MORGAN STANLEY: The ASX Will Keep Raising Fees Thanks To Its 'Quasi-Monopoly Status'

Getty / Sergio Dionisio

Australia’s stock market operator has raised listing fees twice in the past two years, and Morgan Stanley expects more fee hikes to come despite them already being high by global standards.

Morgan Stanley equity analysts Arvid Streimann, Andrei Stadnik, Richard Wiles, Daniel Toohey and Matthew Dunger today forecasted ASX revenues to continue to grow by about 7.5% a year in coming years, after it posted 8.0% revenue growth yesterday.

Future growth would be driven by “better activity and fee hikes … [and] match the best growth since the GFC”, they reported.

The ASX lifted fees in March 2012 and again in May 2013, when it raised annual listing fees by an average of 7.5% and follow-on listing fees by an average of 2.5%.

Morgan Stanley said last year’s increase would earn the ASX an extra $6.8 million this financial year.

From the report:

ASX’s quasi-monopoly position in the financial services industry gives it pricing power. We expect this power to be exercised, even if some fees are high by global standards.

Management … revealed that it examines all fees on an annual basis and we anticipate more fee hikes in the coming years.

As annual listing fees are likely to be relatively a small part of an issuer’s expense base, fee increases may go unnoticed. However, ASX is one of the most expensive listing venues in the world, which may limit the size of future fee hikes.

And here’s how ASX annual listing fees compare with other markets, according to Morgan Stanley:

The ASX yesterday posted a 10.8% rise in profit to $189.6 million in the 6 months to 31 December, driven by improved global economic conditions and an uplift in listings activity.

It accounts almost three quarters of trading activity in Australia, versus almost 10% on Chi-X.

Now read: It’s Shaping Up To Be A Record Year For Global IPOs, With The ASX The 4th Most Popular Market For Listings

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