If you’re a first time investor, you’ve likely come across the Australian Securities Exchange – AKA the ASX.

Based in Sydney, the ASX has been an integral part of Aussie investing for decades, not least because it’s the primary place for the public to invest.

But, there’s quite a bit more to the Exchange than merely serving as a spot to buy and sell shares.

What is the ASX?

The short answer is that the ASX is the main market exchange in Australia. In a very basic sense, the ASX is where companies list their shares so that the public can invest in them.

The longer answer is a little more involved. Because the ASX is a completely integrated exchange, it provides several services. These include listings, trading, clearing, settlement, technical and information services, technology, data and post-trade services, along with educational resources.

The ASX also manages compliance and corporate governance among the companies that list on the Exchange, plus it facilitates payments.

The ASX is where you’re most likely to invest in Australian public companies because around 80% of on-market trading in Australia is conducted on the Exchange. Currently, there are more than 2,200 securities listed on it. This also makes the ASX the world’s eighth-largest share market and the second-largest in the Asia Pacific.

The ASX is open from 10am to 4pm Sydney time on business days. This means that any trades you place outside these hours won’t be executed until the ASX opens.

What's the history of the ASX?

The ASX’s history stretches back all the way to the 1850s. At this point, there were numerous stock exchanges around Australia, with each one operating in a separate state capital: Sydney, Melbourne (which was the first to launch), Brisbane, Adelaide, Perth and Hobart.

There were also a few smaller exchanges in cities like Ballarat and Bendigo – largely thanks to the boom that these locations experienced following the discovery of gold. But, these exchanges didn’t last too long.

For many decades, the state-based stock exchanges held conferences where each would gather, an arrangement that was formalised into the Australian Associated Stock Exchanges (AASE) in 1937.

The AASE – which is considered the predecessor of the ASX – developed a more uniform trading system and rules for each exchange over time. This was despite the fact that they continued to run individually.

Eventually, though, the state-based stock exchanges would amalgamate.

The Sydney Stock Exchange operated until 1987 when it merged with the other exchanges under Australian Parliament legislation and became known as the Australian Stock Exchange. In 1990, the individual capital city exchanges shut down their floors, and the ASX became solely headquartered in Sydney.

It wasn’t until 2006 that the ASX switched from the Australian Stock Exchange to the Australian Securities Exchange. The reason is that it merged with the Sydney Futures Exchange during that year, thus expanding the types of products the ASX offered. From then on, investors were able to put their money into index options, interest rate securities, energy and agricultural commodities, so the revised name made much more sense.

What can I invest in through the ASX?

You might associate the ASX with investing in shares, but you actually have access to a diversity of investment options.

Here are some of the most common ways to invest on the ASX.

Shares

As mentioned earlier, there are presently more than 2,200 companies listed on the ASX, ranging from smaller enterprises to bigger, more established businesses – think staples like banks, large retailers and energy providers. The ASX divides these companies into 13 categories according to their sector; for example, telecommunications or banking and insurance.

Shares are a common form of investment for newbie investors. You can learn more about them in our guide to how to invest in stocks.

Bonds

Bonds are a type of generally low-risk investment issued by companies and the government. If you invest in bonds, you’re effectively loaning money to that particular company or government in return for interest payments.

Many investors put their money into bonds to help diversify their portfolios. Diversification is popular with long-term investors, because it means you’re not putting all your eggs in one basket (or relying on one investment to succeed). To learn more about it, check out our article on how to create a diversified portfolio.

ETFs

ETFs, or exchange-traded funds, are more or less traded like shares. However, rather than investing in a single company, you’re putting your money into a group of securities – such as shares or bonds.

ETFs then track these securities and their value goes up or down accordingly. A good (and rather fitting) example is the Betashares Australia 200 ETF (A200). This ETF tracks the performance of the 200 biggest companies on the ASX, effectively giving investors exposure to (and diversification across) a huge number of companies in one go.

Managed funds

Managed funds are overseen by professional fund managers, who combine your money with other investors and invest in different assets on your behalf. These assets could include shares, bonds, property and cash (or a mix), giving investors exposure to several asset classes.

Other investments on the ASX

The ASX offers the opportunity to invest in hybrids, warrants, options and futures. However, these types of investments are typically more complex – so you may not even consider them as a first-time investor.

Is the ASX the only stock exchange in Australia?

Nope! Despite being the main stock exchange in Australia, the ASX isn’t the only local stock exchange.

There’s a much smaller one known as the Cboe, another exchange based in Sydney that conducts the remaining 20% of all trades. Formerly known as Chi-X, it works very similarly to the ASX and, because it lists mostly the same securities, is considered an alternative trading exchange.

The Cboe differs from the ASX in several ways, though. Firstly, it only operates during the day, meaning you can’t place orders outside trading hours to have them executed the next day. There are also a few ETFs and managed funds available to trade on the Cboe that aren’t listed on the ASX.

How does the ASX differ from foreign stock exchanges, like the NYSE?

The ASX is just one of many stock exchanges around the world. Others include the New York Stock Exchange (NYSE), the Nasdaq (also US-based), the London Stock Exchange (LSE), the Stock Exchange of Hong Kong (HKEX) and New Zealand’s Exchange (NZE).

As an Aussie investor, you can invest in many of them – either by trading individual stocks, or by buying into an ETF or managed fund. It's quite easy to do so, too, as the fundamentals are much the same. Other stock exchanges, like the NYSE, offer a range of investment types and the trading process is near identical. Many Australian trading platforms (like Pearler!) also offer exposure to some global markets.

There are numerous benefits to investing in international markets. These include the ability to trade outside of the ASX’s usual business hours and the potential to diversify your investments in case the Aussie market experiences a downturn.

It’s also worth highlighting that only 2% of shares globally are Australian ones, with the majority of the world’s biggest companies listed on foreign exchanges. Typically, this applies to the US, which is home to the world's two largest market exchanges: the NYSE and the Nasdaq. Many investors believe that foreign markets, particularly the US markets, generally perform better than the Australian one, too.

That being said, it pays to do your research into the different exchanges before diving into them – because international investing has its own risks to consider. There may be higher fees associated with investing in international markets, plus you need to think about exchange rates and tax implications.

Australian shares also usually pay higher dividends than international shares (4.4% on average compared to 2.5% globally). This is not a given for every Australian share, but something that may factor into your decision-making.

As an investor, how can I keep up to date on important ASX resources and developments?

The ASX website has numerous helpful resources for all kinds of investors, even first-time ones. There are educational materials like fact sheets, videos, blog posts and more, all designed to help you understand the ins and outs of Australia’s biggest market exchange.

There are also several ASX newsletters that deliver news, notifications and other market-related updates. Alternatively, you can follow the ASX on X or LinkedIn.