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FINANCIAL SYSTEM IN AUSTRALIAThe Australian financial system consists of "the set of arrangements covering the borrowing and lending of funds and the transfer of ownership of financial claims" in Australia. It has several sectors:

Banks, credit unions and building societies - referred to as Authorized Deposit Taking Institutions (ADIs) or financial institutions

Insurance (life and general) Superannuation Financial markets—debt, equity and derivative markets Payments systems—cash, cheques, EFTPOS, RTGS and other high-value payment

systems

MARKET PARTICIPANTS

Participants in the financial system consist of commercial banks, investment banks, finance companies, building or cooperative societies, credit unions, friendly societies, superannuation and approved deposit funds, public unit trusts, cash management trusts, mortgage originators, insurance companies, institutional funds investing in and financing debt.

FINANCIAL INSTITUTIONS

The banking sector in Australia consists of a number of banks licensed to carry on banking business under the Banking Act 1959, foreign banks licensed to operate through a branch in Australia, and Australian-incorporated foreign bank subsidiaries. The banking system is liquid, competitive and well developed.

The major banks are referred as the pillars of the Australia's financial system. Banking in Australia is dominated by what are known as the "big four".

There are several smaller banks and other financial institutions, such as credit unions, with a presence throughout the country. Many large foreign banks have a presence, but few target the retail banking market. The central bank is the Reserve Bank of Australia (RBA). Since 2008 the Australian government has guaranteed deposits up to a million dollars per customer per institution against banking failure.

INSURANCE

Australia has a sophisticated and well-developed insurance market, which can be divided into roughly three components: life insurance, general insurance and health insurance. These markets are fairly distinct, with larger insurers focusing on only one type, although in recent times several of these companies have broadened their scope into more general financial services, and have faced competition from banks and subsidiaries of foreign financial conglomerates.

LIFE INSURANCE

Life insurance products sold in Australia include term life insurance, disability income insurance. Australian insurers are unusual in providing a lump sum Total and Permanent Disability insurance. Life insurers also sell superannuation investment products.

GENERAL INSURANCE

General insurance products sold in the Australian market can roughly be divided into two classes:

Liability insurance such as Compulsory Third Party (CTP) motor insurance, worker's compensation, professional indemnity insurance and public liability insurance, business insurance;

Property insurance such as Home and Contents insurance, travel insurance, and comprehensive motor vehicle insurance Certain types of insurance, such as CTP and worker's compensation, are statutory (i.e. are required by law), and can differ considerably by state

HEALTH INSURANCE

The Australian Government provides a basic universal health insurance, Medicare. Private health insurance in Australia is limited to those services not covered by Medicare or to services provided in private hospitals.

The Australian Taxation system encourages middle to high income earners to take out Private Health Insurance. While most taxpayers pay a 1.5% Medicare levy, an additional 1% Medicare Levy Surcharge is payable by those taxpayers who earn more than $76,000 and do not have Private Health Insurance

SUPERANNUATION

Before 1992, reasonably widespread superannuation arrangements had been in place for many years under industrial awards negotiated by the union movement between wage increases. In 1992, the Keating Labor government introduced a compulsory "Superannuation Guarantee" system as part of a major reform package addressing Australia's retirement income policies. It was calculated that Australia, along with many other Western nations, would experience a major demographic shift in the coming decades, resulting in the anticipated increase in age pension payments placing an unaffordable strain on the Australian economy. The proposed solution was a "three pillars" approach to retirement income:

A safety net consisting of a means-tested Government age pension system Private savings generated through compulsory contributions to superannuation Voluntary savings through superannuation and other investments

FINANCIAL MARKETS

Australian Securities Exchange Sydney Futures Exchange Newcastle Stock Exchange Bendigo Stock Exchange

PAYMENT SYSTEMS

Most foreign exchange transactions are free from regulation, and the Reserve Bank of Australia has largely delegated its control to authorized money market dealers and foreign exchange dealers

CASHCash payments are cleared and settled pursuant to the regulations and procedures of the APCA - ACDES (Australian Cash Distribution Exchange System) also called CS5.

CHEQUES

The cheque is still the most important non-cash payment instrument in Australia in terms of the value transferred using it each day. The number of monthly transactions in 2008 was 33.7 million with a value of $139.3 billion.Cheques and other payment instruments (such as traveler’s cheques and warrants) are cleared and settled pursuant to the regulations and procedures of the APCS also called CS1.Cheques payments make use of the BSB codes to identify the bank and account to debit

EFTPOS

EFTPOS and ATM transactions occur over the EFT network. Clearing and settling of EFTPOS and ATM transactions are regulated by the APCA under CECS (Consumer Electronic Clearing System) also called CS3.

HIGH VALUE PAYMENTS

High value payments are typically more time critical and for large sums. The main high value payment systems in Australia:SWIFT Payment Delivery System (SWIFT PDS) Clearing House Electronic Sub register System (CHESS): CHESS is an automated share transfer system developed by the Australian Securities Exchange. If a CHESS transaction is selected for RTGS settlement, then an interbank request is sent to RITS via the SWIFT FIN service. Upon settlement of the gross amount across ESAs, RITS notifies CHESS, which then settles the transaction at the CHESS participant level.

