The ASX launched a range of new order types in June 2010. Two of...

The ASX launched a range of new order types in June 2010. Two of those new order types were Centre Point1 (CX) orders and Centre Point Crossing (CXXT) orders. A CX order is an anonymous order that enables execution at the midpoint of the best bid and offer in the ASX Central Limit Order book (CLOB). The CXXT order enables participants to cross at the midpoint price of the prevailing best bid-offer. CX orders and CXXT crossings thus offer a way for investors to lower execution costs by trading at the midpoint.
Charts 1 and 2 show that the majority of CX and CXXT trading is being executed by the top 10 institutional brokers. This is expected as optimal usage requires automation and possibly algorithmic development. This study examines whether price impact is lower for CX orders and CXXT crossings relative to orders on the CLOB after accounting for the spread and explicit ASX trading fees.