Australian traders will be able to invest in big United States stocks such as Apple or The Coca-Cola Company from   September on Chi-X Australia, which looks set to beat larger rival ASX to offer those trades.
The exchange said on Thursday it was working on using what it called "transferable custody receipts" (TRaCRs) to represent stocks from the New York Stock Exchange and NASDAQ on Chi-X, and was just waiting on approval from the corporate watchdog. Such a move was reported in   June 2015 in The Australian Financial Review's Street Talk column. 
In line with the requirements of the Australian Securities and Investments Commission, Chi-X has issued a consultation paper detailing the plans. Each TRaCR security will represent one-tenth of the underlying US stock.
"For a long time Australian investors have wanted a local vehicle to invest in and trade American equities and Chi-X is innovating to be the first to meet this demand," chief executive John Fildes said. "We are confident TraCRs will be a great vehicle for Australian SMSF [self-managed superannuation funds] and other retail investors looking to diversify their portfolios."  
The move would help diversify the investments of Australian funds not allowed to invest directly offshore, Mr Fildes said.
"It fills in gaps in the sectors that are uninvestable in Australia. There is not a lot technology and no automotive stocks," he said.
The ASX tried to use a similar mechanism, called unsponsored depositary receipts, to offer offshore stocks in 2012, but the Australian Securities and Investments Commission denied the request. It was concerned investors would not be fully informed because the overseas companies weren't subject to Australia's continuous disclosure obligations. It has been working on a plan to re-apply, but has yet to release the details on how it would get around the previous objections.
  Ease ownership requirements  
The news came one day after Treasurer Scott Morrison said he was set to ease the ownership requirements of the Australian Securities Exchange. 
"The big difference is Chi-X has verbally been given the green light by ASIC to move ahead with these," Mr Fildes said. He also said the reason it was moving faster on its TRaCRs than the ASX was that new products like this were more of a priority for Chi-X than ASX.
"ASIC had concerns about UDR products. We have spent considerable time, effort and money to address ASIC's concerns."
Chi-X has been working on TRaCRs for about 18 months and has applied to ASIC for "relief" from several sections of the Corporations Act for issuers of TRaCRs.
This includes issuers of TRaCRs being exempt from continuous disclosure obligations, on the grounds that the stocks are publicly traded in the US and Chi-X will set up a separate website, which will provide continous disclosure of price-sensitive information.
"We will be providing a new website with continuous disclosure that is as good, if not better, than what investors get in the US," Mr Fildes said.
The company was spending a "seven-figure sum" on this and numerous other new products it has been launching, including warrants, exchange tradeable funds, new trading indices and "quoted-managed funds", due in   June, he said.
"For a company our size it is a lot of money. We may well not be profitable this year because we have chosen to invest." 
Submissions on the consultation are due by   April 22.