AUSTRALIAN MARKET

With a relatively high-growth and low-inflation economy supported by robust political and economic institutions, and an internationally competitive business sector, Australia now ranks as the 13th largest economy in the world (measured by GDP), and the 3rd largest in the Asia Pacific region. This firm international standing is reflected in the fact that Australia’s three largest trading partners – China, Japan and the United States - are also the three largest economies in the world; and its two largest investment partners - the US and UK – are home to the world’s largest capital markets. Such solid trade and investment relations have helped see real economic growth average 3.0% per annum over the past decade, positioning Australia as one of the stronger performers among developed countries during the period.Australia’s steady economic growth has also been aided by a resources boom that has seen its economy emerge as one of the largest global suppliers of raw materials (coal, iron ore, etc). This fertile resources sector makes up around 9.6% of Australia’s total economy, with the remainder being comprised of financial services (11.0%), manufacturing (9.1%) and construction (7.7%).This distribution broadly mirrors that of the Australian equity market, with the largest sectors being financial services (32%) and resources (31%).Australia is also home to a well-developed, innovative and highly-regarded financial services industry and capital market, including:

Financial development - Australia was ranked 5th out of 57 of the world's leading financial systems and capital markets by the World Economic Forum;

Equity market - the 8th largest in the world (based on free-float market capitalization) and the 2nd largest in Asia-Pacific, with A$1.2 trillion market capitalization and average daily secondary trading of over A$5 billion a day;

Bond market - 3rd largest debt market in the Asia Pacific; Derivatives market - largest fixed income derivatives in the Asia-Pacific region; Foreign exchange market - the Australian foreign exchange market is the 7th largest in the

world in terms of global turnover, while the Australian dollar is the 5th most traded currency and the AUD/USD the 4th most traded currency pair;

Funds management - Due in large part to its compulsory superannuation system, Australia boasts the largest pool of funds under management in the Asia-Pacific region, and the 4th largest in the world.

Spurred by its healthy political and economic position, Australia has become an attractive investment destination for global investors as well as home to many major multinational financial services providers. With a diverse investor group comprised of 40% foreign investors, 40% domestic institutional investors and 20% retail investors, the Australian equity market is well placed in the global economy.

WHAT ARE SHARES?

When you buy shares in a company, you are buying a part of that company. This means you share in the company's performance in the form of profits which can be given to you as dividends and/or capital growth through the value of your shares increasing. Companies

generally list on the stock exchange to raise capital for their company and to create a market in their shares. Companies you invest in benefit by using your money and that of other investors to finance their business or its expansion, without having to borrow money.

Shares are an important part of an investment strategy. Being good at investing in shares is about being informed, monitoring your share’s performance on a regular basis, keeping an eye on your goals and investment strategy and participating in ongoing education as you need it.

BENEFITS OF INVESTING IN SHARES:

The Share market provides one of the best opportunities to achieve your long-term goals. It’s straightforward, you don’t need a lot of money to get started, and shares give you flexibility and control. People invest in shares to make money – either through share price growth, or via income paid as dividends.

POTENTIAL TO OUTPERFORM OTHER INVESTMENTS OVER THE LONG-TERM:

Although past performance is no indication of future performance, history suggests that Australian shares have outperformed other types of investment over the longer term.

CAPITAL GROWTH AND DIVIDENDS:

Capital growth occurs when the value of your investment increases. People invest in shares because they offer the possibility that their price will rise. Owning shares in a company with a rising share price is one way to achieve capital growth. As a shareholder you are entitled to share in the company's profits or earnings. For many investors a key criteria in selecting shares, is whether the company pays dividends and the size of these. Companies pay dividends from their net earnings. Dividend payments vary from company to company and it is not compulsory for a company to pay a dividend.

TAX BENEFITS:

For Australian investors, dividends are often worth more than the cash payment they receive. This is because where companies have already paid tax on their profits, tax credits known as franking credits may be attached to the dividends the company pays to you. These franking credits can be used to offset tax payable by you on other income. In addition, shares held for more than 12 months qualify for a 50% discount on any capital gains tax payable.

DIVERSIFICATION:

Many people know the saying "don't put all your eggs in one basket". The Australian share market helps you to do this by offering a wide choice of companies in which to invest. There are over 2,100 companies listed on ASX. These companies are involved in a wide range of industries

covering most sectors of the economy including financial services, industrials and healthcare. By investing in a range of companies you can spread your risk.

EASE OF BUYING AND SELLING:

Investing in shares gives you flexibility. You can buy and sell shares quickly. You can sell shares and generally have access to your money in no more than three days. Other investments often take longer to sell and get your money back. This concept is known as liquidity. Remember some shares can be traded quicker than others du e to their increased liquidity. (Liquid investments have the benefit of greater flexibility).

CONTROL OVER YOUR FINANCIAL FUTURE:

You can decide exactly how your money is invested, enabling you to have a lot of control over your finances. You can of course choose to share this responsibility with a stock broker who can advise you on what shares to buy and sell.

TYPES OF SHARES:

There are different types of Shares available on ASX:

Industrial & Resources Large & Small Capitalizations Industry Sectors (GICS) Ordinary Shares

The Australian Share market offers a wide range of companies to invest in, with approximately 2,200 companies listed on the ASX. Some companies have a long and consistent history of paying dividends, or relatively consistent profit growth. While others may not have the track record, but may have the potential to provide good returns in the future. To give order to the wide spectrum of companies listed on ASX, they can be categorized in a number of ways:

INDUSTRIAL & RESOURCES

The companies listed on ASX can be categorized across a broad industry divide, industrial and resources companies. This broad categorization is most commonly used in the share price tables in the newspapers. Some companies listed on ASX are involved in the industrials and mining sectors, the most obviously example being BHP.

The Australian Resources sector is made up of the two streams of Minerals and Energy. In Minerals, we have explorers and producers involved in a whole range of minerals, which can be broadly classified as base metals, gold and precious metals, mineral sands, diamonds, iron ore and other steel related ores. In Energy we have oil and natural gas, steaming and coking coal, coal seam methane gas and uranium.

Some of the largest shares in the broader resources sector include:

BHP Billiton Limited (BHP) - Materials Newcrest Mining Limited (NCM) - Materials Woodside Petroleum Limited (WPL) - Energy RIO Tinto Limited (RIO) - Materials Origin Energy Limited (ORG) - Energy Santos Limited (STO) - Energy Lihir Gold Limited (LGL) - Materials

The Australian Industrials sector is a mix of all other streams that don't fit into resources sector. It has a large banking and insurance sector, telecommunications companies, newspapers and media, gambling agencies, and airlines to name a few:

Westpac Banking Corporation (WBC) - Financials Commonwealth Bank of Australia (CBA) - Financials Telstra Corporation Limited (TLS) - Telecommunication Services National Australia Bank Limited (NAB) - Financials Woolworths Limited (WOW) - Consumer Staples Australia and New Zealand Banking Group Limited (ANZ) - Financials QBE Insurance Group Limited (QBE) - Financials

LARGE & SMALL CAPITALIZATIONS

Companies can be ordered by their relative size, large capitalizations versus small capitalizations companies. Market capitalization is calculated by multiplying a company’s share price by the number of shares it has on issue. This can be applied to work out the market value of one company or of the value of all companies listed on the exchange.

