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IPOs and derivatives trading lift ASX Ltd revenue

ASX Ltd (ASX: ASX) announced today that its third quarter revenue was up 7% mainly due to new listings and increased derivatives and OTC trading.

The ASX also provided an update on the Clearing House Electronic Subregister System (CHESS) replacement project with the new ASX CHESS DLT system expected to go live in late 2020 – early 2021.

The ASX’s financial results and update for the 9 months ended 31 March 2018 were presented at the Macquarie Group Ltd (ASX: MQG) conference held in Sydney this morning.

There are a couple of reasons why an investment in the ASX would make sense as part of a diversified portfolio.

Moat

While I don’t think the ASX will provide 10x returns to investors anytime soon, it does have significant competitive advantages that make it a solid investment. Whilst Chi-X Australia exists as an alternative, the ASX retains the lion’s share of the market. Even if other potential competitors could overcome the regulatory hurdle of setting up a rival exchange in Australia, the ASX still enjoys the advantages of the network effect that make it difficult for participants to leave.

Age of cryptocurrencies 

As innovation and technology progress, we could see more financial products being traded more frequently on the ASX. The options are potentially endless with the rise of high frequency trading, derivatives and perhaps we could even see a future where Bitcoin (BTC), Ethereum (ETH) and Ripple (XRP) are traded on the ASX.

Risks

There are risks that could impact the ASX’s growth plans. The ASX is the 16th largest global exchange by market cap and so investors could continue opting to invest on the New York Stock Exchange or Nasdaq where there are more businesses. There is also the outside chance of a cyber-attack creating losses for the ASX. Although the chances of this happening are quite low, if it did happen it would be catastrophic.

If you are looking for more stable and profitable business, try these 3 ASX blue chip stocks.

Top 3 ASX Blue Chips To Buy In 2018

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool's in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool's Top 3 Blue Chip Stocks for 2018."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand - and how quickly the share prices of these companies moves - we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor Kevin Gandiya has no position in any of the stocks mentioned.

You can follow Kevin on Twitter @KevinGandiya.

The Motley Fool Australia owns shares of ASX Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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