The Australian Stock Exchange Essay Research Paper — страница 6

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Law, constitutes a flexible system designed to preserve the integrity of the market. Regulations on companies wishing to list on the ASX that concern assets, finance and money matters are in place incase the well being of an entity is in jeopardy. For example, I.C.U Optometrists are on the ASX and go broke. Yet they still owe there shareholders money for the part ownership they have in the company. I.C.U Optometrists have entered the ASX on the condition that they have assets to they have $X worth of assets, these assets we now be sold to compensate for the money they owe to there shareholders. Another example of rules and regulations of the ASX would be that of insider trading. For example, XXX Gold Mining Corporation is listed on the ASX. Their shares are trading at $5.70 each.

Their exploration team finds a massive gold deposit, bigger than any deposit found in the world. The ASX forbids XXX Gold Mining Corporation from running out to the public and secretly telling them to buy masses of XXX shares because they will boom in price due to a discovery of a massive gold deposit. Another example of insider trading would be selling unregistered shares (those not listed on the ASX) to the public. So basically as you can see the ASX can stop and punish the buying or selling of shares on the basis of price sensitive information not generally available to market players, insider trading. In 1980 this became a criminal offence. If one is caught they will receive a mandatory fine which equals the profit made, in addition when they attend court they will receive

another fine up to two times the amount of the profit made and possible imprisonment . More Government Regulation Of The ASX Kevin Smith has just retired, he was an accountant. Kevin has now received a lump sum of $250,000 and wants to invest all of his money. This lump sum is a substantial amount of money and Kevin wishes to invest this money and use the return as a form of income. He goes his financial adviser Fredrick Williams for some advice on the best way to invest his money. Fredrick tells Kevin about property investment, bonds, cash trusts, stock market, etc, etc. Kevin decides to invest in the stock market as he believes this form of investment suits him best. He goes to a Donald Hendricks the Stockbroker and Donald tells him that Quintex shares are very attractive for

many reasons. Kevin put his money on the table and tells Donald to make a purchase of $250,000 worth of Quintex shares on his behalf. The transaction is made and Kevin is a happy man, two weeks later Kevin’s shares are excluded from the stock exchange. The chairman of the company Christopher Skase took all the money he could get his hand on and went to Spain, where no one can touch him. Kevin’s wife is so shocked she leaves him and files a divorce, Kevin now has no money, is to old to work and lives of a small pension with a broken heart. As you can now clearly see, with all the rules and regulations the ASX has today, it is still not enough. These such incidents rape people of there money and the ASX says, “well, that’s just too bad”. The ASX needs more government

regulation to protect the well being of all shareholders. Although I believe that there should be more government regulation on the ASX, I don’t believe much more can be done. This is a very rigid topic we are dealing with. As we saw in the above example, the way some stocks fall in price or in some cases fall of the exchange is not the fault of the ASX at all. This has given the ASX the label of a high risk investment. If the ASX were to go through all companies on the stock exchange and make sure that all the companies were clean and honest, this would surely be very reassuring. It is impossible, absolutely impossible. It is also hard for the ASX to make sure that everyone is following the rules and regulation due to the growing size of entities on the exchange. More

government regulation is needed, but how will it be implied? Part 5 The Crash of 1987 In particular the crash of 1987 experienced some highs and lows, but much like the 1927 crash it is important to understand some of the most significant events that led to the crash. In the case of 1987, these events are not to the fault of poor running of the market, but more or less the economic structure and operations carried out within the economy. These events take us back to 1982. In 1982 the U.S double digit inflation was under control, the Federal Reserve eased credit, and taxes were reduced. The recession was over and the bull market began. The bull market of the 1980s began in 1982 and continued until October 1987. The Dow Jones Industrial Average increased from 777 in August 1982 to