INDUSTRY SECTORS (GICS)

The Global Industry Classification Standard (or GICS) is a method of grouping companies into Industry Sectors along the lines of their main business activities. GICS is a joint Standard and Poor’s/Morgan Stanley Capital International product aimed at standardizing industry definitions.

The standard classification system has the advantage that it encourages foreign investors to look into local markets, as well as allowing local investors to look at the rest of the world and compare stocks via industry classification. GICS sectors give you a better picture of which area of the market is driving its performance.

Having used a sector index to identify general areas of good performance it is then possible to drill down to the actual companies that make up the index to identify those companies which are contributing to the good performance of that sector.

ORDINARY SHARES

The most commonly traded securities in Australia are ‘ordinary’ shares. Holders of ordinary shares are part-owners of a company and may receive payments in cash, called dividends, if the company trades profitably. You can also buy preference, contributing, and partly paid shares.

Shares issued without requiring full payment up-front. At a specified future date(s) shareholders are legally obliged to pay the scheduled call, unless the issuing company is a no liability company in which case shares can be forfeited instead.

Usually identified by a five letter code (the company code plus a two letter suffix, generally CA-CZ (except CP)).

Have equal voting rights as ordinary shares and dividends are usually paid on a pro-rata basis.

Retail customers are required to sign a client agreement with their broker before first trading in these securities to acknowledge they understand the risks involved.

HOW TO BUY AND SELL SHARES

There are two distinct points at which you can purchase shares: From the company itself in the very first instance of the shares being offered in a float.

The word float is used when a company seeks to raise money by offering its shares to the public for the first time.

Following the float, shares are bought from other investors via the share market. Shares listed on ASX can only be bought or sold through a broker.

PLACING AN ORDER WITH YOUR ADVISER

Most stock broking firms require you to provide funds before they accept your first order to buy shares. Many brokers will require that you set up a client account or trading account before you can start trading. This can take up to a week to finalize but can usually be done in 24 hours. Many brokers will require you to establish a cash management account with a bank or financial institution, to which they have access. This is to facilitate the transfer of funds to pay for your purchase of shares and to allocate proceeds to you from the sales of shares.

When you place an order to buy or sell shares, you have a choice of two ways to tell your adviser what price you will accept. You can place your order 'at market', meaning you will accept a price at or about the market price of the shares at the time you place your order. Alternatively, you can place your order 'at limit', and inform your adviser of the highest price you are prepared to pay or the lowest price at which you will sell.

When placing an order with your adviser, make sure you are fully informed and that your order is confirmed. Ask for the current market price and write it down. Then tell your adviser the details of your order (i.e. the amount of shares to be bought or sold and the price at limit or at

market). The adviser should then repeat the order back to you. Internet based stockbroking

websites provide confirmation screens for you to double check your order before it is processed. Your adviser will not necessarily call you as soon as your order has been filled. However, if you place an order very near the current market price, it may be filled quickly.

When you buy shares in companies listed on ASX, you are buying them from investors who currently own them. Shares bought and sold on the share market can only be done so through the services of a stockbroker.

ASX TRADING SYSTEM

Orders to buy and sell shares are entered into the ASX Trade platform by licensed operators within stock broking firms. Buy and sell orders are matched by price in the order they were entered into the system. Every order is processed on an equal basis, and larger investors do not gain priority. A trade occurs whenever a buy order is matched with a sell order.

Following a transaction on the share market you will be sent a contract note (confirmation) which outlines the details of your trade. If you change your mind about the order after it has already been filled, you are still bound to pay for the shares you have bought, or release the shares you have sold, even if you have not yet received the contract note.

PAYING AND SETTLING

When you buy or sell shares in a listed company, you must exchange the title or legal ownership of those shares for money. Within three days of your broker executing your order you will need to enable the transfer of these shares, either by organizing payment for the stock you have purchased, or by providing access to the shares you have sold.

CHESS (the Clearing House Electronic Sub-register System) is operated by a subsidiary of ASX on behalf of the listed companies. Issuer sponsorship involves the company (or issuer) through which the shares are issued, controlling the shareholding on your behalf. All shareholdings are registered electronically on either CHESS or the issuer sponsored sub-register. Shares can be registered in one of two ways, via CHESS and tracked with a HIN – Holder Identification Number, or on the Issuer Sponsored Sub register and tracked with a SRN – Shareholder Reference Number.

To hold shares electronically on CHESS, you usually enter into an arrangement with your broking firm to act as your CHESS sponsor. The CHESS sponsor can then electronically register details of any purchases or sales. The mechanics of how you settle your transactions depend upon where your shares are registered. If you have sold shares held on the CHESS sub-register you will need to provide your broker with your holder identification number (HIN) to allow access to transfer the shares for settlement. If sold shares are held with an issuer sponsored

company, you will need to provide your broker with your Security-holder Reference Number (SRN) to allow access.

BONDS IN AUSTRALIA

GOVERNMENT BONDS:

Government Bonds are considered to be one of the safest investments in Australia. Bonds can be purchased from either Federal or State governments. While interest payment and the face value payment at maturity are guaranteed by government, it is possible for capital gains or losses to be made if bonds are sold prior to maturity. The market price of bonds will vary with interest rates. As interest rates rise, the market price of a bond will fall and when interest rates fall, the market price of a bond will rise. The ASX have a very useful bond price calculator.

