How the ASX Works: Orders, Execution and Settlement

What the ASX does

The Australian Securities Exchange is a marketplace where quoted securities can be bought and sold. For an individual investor, access normally happens through a broker or trading platform rather than by sending an order directly to ASX.

A share represents part ownership in a company. Once shares are quoted, investors can submit buy and sell orders through market participants. The market brings those orders together; it does not guarantee that a buyer and seller will always agree on a price.

From your screen to an executed trade

When you submit an order, your broker sends the order into the relevant market process. ASX explains that buy and sell orders are generally matched by price and then by the sequence in which they entered the platform. A trade occurs when a buy order can be matched with a sell order.

After execution, your broker provides a trade confirmation showing details such as the security, quantity, execution price and fees. Execution is separate from settlement: the trade happens first, then cash and securities are exchanged through the settlement process.

Market orders vs limit orders

A market order seeks to buy or sell at the next available price. It can prioritise getting the order executed, but the final price can differ from the last price you saw if the market moves or available liquidity changes.

A limit order sets a boundary: the maximum price you are prepared to pay when buying, or the minimum price you are prepared to accept when selling. The price condition gives you more control, but the order may remain unfilled if the market never reaches it.

• Market order: execution is prioritised; price is not fixed in advance.
• Limit buy: do not pay above the stated limit.
• Limit sell: do not sell below the stated limit.
• Other order types may exist; understand the provider's rules before using them.

Bid, ask and why the displayed price can move

The bid represents prices buyers are currently offering; the ask represents prices sellers are currently requesting. The difference between them is commonly called the bid-ask spread.

The most recent traded price is historical information about the last matched trade. It is not necessarily the price available for the full size of your next order. This distinction becomes more noticeable when a security has lower liquidity or the market is moving quickly.

What happens after execution

ASX currently settles Australian cash-equity trades on a T+2 basis. That means settlement normally completes two business days after the trade date. Through CHESS, settlement transfers securities and funds between market participants using delivery versus payment.

Settlement is also where concepts covered later in this learning path—CHESS sponsorship, custody and HINs—become relevant. Those concepts describe how holdings can be recorded and administered after trading.

A simple order example

Suppose a share is showing sellers at $10.05 and buyers at $10.00. A market buy order may interact with the available sell orders, while a limit buy at $10.00 will not pay more than $10.00 and may therefore remain unfilled. This is an illustration only: real order books can contain many prices and quantities and can change rapidly.

The useful question is not which order type is universally better. It is what trade-off you are making between price control and the chance of execution.