"We are confident that it [TraCRs] will be a more efficient way for Aussies to buy international stocks."

The model sees an underlying Apple share held by a global custodian to reflect each TraCR. The TraCRs are unsponsored, meaning that they are not jointly issued by a company such as Apple.

While the next batch of TraCRs are yet to be approved, the alternative exchange's website points to other stocks that may follow as early as next week including Facebook Inc, JPMorgan, Microsoft Corp and Walt Disney. Those involved are targeting 25 to 30 stocks by mid next year.

Chi-X did, however, have to push out several deadlines for the TraCR launch. It worked with the corporate regulator and Australian Tax Office to ensure they were classified as a local equity product rather than a derivative and so that rules were in place spanning areas including capital gains tax.

Mr Jokovic, a Deutsche Bank equities veteran who joined Chi-X Australia earlier this year, said the TraCRs would also benefit local investors who are often stung by foreign exchange charges on the way in and out of trading global stocks directly.

"For an investor you may lose 2 per cent or 3 per cent in just your foreign exchange cost in a trade, as opposed to TraCRs where we are talking about four or five basis points," he added.

He started working on TraCRs while still at Deutsche, which is playing a key role on the product as an issuer, market maker and custodian.

The ASX has taken a different approach after coming up against roadblocks when it proposed a similar mechanism, called unsponsored depositary receipts (UDRs), to offer overseas stocks in 2012.


The main bourse was blocked by the Australian Securities and Investments Commission over concerns investors would not be fully informed because overseas companies weren't subject to local continuous disclosure obligations. While the ASX had been working on a plan to reapply, a spokesman on Wednesday suggested those plans had been shelved.

"We continue to watch the space but our focus is elsewhere, as is the market's," he said.

"Central to our decision-making are the questions: Can we add value for customers? Are proposed new products low-cost and scalable? We concluded that this was not the case for UDRs.

"ETFs [exchange traded funds] already provide an efficient way to access international opportunities."

Chi-X said it got local regulators across the line on continuous disclosure by creating a website that acts as a "one stop point" for all company information relating to the TraCR stocks.

Deutsche's head of depository receipts Chris Bagley said TraCRs streamlined the process for Australian investors seeking exposure to global stocks and made the cost dynamics "demonstrably different".

"Investors will receive a dividend, or cash distribution, in Aussie dollars, because the custodian who is the legal owner of the underlying shares, receives the distribution or dividend and then converts that" at a wholesale rate, he added.

Getting brokers on board and sufficient liquidity will prove to be a key test for Chi-X and Deutsche. There are already more than 10 brokers who will offer TraCRs trading and CommSec is said to be readying to trade the product by year's end.


More than 20 per cent of local average daily cash equities trading is now conducted on Chi-X and about 36 per cent of exchange traded fund (ETF) volume.

Mr Jokovic said he expected the growth in TraCRs would be incremental and a "slow build", similar to the early years of ETFs.

Investors will have access to a product disclosure statement and will also need to sign off on an investor fact sheet to buy the TraCRs.

"They are an Australian security so theoretically there is no need to acknowledge the fact sheet but there is a high bar here that has been set," Mr Jokovic added.

The TRaCRs are settled through the local CHESS system and ASX-listed Link Group is the registry.