Federal government bonds State government bonds

FEDERAL GOVERNMENT BONDS

There are two types of federal government bonds:

Treasury Fixed Coupon Bonds:

pay interest on a semi-annual basis at the coupon rate on the face value Repay the face value at maturity.

At the time of writing, there are 16 series of these bonds maturing at various dates from about 9 months time, going forward with various maturity dates spread out about 6 months to a year after the previous series with the final series maturing in about 11 years and 9 months time. The different series are all for the same face value but have different coupons depending on prevailing interest rates at the time they were issued.

TREASURY CAPITAL INDEXED BONDS:

pay interest on a quarterly basis at the coupon rate on the face value payout the face value plus an adjustment for inflation over the life of the bond upon

maturity

You can think of this series of bonds as having two interest components, the coupon which is paid to you plus an allowance for inflation which increases the capital value. There are currently 4 series of these bonds with the first series maturing in about 4 years and the subsequent series spread with five year intervals with the final series maturing in about 19 years time.

Essentially the Reserve Bank maintains a secondary market in these bonds for retail investors. Some points to consider:

don't get to buy a bond at issue It can buy in lots of $1,000 to $250,000 per day from the government at the prevailing

price it can also sell back to the government rather than waiting till maturity There is a fluctuating buy/sell price for each series The price for the older indexed bonds already has substantial amounts of capital

appreciation in the current price.

STATE GOVERNMENT BONDS

The Queensland Treasury Corporation (QTC) offers retail investors bonds with a minimum of $5,000 (thereafter multiples of $100) of differing maturities and differing interest rate earnings. Interest can be paid quarterly or half-yearly. These are sold through Link Market Services.

The NSW Treasury offers bonds for sale. These have a face value of $20,000 and are sold at par with six monthly interest payments.

The South Australian Government Financing Authority (SAFA) offers bonds with a face value of $500 and you can choose quarterly or half yearly interest payments.

The Northern Territory offers bonds with a face value of $1,000 and a variety of investment terms from one to five years. Interest can be paid quarterly, half yearly or annually and interest rates vary from 5.05% to 5.6%.

CORPORATE BONDS:

WHAT IS A ‘CORPORATE BOND’?

A corporate bond is one way for a company to raise money from investors to finance its business activities. In return for your money, the company issuing the bonds(the issuer) promises to:

Pay you interest Pay back the money you’ve invested (your principal) on ascertain date.

By investing in corporate bonds, you are lending your money to company, with all the risks that this involves.

WHY INVEST IN CORPORATE BONDS?

With corporate bonds, you normally get a regular income and higher interest rate than may be available on a term deposit or other cash-based product. However, corporate bonds are not generally designed to give you capital growth (that is, the bonds you buy are unlikely to increase in value during the time you have the investment).

HISTORY OF AUSTRALIAN STOCK EXCHANGE

The ASX Group's origins as a national exchange go back to 1987. The Australian Stock Exchange Limited was formed in 1987 after the Australian Parliament drafted legislation that enabled the amalgamation of six independent state-based stock exchanges. Each of those exchanges brought with it a history of share trading dating back to the 19th century.

In 2006 The Australian Stock Exchange merged with the Sydney Futures Exchange and originally operated under the name Australian Securities Exchange.

Later, however, ASX launched a new group structure to better position it in the contemporary financial market environment. From 1 August 2010 the Australian Securities Exchange has been known as the ASX Group.

AUSTRALIAN STOCK EXCHANGE GROUP

ASX Group (ASX) is an umbrella brand developed to reflect the role of ASX Limited as the holding company of a group with a diverse range of market service activities linked by a common commitment to provide the infrastructure Australia needs to create a globally competitive capital market and a vibrant, robust economy.

ASX Group was created by the merger of the Australian Stock Exchange and the Sydney Futures Exchange in July 2006 and is today one of the world’s top-10 listed exchange groups measured by market capitalization.

ASX is a multi-asset class, vertically-integrated exchange group whose activities span primary and secondary market services, including the raising, allocation and hedging of capital flows, trading and price discovery (Australian Securities Exchange); central counterparty risk transfer (via subsidiaries of ASX Clearing Corporation); and securities settlement for both the equities and fixed income markets (via subsidiaries of ASX Settlement Corporation).

ASX functions as a market operator, clearing house and payments system facilitator. It also oversees compliance with its operating rules, promotes standards of corporate governance among Australia’s listed companies and helps to educate retail investors.

The domestic and international customer base of ASX is diverse. It includes issuers (such as corporations and trusts) of a variety of listed securities and financial products; investment and trading banks; fund managers; hedge funds; commodity trading advisers; brokers and proprietary traders; market data vendors; and retail investors.

In addition to its role as a market operator, ASX relies on a range of subsidiary brands to monitor and enforce compliance with its operating rules. These subsidiaries are:

Australian Securities Exchange - handles ASX’s primary, secondary and derivative market services. It encompasses ASX (formerly Australian Stock Exchange) and ASX 24 (formerly Sydney Futures Exchange)

ASX Clearing Corporation - is the brand under which ASX’s clearing services are promoted. It encompasses ASX Clear (formerly the Australian Clearing House) and ASX Clear (Futures) (formerly SFE Clearing Corporation)

ASX Settlement Corporation - is the brand under which ASX Group’s settlement services are promoted. It encompasses ASX Settlement (formerly ASX Settlement and Transfer Corporation) and Austraclear

ASX Compliance - is the brand under which services are provided to the ASX Group for the ongoing monitoring and enforcement of compliance with the ASX operating rules. This entity replaces ASX Markets Supervision

The oversight work performed by ASX's subsidiaries ensures that it provides fair and reliable systems, processes and services that instill confidence in the markets that depend on its infrastructure.

Confidence in the operations of ASX is reinforced by the market supervision and regulatory role undertaken by the Australian Securities and Investments Commission (ASIC) across all trading venues and clearing and settlement facilities, as well as through the Reserve Bank of Australia's oversight of financial system stability. ASIC also supervises ASX’s own compliance as a listed public company.

