(Reuters) -Australia's corporate regulator on Tuesday approved Cboe Global Markets' ( CBOE ) bid to list new companies on its local exchange, ramping up direct competition with the Australian Securities Exchange (ASX) in the country's tough initial public offering (IPO) market.

Cboe Australia, the local unit of the Chicago-headquartered exchange operator, can now list new companies, offering investors increased access to investment options such as initial public offerings and dual-listed foreign entities.

ASX shares fell as much 2% to the lowest since mid-June 2024 as it faces ongoing regulatory scrutiny into its beleaguered operations. The stock closed at A$58.96, down 1.35%, while the S&P/ASX200 was off by 0.3%.

The Australian Securities and Investments Commission (ASIC) launched an investigation in June into the ASX, following years of tension over a failed software upgrade and recurring trade-processing glitches.

Australia's central bank said last month the ASX needed to implement major cultural and governance improvements after a 2024 trading settlement failure.

"This move will provide more choice for companies to list in Australia, build more links to offshore markets and create more options for investors," ASIC Chair Joe Longo said in a statement.

Heightened competition in Australian equities markets has already led to reduced trading costs and broader access to products like exchange-traded funds (ETFs), the regulator said.

The ASX said it supported competition which helped to strengthen Australian's capital markets and said it already competed with CBOE in some trading categories.

"Public markets play a critical role in supporting companies to raise capital for growth opportunities, and we're confident in the strong value proposition that ASX provides," ASX said in an emailed statement to Reuters.

Listing fees are a major revenue source for the ASX, which in the last financial year earned A$208 million ($137.30 million) from listings, the results released in August showed.

IPO fees earned in the year fell from $A20 million to $A18.9 million, according to the results.

There has been $1.3 billion worth of IPOs in Australia so far this year, according to LSEG data, up from $382.6 million at the same time last year.

Desite the jump, most of the funds raised in 2025 have come from just two IPOs - Virgin Australia and Gemlife - which raised almost $950 million combined.

CBOE Australia currently has 20% of Australia's equity market turnover, representing almost A$2 billion of trades each day, ASIC said.

CBOE Australia told Reuters in an emailed response that it was pleased to have received the regulator's approval. It operates exchanges in the U.S., Canada and the Netherlands alongside its Australian operations, according to its website.

There are now four markets, including Cboe, licensed to list securities in Australia: ASX, National Stock Exchange of Australia (NSX) and Sydney Stock Exchange (SSX), ASIC said.

($1 = 1.5142 Australian dollars)

($1 = 1.5149 Australian dollars)