reduction targets and compliance obligations, and also aligns with government policy.
ASX is developing an integrated ecosystem of products to support the net zero transition, which builds upon the core electricity derivatives business. This ecosystem is intended to encompass electricity, gas and environmental products. Australia is one of the world’s largest liquefied natural gas exporters and the Australian Energy Market Operator implemented a Gas Supply Hub at Wallumbilla to enable improved wholesale trading of natural gas for the East Coast gas market.
25
organisations in working group supporting development of new Wallumbilla gas futures
The Wallumbilla Gas Supply Hub spot volume has on average grown over 20% [2] per annum in the past five years indicating strong demand for the physical commodity. We intend to list Wallumbilla Gas physically deliverable futures in August 2024, and we have been developing this product with over 25 organisations as part of an ASX working group. This highlights the strong customer demand for the futures product. Gas is an important fuel in facilitating a smooth and cost-effective energy transition, and we may consider adding additional regional gas contracts to ASX’s product complex to seek to further support this transition.
In July 2024, ASX launched three physically deliverable Environmental Futures contracts, over Australian Carbon Credit Units, Large Generation Certificates and New Zealand Units. These contracts are expected to provide a transparent forward curve for the market to hedge and manage transitional risk. A liquid Environmental Futures market at scale, can help capital flow to projects that support the energy transition and result in carbon abatement. The physically deliverable nature of these products also allows for the surrender to the relevant registries, and enabling ASX’s customers to meet their compliance obligations.
The listing of gas and environmental derivative products for Australia and New Zealand seeks to address a key challenge, which is the lack of forward price transparency and risk management tools to support the investment in clean energy projects, and enabling capital to flow towards projects with significant carbon abatement potential.
ASX is also in preliminary discussions with the Clean Energy Regulator to explore the option of developing a robust and effective model for a spot carbon exchange to address existing market place challenges, focusing initially on Australian Carbon Credit Units. The exchange could offer a centralised, standardised and regulated marketplace, and could potentially leverage ASX’s existing cash market trading platform for execution, and clearing and settlement via ASX Clear and ASX Settlement.
The environmental product ecosystem that is being developed will offer ASX the opportunity to provide new datasets and address new areas of market demand.
Another opportunity comes from listed company disclosure data. Companies are being asked to disclose more information in line with Australia’s emerging climate reporting standards. Simultaneously, investors have an appetite for more detailed, accurate and comparable disclosures.
ASX is exploring what role it could play in helping with these challenges, as well as looking more generally at how we can improve the accessibility of data and insights contained within company disclosures.
ASX plays an important role in representing listed entities in relevant areas of policy and regulation. Throughout FY24, ASX has contributed to numerous government consultations, including making submissions to:
Treasury’s consultations on mandatory climate-related financial disclosure, including on the exposure draft legislation
Treasury’s review of the regulatory framework for managed investment schemes
The Government’s independent review of the changes to the continuous disclosure laws
The RBA’s consultation on increasing the threshold for the application of the Financial Stability Standards for Securities Settlement Facilities (SSFs) from $200 million to $40 billion in annual value of settled financial obligations
Treasury’s consultation on draft legislation relating to Financial Market Infrastructure Regulatory Reforms
The Parliamentary Joint Committee’s Inquiry into the wholesale investor and wholesale client tests.
All of ASX’s public policy submissions to government are available here.
ASX also engaged with policymakers regularly throughout the year to advocate for its policy positions including highlighting the importance of thriving capital markets to the economy, and providing feedback on new policy initiatives to ensure that public markets continue to function well.
This year marked 25 years of the ASX Sharemarket Game, which gives participants the opportunity to get familiar with investing and trial various investment strategies with $50,000 of virtual money. The changing profile of sharemarket investors has highlighted the role educational tools such as the virtual ASX Sharemarket Game can play in preparing new investors and understanding market volatility.
We also run a high school version of the game. Since its inception in 1977, more than four million students have participated. The game is recognised by state education departments across Australia as an education tool for schools to explore and benefit from. Every year students from more than 1,500 schools across Australia and New Zealand now participate.
4M
school students have participated in ASX Sharemarket Game [1]
2,500+
people attended educational ASX Investor Days
ASX Investor Day is our flagship retail investor event of the year, run biannually across the eastern seaboard of Australia. More than 2,500 people attended the series in the past year, and a further 8,000+ viewed the on-demand content.
Through this initiative, we provide retail investors unparalleled access to over 20 fund managers, brokers and advisers who in turn can provide insights and expertise from the heart of the financial markets and provide investors with practical tools and knowledge to build their confidence and understanding of investing.
The days include presentations from industry experts on a range of topics, including:
We publish a number of publications to support retail investors who want to become and remain informed about investing and markets.
[1] Since inception in 1977.
[2] Australian Energy Regulator industry charts: Wallumbilla Gas Supply Hub – trade volume and VWA places by pipeline.