STOCK EXCHANGES IN AUSTRALIA

AUSTRALIAN STOCK EXCHANGE

ASX Group is the brand name for ASX Limited. It was created by the merger of the Australian Stock Exchange and the Sydney Futures Exchange in July 2006 and is today one of the world’s top 10 listed exchange groups measured by market capitalization.

Functioning primarily as a market operator, clearing house and settlement system facilitator, ASX also oversees compliance with its operating rules, promotes standards of corporate governance among Australia’s listed companies and helps to educate retail investors.

As a multi-asset class, vertically-integrated exchange, ASX provides opportunities at every stage of the market services value chain. Its activities span primary and secondary market services, including capital formation, capital allocation and hedging, trading and price discovery (Australian Securities Exchange); central counterparty risk transfer (ASX Clearing Corporation); and securities settlement for both the equities and fixed income markets (ASX Settlement Corporation).

ASX services a diverse domestic and international customer base, including issuers (such as corporations and trusts) of a variety of listed securities and financial products, investment and trading banks, fund managers, hedge funds, commodity trading advisers, brokers and proprietary traders, market data vendors and retail investors.

ASX relies on the work of its wholly owned subsidiary, ASX Compliance, to provide the monitoring and enforcement of operating rules. By providing systems, processes and services needed for a fair, orderly and transparent market, ASX inspires confidence in the markets. Such strict quality assurance is integral to ASX's long-term commercial success.

Confidence in ASX is further reinforced by the Australian Securities and Investments Commission’s (ASIC) regulation across all trading venues and clearing and settlement facilities, as well as through the financial system stability oversight conducted by the Reserve Bank of Australia (RBA). ASIC also supervises ASX Group’s own compliance as a listed public company.

ASIA PACIFIC STOCK EXCHANGE

Asia Pacific Stock Exchange (APX) is a securities exchange in Australia with a market license granted by the Australian Securities & Investments Commission (ASIC). APX provides opportunities for growth oriented companies to raise the capital they need for expansion from a diversified range of domestic and international investors, especially from the Asia-Pacific region. APX offers Chinese market participants an alternative listing venue to the Shanghai and Shenzhen stock exchanges in China.

As a securities exchange, APX provides ‘listing’ facilities to companies and securities issuers as well as 'trading' facilities for stock brokers, traders and investors to buy and sell shares/securities. The securities that can be traded on APX include: shares issued by companies, units issued by trusts and other pooled investment products as well as fixed interest instruments, such as bonds.

APX was granted a stock exchange license by Australian Securities and Investments Commission (ASIC) in August 2004. APX was started as an exempt market exchange in 1997. A number of companies including Sigma Company Limited, Sydney Futures Exchange Corporation Limited, Becton Development Limited and SPC Ardmona Limited were listed and traded on APX.

APX's Listing Rules have been approved by ASIC and the Australia Federal Treasury. APX is working on implementation of its new trading system. APX aims to be operating with new Listing Rules, new Business Rules and new trading system from first half of 2013.

NATIONAL STOCK EXCHANGE OF AUSTRALIA

National stock exchange of Australia formally known as the Newcastle stock exchange. The national stock exchange of Australia dated back to 1973 when it was known as the Newcastle stock exchange. After a dormant period, the NSX was re-established in February 2000 and has since grown to become Australia’s second largest listing stock exchange.

Since NSX was re-established in 2000 it has grown to become Australia’s second largest listing stock exchange. NSX currently has well over a hundred securities listed on its market with a combined market capitalization in the billions. 

Many companies are seeking a listing exchange that is customer focused, flexible, responsive, innovative, and helpful and offers real value for money.

NSX is the answer they need. We offer a superior listing solution at a compelling price.  NSX does not have a one-size-fits-all listing model and prohibitive cost structure.  We offer flexible solutions and believe listed companies should be listened to and respected.

NSX represents a nimble and creative stock exchange with a flexible range of listing and trading solutions offered at a fair price.

We help companies throughout the listing process with everything from advice, introductions and marketing through to problem solving and unique tailored solutions.

NSX has many of Australia's largest brokers connected and a network of dozens of adviser firms helping support companies throughout the initial listing and capital raising process, through to ongoing compliance, secondary raising and cross border dual listings.

The National Stock Exchange of Australia Limited (NSX) dates back to 1937 when it was known as the Newcastle Stock Exchange. After a dormant period, the NSX was re-established in February 2000 and has since grown to become Australia’s second largest listing stock exchange.

In its former trading days, the NSX was the home exchange of up to 300 companies. Many of these were local and regional businesses that went on to become significant Australian companies. Among these were Brambles Industries Limited, Coal and Allied Industries Ltd, NBN Ltd, New Redhead Estate and Coal Company Ltd, Newcastle Gas Company Ltd and Steggles Holdings Ltd.

The NSX was officially reopened for business in March 2000 by The Hon Joe Hockey MP, the then Federal Minister for Financial Services and Regulation. On 21 December 2006 NSX changed its name to National Stock Exchange of Australia Limited.

BENDIGO STOCK EXCHANGE

Bendigo Stock Exchange (BSX) was a small stock exchange based in Australia.

The exchange targeted its listing rules at small to medium sized businesses and offered lower listing fees than the Australian Stock Exchange. It listed various small companies, property trusts, and community-based businesses (such as community bank franchises of the Bendigo Bank).

Trading was all-electronic, conducted by an order-matching system in strict price time order. Trading hours were from 9.00am until 2.30pm each weekday after being aligned with Newcastle Stock Exchange hours. The trading system had been merged onto the NSX NETS platform where stockbrokers can trade either market.

The exchange has a long history. It was founded in the 1860s as the Sandhurst Mining Exchange (Bendigo was called Sandhurst before it became a city), to list shares in mining companies working the rich goldfields of Bendigo and surrounding areas.

The 1870s were the heyday of the exchange, business was booming, and special trains brought investors from Melbourne to buy shares. In November 1871, the exchange had over 1300 listed companies, with a total capitalization around £10,000,000.

