The Australian Securities Exchange (ASX) has launched a project to fund independent equity research coverage for its small and mid-cap companies that wouldn’t ordinarily attract analyst attention.

The ASX announced Tuesday that it has begun a 12-month trial of an initiative, known as the ASX Equity Research Scheme, to fund independent research for ASX-listed companies with a market capitalization below A$1 billion (which represents about 92% of all listed companies). The exchange is spending A$1 million to fund the trial.

During the trial, the scheme will generate three different sorts of reports: a company snapshot report for almost 1,200 issuers with a market cap of less than A$50 million to be produced by Morningstar Australia, which will be available on the ASX website; a retail report for companies with market caps of between A$50 million and A$200 million; and, an institutional report on companies in the A$200 million to A$1 billion range.

For the retail reports, the ASX has selected 10 research providers to produce three standard research reports with analysis and commentary on approximately 30 companies chosen by the researchers, which will be branded by the research providers and distributed through their existing distribution channels.

For the institutional reports, it has picked six market participants with an established institutional research function (including Credit Suisse Equities (Australia) Limited, Deutsche Bank AG, J.P. Morgan Securities Australia Ltd., Macquarie Securities (Australia) Ltd, Merrill Lynch Equities (Australia) Ltd, and UBS Securities Australia Ltd) to produce three reports on approximately 20 companies, which will be distributed through their existing distribution channels.

“By improving the quality and availability of research in the small to mid-cap sector, the scheme will provide a broader range of opportunities for investors. Over time, this will assist the investor relations activities of small to mid-cap companies and improve their ability to raise capital,” the exchange says.

If the trial is successful, the ASX says it will assess how it could be expanded, starting in July 2013, and what impact this will have on annual listing fees. It estimates that a fully operational scheme would cost up to A$10 million per year.