The first Australian stock exchange was formed in 1865 in Melbourne. Since then a stock exchange has been established in every major city in Australia. The corporate headquarters is located in Sydney. In 2006 the former Australian Stock Exchange merged with Sydney Futures Exchange (SFE) to form the current Australian Stock Exchange (ASX). Today ASX is one of the top 10 listed exchange groups in the world.

The stock market index is used to determine the market’s performance at the end of every business day. ASX has a few indices. All the indices are constructed and calculated by Standard and Poor. The formula for calculating the index value is quite complex and elaborate. But if I have to put in one sentence then the index value is simply the average market capitalization of a few selected stocks.

For each index Standard and Poor has different set of criteria for including companies in that index. The most common criteria would be a combination of liquidity of that company’s shares and the market capitalization of that company.

The primary index for ASX is the ‘All Ordinaries Index’ (All Ords). This index is Australia’s premier market indicator. The top 500 companies are included in this index. The companies included in this index are picked based on market capitalization alone.

There is an index for virtually every sector in the market - example ASX Small Ordinaries Index, ASX Resources Index, ASX Industrial Index etc.

Australian Stock Exchange has all the information regarding which companies constitute an index. This website also has numerous resources for self education about the Australian Stock Market. You can also find the closing prices of your shares. You can set up a watch list (a list with the prices of stocks that you own or are monitoring).

All the companies listed on the Australian Stock Exchange have to abide by its rules. ASX is itself a listed stock exchange. This means you can actually trade in ASX stocks (you can become a shareholder of ASX if you like).

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