The great depression of the 1930s hit the exchange hard, and World War II saw the closure of almost all mines.

In June 2012, it was purchased by the National Stock Exchange of Australia who decided to shut it down.

CHI-X AUSTRALIA

Chi-X Australia offers a valuable alternative to trading on ASX using its low latency, high performance, proven trading system. Chi-X Australia will provide innovative new order types, the potential for lower costs and a more efficient way to trade.

The name Chi-X is derived from the Greek letter Chi, written X, symbolizing the crossing of the two sides of a trade.  Along with the “X” from the English alphabet, the name signifies a combination of the old world and modern world, or traditional securities trading techniques married with cutting-edge technology.

In many markets, the introduction of competition has seen bid-offer spreads tighten, explicit trading costs reduce and overall market turnover increase. Increased liquidity, more efficient markets and related price improvements deliver better trading outcomes; these are just some of the benefits experienced by traders and investors alike.

The journey to drive change and launch a new financial market requires foresight and patience, as well as a commitment to value creation. Chi-X has a track record of delivering successful outcomes and remains committed to enhancing Australia's financial markets.

SYDNEY STOCK EXCHANGE

The Sydney Stock Exchange was formed to allow brokers and traders to trade stocks and bonds for companies listed in New South Wales. It formed an association with the stock exchanges in Adelaide, Melbourne, Brisbane Perth and Hobart called the Australian Associated Stock Exchanges but remained an independent body. These six stock exchanges amalgamated on 1 April 1987 to form the Australian Stock Exchange Limited (ASX)

AUSTRALI1AN STOCK MARKET INDEX

A stock index or stock market index is a method of measuring the value of a section of the stock market. It is computed from the prices of selected stocks (sometimes a weighted average). It is a tool used by investors and financial managers to describe the market, and to compare the return on specific investments. An index is a mathematical construct, so it may not be invested in directly. But many mutual funds and exchange-traded funds attempt to "track" an index (see index fund), and those funds that do may not be judged against those that do not

SECTOR INDEX OVERVIEWS

S&P/ASX All Ordinaries Gold Index S&P/ASX 200 A-REIT Index S&P/ASX 200 Consumer Discretionary Index S&P/ASX 200 Consumer Staples Index S&P/ASX 200 Energy Index S&P/ASX 200 Financial Index S&P/ASX 200 Financials excluding A-REITs Index S&P/ASX 200 Health Care Index S&P/ASX 200 Industrials Index  S&P/ASX 200 Information Technology Index ASX LIC Index S&P/ASX 200 Materials Index S&P/ASX 300 Metals and Mining Index S&P/ASX 200 Resources S&P/ASX 200 Telecommunications Services Index S&P/ASX 200 Utilities Index

S&P/ASX ALL ORDINARIES GOLD INDEX

The S&P/ASX All Ordinaries Gold Index (XGD) includes companies from the Gold sub-industry of the All Ordinaries Index and serves as an ideal market indicator for the Gold industry. The index follows the broader All Ordinaries index methodology, therefore companies included in this index are not filtered for liquidity or adjusted for free float.

S&P/ASX 200 A-REIT INDEX

The S&P/ASX 200 A-REIT Index (XPJ) contains the listed vehicles classified as REITs. REITs own property and derive income from rental returns. A REITs sector has been created for the Australian market, where REITs are treated almost as a separate asset class to equity, and are often managed on a separate basis.

S&P/ASX 200 CONSUMER DISCRETIONARY INDEXES

The S&P/ASX 200 Consumer Discretionary Index (XDJ) encompasses those industries that tend to be the most sensitive to economic cycles. Its manufacturing segment includes automotive,

household durable goods, textiles and apparel and leisure equipment. The services segment includes hotels, restaurants and other leisure facilities, media production and services, and consumer retailing and services.

S&P/ASX 200 CONSUMER STAPLES INDEX

The S&P/ASX 200 Consumer Staples Index (XSJ) comprises companies whose businesses are less sensitive to economic cycles. It includes manufacturers and distributors of food, beverages and tobacco and producers of non-durable household goods and personal products. It also includes food & drug retailing companies as well as hypermarkets and consumer super centers.  

S&P/ASX 200 ENERGY INDEXES

The S&P/ASX 200 Energy Index (XEJ) comprises companies whose businesses are dominated by either of the following activities: the construction or provision of oil rigs, drilling equipment and other energy related service and equipment, including seismic data collection; or, companies engaged in the exploration, production, marketing, refining and/or transportation of oil and gas products, coal and other consumable fuels.

S&P/ASX 200 FINANCIAL INDEX

The S&P/ASX 200 Financial Index (XFJ) contains companies involved in activities such as banking, mortgage finance, consumer finance, specialized finance, investment banking and brokerage, asset management and custody, corporate lending, insurance, and financial investment, and real estate, including REITs. 

S&P/ASX 200 FINANCIALS EXCLUDING A-REITS INDEX

The S&P/ASX 200 Financials excluding A-REITs Index (XXJ) contains all the companies in the Financial sector except those that are classified as A-REITs.

S&P/ASX 200 HEALTH CARE INDEXES

The S&P/ASX 200 Health Care Index (XHJ) encompasses two main industry groups. The first includes companies who manufacture health care equipment and supplies or provide health care related services, and owners and operators of health care products, providers of basic health-care services, and owners and operators of health care facilities and organizations. The second group includes companies primarily involved in the research, development, production and marketing of pharmaceuticals and biotechnology products.

S&P/ASX 200 INDUSTRIALS INDEX 

The S&P/ASX 200 Industrials Index (XNJ) includes companies whose businesses are dominated by one of the following activities: the manufacture and distribution of capital goods, including aerospace & defense, construction, engineering & building products, electrical equipment and industrial machinery; or, the provision of commercial services and supplies, including printing, employment, environmental and office services; or, the provision of transportation services, including airlines, couriers, marine, road & rail and transportation infrastructure.

