Provided by Michelle Huckel, Policy Manager, SIAA
Cboe Australia is proposing an Australian launch of Cboe’s Global Listings Platform that will enable companies (domestic and foreign) and closed-ended investments (such as Listed Investment Companies, Listed Investment Trusts, Real Estate Investment Trusts, and Infrastructure Funds) to list in Australia and intralist across Cboe’s network of security exchanges around the world.
It has issued a consultation paper on the proposed new listing framework that invites stakeholders to provide feedback. Following consideration of the feedback received, Cboe Australia will publish a second consultation paper later this year.
The proposed listing framework will include:
- Listing Rules that will set out the requirements that need to be met to be admitted to the official list (including for companies seeking to intralist), ongoing obligations after admission, and suspension and delisting.
- Opening auctions, closing auctions and intra-day reopening auctions for Cboe Australia symbols.
- Good-till-cancel (GTC) and good-till-date (GTD) orders for Cboe Australia symbols (Cboe Australia warrants will not be eligible for multi-day orders). These changes will also be enabled for ASX symbols traded on the Cboe Australia market.
- Liquidity provision programs via Cboe Australia’s Additional Liquidity Provider Scheme.
- Clearing and settlement support – all trades in Cboe Australia listed securities will clear and settle through CHESS, with the securities of intralisted and other foreign companies being in the form of CHESS Depository Interests (CDIs) where required, with CHESS Depositary Nominees Pty Ltd (CDN) serving as depository nominee, subject to certain conditions being met.
ASIC relief will be required to support the listing framework. Cboe has stressed that the proposals are at a consultation stage only and have not been the subject of final review or endorsement by ASIC and are subject to regulatory approval.
Cboe Australia also plans to engage the industry in a further phase to explore in greater detail the possibility of opening and closing processes for ASX symbols traded on the Cboe Australia market as it considers the provision of such a backup closing auction facility could deliver significant benefits to Australian market resilience, particularly in the context of the introduction of the ASX cancel only session state.
Background
Cboe’s vision is to have an aligned rule framework across its exchanges in Australia, the US, Canada, the UK, and the European Union so that a company meeting listing requirements in one country will materially meet exchange requirements in the other countries. This means that once a company lists on one Cboe exchange, opportunities to raise capital on any other Cboe exchange become readily available.
From the launch of the Cboe Australia listing market, Cboe Australia expects to be able to support intralisting by Australian issuers into Cboe’s exchanges in the US and Canada and vice versa. Cboe Australia expects to add support for intralisting into Cboe’s exchanges in the EU and UK shortly thereafter.
Types of Listings
The listing rules will support five new types of listing categories:
- Cboe Intralistings – these are companies listed on other Cboe exchanges that become listed on Cboe Australia. Intralisted companies may raise capital and be available for secondary trading in Australia or may be limited to secondary trading in Australia only. As Cboe Intralistings on Cboe Australia will be subject to the rules of another Cboe exchange and benefit from the information sharing and harmonised processes among Cboe exchanges, Cboe Australia considers that only a small set of Cboe Australia listing rules would be necessary for, and applicable to, Cboe Intralistings.
- International Listings – these are companies listed on select other reputable, international markets, with a rule and legislative framework comparable to Cboe Australia, that become listed to enable secondary market trading of their securities and capital raising in Australia. Cboe Australia intends to initially recognise the foreign markets currently recognised by other Australian exchanges.[1] As these companies will be subject to the rules of their primary exchange, Cboe Australia intends to exempt them from certain listing rules in line with existing market practice.
- Primary Listings – these are companies that list on Cboe Australia to enable secondary market trading of their securities and capital raising in Australia. A full set of Cboe Australia listing rules would be necessary for and applicable to Primary Listings.
- New Zealand Listings – these are New Zealand incorporated companies that are listed on NZX and become listed on Cboe Australia to enable secondary market trading of their securities and capital raising in Australia. These companies would be exempt from certain listing rules in line with existing market practice.
- Debt Listings – these are companies seeking to raise debt finance by listing debt securities on Cboe Australia. Specific Cboe Australia listing rules would be necessary for and applicable to Debt Listings.
Admission Standards
For listings other than debt listings, it is proposed that prospective issuers must meet at least one of the following four profit and asset standards:
◆ An Equity Standard – which requires meeting a net tangible asset (NTA) threshold;
◆ A Net Income Standard – which requires meeting an operating profit (before income tax from continuing operations) threshold;
◆ A Market Value Standard – which requires meeting a market capitalisation threshold; or
◆ An Assets and Revenue Standard – which requires meeting total asset and revenue thresholds.
Cboe Australia’s proposed standards are largely comparable with ASX standards. However, some key differences to highlight are:
- Differences in monetary thresholds under the standards.
- A spread requirement of a minimum of 150 unaffiliated security holders holding a minimum parcel size of at least $2,000.
- Listings, other than international exempt listings, will be required to implement an investor relations strategy supported by an investor relations budget of at least $100,000 for the 12 months following listing.
- The Assets and Revenue Standard would be novel for the Australian market but is used on other Cboe exchanges. Cboe Australia envisages this pathway would help enable listings of emerging, innovation, technology, and other types of company that may have significant non-tangible assets (and therefore cannot meet the equity standard) and generate significant income without necessarily posting regular profits (and therefore cannot meet the net income standard).
- New defined distribution requirements for primary listings. This means that issuers may meet the requirement by ensuring that the public float comprises of at least 1 million main class securities with an expected market value of at least $10 million (or $5 million under the income standard). Alternatively, issuers may meet this requirement by meeting the more familiar requirement of a free float of at least 20% of the main class of securities (consistent with existing market practice).
Cboe Australia has asked stakeholders to respond to the consultation by 17 April 2024.
A link to the consultation paper is here.
[1] Cboe Australia intends to recognise Borsa Italiana, Deutsche Börse, EuroNext (Amsterdam), EuroNext (Brussels), EuroNext (Lisbon), EuroNext (Paris), Frankfurt Stock Exchange, HKSE, LSE, SGX, SIX Swiss Exchange, TASE (Israel), TSE (Tokyo), TSX (Toronto), NASDAQ, NYSE and NZX as acceptable exchanges.
