MARKETS SPECTATOR: An ASX electric zap

ASX, the operator of Australia’s dominant stock and futures market, says it will buy d-cyphaTrade from Transpower.

The ASX will buy Transpower New Zealand’s electricity derivatives unit d-cyphaTrade for $55 million to grow a derivatives business that accounted for almost a third of ASX’s revenue in 2012.

The takeover, which closes today, will be paid for in cash and bolster earnings, though not materially, the ASX said in a statement. The acquired company will be renamed ASX Energy. It has worked with the ASX since 2002 to jointly develop the electricity trading market in Australia.

Between May 2012 and April 2013, 13,948 electricity futures and options contracts have traded on average each month. The ASX’s d-cyphaTrade trades an average 1.651 million megawatt hours per day. This represents 232 per cent of daily average system demand.

Derivatives generated $188.7 million, or 31 per cent of ASX’s total revenue in its 2012 financial year, making it the biggest business unit of the company. Sales from electricity derivatives generated $6.6 million during the same period.

At 1503 AEST ASX shares were up 12 cents, or 0.3 per cent, to $$37.61. The S&P/ASX200 Index had added 9.818, or 0.2 per cent, to 4,940.50.

ASX’s stock has risen 28 per cent in the last year compared with the 21 per cent gain in the S&P/ASX200 Index.  

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