S&P/ASX 200 INFORMATION TECHNOLOGY INDEXES

The S&P/ASX 200 Information Technology Index (XIJ) covers the following general areas: firstly, Software & Services, including companies that primarily develop software in various fields such as the Internet, applications, systems, databases management and/or home entertainment, and companies that provide information technology consulting and services, as well as data processing and outsourced services; secondly, Technology Hardware & Equipment, including manufacturers and distributors of communications equipment, computers & peripherals, electronic equipment and related instruments; and thirdly, Semiconductors & Semiconductor Equipment Manufacturers.  

ASX LIC INDEX

ASX in conjunction with Listed Investment Companies (LICs) have established a composite LIC index (XIC) which comprises of LICs listed on ASX that invest directly in Australian and International Equities. Two sub-indices have also been created to allow for better tracking against either the domestic (XID) or internationally focussed (XII) LICs. The ASX LIC Index allows investors and advisers to measure relative performance of individual LICs against an industry standard benchmark.

S&P/ASX 200 MATERIALS INDEX

The S&P/ASX 200 Materials Index (XMJ) encompasses a wide range of commodity-related manufacturing industries. Included in this sector are companies that manufacture chemicals, construction materials, glass, paper, forest products and related packaging products, and metals, minerals and mining companies, including producers of steel.

S&P/ASX 300 METALS AND MINING INDEX

The S&P/ASX 300 Metals and Mining Index (XMM) is based on the S&P/ASX 300 index and comprises companies that are classified as being in the Metals and Mining industry.  The index includes producers of aluminum, gold, steel, precious metals and minerals and also diversified metals and minerals.

S&P/ASX 200 RESOURCES

The S&P/ASX 200 Resources Index (XJR) consists of companies from the S&P/ASX 200 index where the company is classified as belonging to the Energy sector or the Metals & Mining industry.

S&P/ASX 200 Telecommunications Services Index

The S&P/ASX 200 Telecommunications Services Index (XTJ) contains companies that provide communications services primarily through a fixed-line, cellular, wireless, high bandwidth and/or fiber optic cable network. 

S&P/ASX 200 UTILITIES INDEX

The S&P/ASX 200 Utilities Index (XUJ) encompasses those companies considered to be electric, gas or water utilities, or companies that operate as independent producers and/or distributors of power.

INDEX VALUES

Indices measure the movement in value of the market or various sectors of the market. They provide a broad outline as to how the market is performing. Standard & Poor's (S&P) calculate many of the indices available over the Australian share market. Information about types of indices, index related products and GICS is available. The Standard & Poor's provides the following detailed information:

Understanding Indices educational booklet

S&P/ASX Index Methodology, News, Commentary and Analysis

S&P/ASX Index Descriptions

S&P/ASX Index Data including live values, constituent lists and index changes

S&P/ASX Monthly Accumulation Index Returns

Index name ASX code Last Mvmt CloseS&P/ASX 20 XTL 2,950.1 -29.9 2,980.0S&P/ASX 50 XFL 4,876.2 -47.4 4,923.6S&P/ASX 100 XTO 3,926.5 -36.4 3,962.9S&P/ASX 200 XJO 4,737.7 -43.5 4,781.2S&P/ASX 200 VIX Index XVI 19.2 1.055 18.2S&P/ASX 200 2 x Daily Inverse Index XNV 346.7 6.2 340.5S&P/ASX 200 2 x Daily Leverage Index XLD 827.4 -15.4 842.8S&P/ASX 300 XKO 4,698.7 -43.1 4,741.8ALL ORDINARIES XAO 4,729.3 -42.5 4,771.8S&P/ASX MIDCAP 50 XMD 3,882.7 -21.4 3,904.1S&P/ASX SMALL ORDINARIES XSO 2,010.0 -16.1 2,026.1S&P/ASX All Australian 50 XAF 4,822.2 -47.3 4,869.5S&P/ASX All Australian 200 XAT 4,704.4 -43.3 4,747.7S&P/ASX200 A-REIT (Sector) XPJ 1,025.0 0.3 1,024.7S&P/ASX 200 Consumer Discretionary (Sector)

XDJ 1,528.4 -8 1,536.4

S&P/ASX 200 Consumer Staples (Sector) XSJ 9,365.2 -10.5 9,375.7S&P/ASX Dividend Opportunities Index XDI 1,582.7 -4.9 1,587.6S&P/ASX Emerging Companies Index XEC 1,016.6 -3.9 1,020.5S&P/ASX 200 Energy (Sector) XEJ 12,721.8 -64.6 12,786.4S&P/ASX 200 Financials (Sector) XFJ 5,149.9 -44.6 5,194.5S&P/ASX 200 Financial-x-A-REIT (Sector) XXJ 5,939.1 -61.8 6,000.9S&P/ASX All Ordinaries Gold (Sub XGD 2,694.4 -136.1 2,830.5

Industry)S&P/ASX 200 Health Care (Sector) XHJ 12,431.5 -14.2 12,445.7S&P/ASX 200 Industrials (Sector) XNJ 3,534.4 -35.7 3,570.1S&P/ASX 200 Information Technology (Sector)

XIJ 663.7 -3 666.7

S&P/ASX 200 Materials (Sector) XMJ 8,945.3 -219.7 9,165.0S&P/ASX 300 Metals and Mining (Industry) XMM 2,956.2 -74.5 3,030.7S&P/ASX 200 Net Total Return XNT 37,274.7 -339.4 37,614.1S&P/ASX 200 RESOURCES XJR 3,755.1 -73.7 3,828.8S&P/ASX 200 Telecommunication Services (Sector)

XTJ 1,594.5 10.2 1,584.3

S&P/ASX 200 Utilities (Sector) XUJ 5,351.2 20.7 5,330.5

PRICE WEIGHTED INDEX

A price-weighted index is an index in which the member companies are weighted in proportion to their price per share, rather than by number of shares outstanding, market capitalization or other factors. The Dow Jones Industrial Average (DJIA) is aprice-weighted index.

