Until recently, if you wanted direct access to international share markets then you paid for the privilege. If the high-technology Nasdaq exchange beckoned with its higher returns and the opportunity
Until recently, if you wanted direct access to international share markets then you paid for the privilege. If the high-technology Nasdaq exchange beckoned with its higher returns and the opportunity of global portfolio diversification, you had to be a favoured, high-wealth client of a traditional broker. And if offerings from Londons market put your local stocks to shame, you paid higher brokerage to gain off-shore access, or set up a foreign bank account subject to currency exchange rate fluctuations. And the markets of Israel, Ireland or South Africa? Forget it.
But the investment landscape is about to undergo monumental change. In the middle of this year, Australias stock exchange and the Nasdaq exchange will perform the worlds first co-trading, where 100 of Nasdaqs largest stocks in its Tracking 100 Index will be available to Australian investors through local Australian brokers with real-time access to share price and market depth information, while US brokers and their clients will gain access to 50 of Australias largest stocks. You will be able to buy $1,000 of Oracle or eBay as easily as you have bought BHP or News Corporation stock.
The move forms part of Nasdaqs plan to have its largest listed companies trading around the clock, around the world, and for the ASX it could stop public companies such as Look Smart having to list overseas first to gain pre-float interest from venture capitalists and then to tap into larger offshore investor markets.
Australian investors will be able to buy Nasdaq stocks individually, and as a combined product packaging the 100 stocks together, so you can buy the performance of the whole Tracking 100 index.
But before investors dip their toes in volatile US markets, Tony McLean, Australian Shareholders Association Executive Director, warns them to display caution, particularly initially and particularly for novice investors.