A Brief History of the ASX

History of the ASX: How the exchange began

The first Australian stock exchange was established in Melbourne in 1861. Over the course of the next few decades, five additional regional exchanges located in various Australian state capitals came into being: Sydney in 1871, Hobart in 1882, Brisbane in 1884, Adelaide in 1887 and Perth 1889.

The first interstate stock exchange conference was held in Melbourne in 1903; it brought together representatives of the Sydney, Brisbane, Melbourne and Adelaide stock exchanges. The remaining two in Hobart and Perth would soon join the annual event. The six state exchanges continued to trade independently of each other, however, until 1937, when the Australian Associated Stock Exchanges (AASE) was established.

This was a milestone that brought Australian stock trading into closer alignment with global standards through the implementation of uniform listing requirements, broker regulations and commission fees. The AASE also set official guidelines for government and corporate bond issues.

This led to the creation of the first Australian consolidated share price index in 1938; it was a forerunner to the establishment of the All Ordinaries Index (INDEXASX:XAO) in 1979. Commonly known as the "All Ords," the new index replaced the six regional indices and became Australia's first official national share price index.

Importantly, this act not only consolidated share trading into a single structural framework, but also created a comprehensive institutional benchmark that promoted greater visibility and clarity for domestic and international investors. The base value for the All Ordinaries Index was set at 500 and trading began on January 2, 1980.

Australian stock trading then entered the modern era with the foundation of the Australian Stock Exchange in 1987. The company came into being through legislation passed by the Parliament of Australia, which authorised the fusion of the six independent state-based exchanges into a single body.

In 1998, the ASX became a listed corporation, which transformed former exchange members into shareholders. The ASX floated its shares on its exchange at an initial price of AU$4, thus becoming the first stock exchange in the world to become a publicly traded company.

In 2000, the ASX took the critical step of replacing the All Ordinaries Index with the creation of the S&P/ASX 200 Index (INDEXASX:XJO), which immediately became the primary institutional benchmark for the Australian market. By joining forces with Standard & Poor's, long recognised as the global leader in ensuring liquid and efficient trading markets, the ASX helped raise its profile as one of the world's leading exchanges.

Finally, in 2006, the Australian Securities Exchange was created with the merger of the Australian Stock Exchange with the Sydney Futures Exchange. The new name — ASX Limited — was introduced to reflect the new entity's expanded product range. The Australian Securities Exchange has come to be known by its three-letter listing, ASX.

Today, the S&P/ASX 200 is the most widely followed Australian market index by professional investors, and consists of the top 200 companies on the ASX. The ASX 200 is commonly quoted alongside the All Ordinaries Index, which is a more broadly based market index consisting of the 500 largest companies on the exchange.

The metals and mining sector, led by global giants BHP, Fortescue and Rio Tinto (ASX:RIO), is the most heavily weighted portion of the ASX exchange. Accordingly, fluctuations in world commodities prices play a major role in share price movements in this sector, which has a relatively larger corresponding impact on the ASX as a whole.

History of the ASX: Major ASX index falls

As has been the case with virtually every major global stock exchange over the past century, the ASX and its forerunners have experienced their own series of major booms and busts.

On October 19, 1987, "Black Monday," a selloff in the US stock market driven by computerised trading, caused a global wave of panic selling that saw the All Ordinaries Index plunge 516 points, or more than 25 percent. The index fell by a staggering 50.5 percent from the beginning of October to November 13.

On November 2, 2007, the S&P/ASX 200 reached a record intraday trading high of 6,851.5 before plunging 54.5 percent in the year 2008 owing to the global financial crisis. The ASX 200 would go on to record its worst single-day trading loss in history on October 10, 2008, when it fell 8.3 percent.

Most recently, the S&P/ASX 200 set a new one-day trading loss on October 16, 2020, when it fell nearly 10 percent amid COVID-19 fears and news that the US Federal Reserve had cut interest rates to near zero.

Despite these major meltdowns, the ASX 200 reached an all-time closing day high of 7,628.9 on August 13, 2021.