For example, let's assume that the following companies are in the XYZ price-weighted index:

A price-weighted index is simply the sum of the members' stock prices divided by the number of members. Thus, in our example, the XYZ index is:

$5 + $7 + $10 + $20 + $1 = $43 / 5 = 8.6.

In a price-weighted index, stocks with higher prices receive a greater weight in the index, regardless of the issuing company's actual size or the number of shares outstanding. Accordingly, if one of the higher-priced stocks (Company D, in our example) has a huge price increase, the index is more likely to increase even if the other stocks in the index decline in value at the same time.

The Dow Jones Industrial Average is probably the best-known and most widely followed index in the world. At its inception, the DJIA started with just 12 stocks and was priced at 40.94, a far cry from today's levels. The Dow now consists of just 30 stocks, making it one of the least diversified indexes around. The calculation behind the actual Dow value is quite complex, but essentially it is derived by summing up the prices of all 30 member stocks and then dividing that figure by a "magic number" (also referred to as the divisor).

VALUE WEIGHTED INDEX

The concept of value weighting a portfolio is new to investing. A Value Weighted Index weights stocks within the relevant universe based on a calculation of each stock's absolute and relative value as compared to the other stocks within the index universe. The index is continually rebalanced to weight most heavily those stocks that are priced at the largest discount to various measures of value. The index is updated as prices and company fundamentals change. We believe there will be a movement toward value weighted indexes, and this site will keep investors abreast of new opportunities within this area. If you like updates on new opportunities in this field.

MARKET CAP-WEIGHTED INDEX

Over time, traditional market-cap weighted indexes such as the S&P 500 and the Russell 1000 have been shown to outperform most active managers. However, market cap weighted indexes suffer from a systematic flaw. The problem is that market-cap weighted indexes increase the amount they own of a particular company as that company's stock price increases. As a company's stock falls, its market capitalization falls and a market cap-weighted index will automatically own less of that company. However, over the short term, stock prices can often be affected by emotion. A market index that bases its investment weights solely on market capitalization will systematically invest too much in stocks when they are overpriced and too little in stocks when they are priced at bargain levels. (In the internet bubble, for example, as internet stocks went up in price, market cap-weighted indexes became too heavily concentrated in this overpriced sector and too underweighted in the stocks of established companies in less exciting industries.) This systematic flaw appears to cost market-cap weighted indexes approximately 2% per year in return over long periods. Annual return* of S&P 500 over trailing 20 years: 9.1%

EQUALLY WEIGHTED INDEX

One way to avoid the problem of buying too much of overpriced stocks and too little of bargain stocks in a market-cap weighted index is to create an index that weights each stock in the index equally. An equally-weighted index will still own too much of overpriced stocks and too little of bargain-priced stocks, but in other cases, it will own more of bargain stocks and less of overpriced stocks. Since stocks in the index aren't affected by price, errors will be random and average out over time. For this reason, equally weighted indexes should add back the approximately 2% per year lost to the inefficiencies of market-cap weighting. Annual return* of S&P 500 Equal Weighted Index over trailing 20 years: 11.8%

FUNDAMENTALLY WEIGHTED INDEX

Fundamentally-weighted indexes weight companies based on their economic size using measures such as sales, book value, cash flow and dividends. Similar to equally-weighted indexes, company weights are not affected by market price and therefore pricing errors are also random. By correcting for the systematic errors caused by weighting solely by market-cap, as tested over

the last 40+ years, fundamentally-weighted indexes can also add back the approximately 2% lost each year due to the inefficiencies of market-cap weighting.

Annual return* of RAFI FTSE 1000 Fundamentally Weighted Index over trailing 20 years: 12.2%

VALUE WEIGHTED INDEXOn the other hand, value-weighted indexes seek not only to avoid the losses due to the inefficiencies of market-cap weighting, but to add performance by buying more of stocks when they are available at bargain prices. Value-weighted indexes are continually rebalanced to weight most heavily those stocks that are priced at the largest discount to various measures of value. Over time, these indexes can significantly outperform active managers, market cap-weighted indexes, equally-weighted indexes, and fundamentally-weighted indexes.

HOW TO DETERMINE SAMPLE SIZE, DETERMINING SAMPLE SIZE INAUSTRALIA STOCK EXCHANGE

In order to prove that a process has been improved, you must measure the process capability before and after improvements are implemented. This allows you to quantify the process improvement (e.g., defect reduction or productivity increase) and translate the effects into an estimated financial result – something business leaders can understand and appreciate. If data is not readily available for the process, how many members of the population should be selected to ensure that the population is properly represented? If data has been collected, how do you determine if you have enough data?

Determining sample size is a very important issue because samples that are too large may waste time, resources and money, while samples that are too small may lead to inaccurate results. In many cases, we can easily determine the minimum sample size needed to estimate a process parameter, such as the population mean .

When sample data is collected and the sample mean is calculated, that sample mean is typically different from the population mean . This difference between the sample and population means can be thought of as an error. The margin of error is the maximum

difference between the observed sample mean and the true value of the population mean :

Where:

is known as the critical value, the positive value that is at the vertical boundary for the area

of in the right tail of the standard normal distribution.

is the population standard deviation.

is the sample size.

Rearranging this formula, we can solve for the sample size necessary to produce results accurate to a specified confidence and margin of error.

This formula can be used when you know and want to determine the sample size necessary to

establish, with a confidence of , the mean value to within . You can still use this formula if you don’t know your population standard deviation and you have a small sample size. Although it’s unlikely that you know when the population mean is not known, you may be able to determine from a similar process or from a pilot test/simulation.

Let’s put all this statistical mumbo-jumbo to work. Take for example that we would like to start an Internet service provider (ISP) and need to estimate the average Internet usage of households in one week for our business plan and model.

Determinants of Sample Size

Type of analysis to be employed The level of precision needed Population homogeneity/heterogeneity Available resources Sampling technique used