NZSE prepares new secondary market to be road tested

By NZPA

Monday 10th March 2003

The New Zealand Stock Exchange is about to put its alternative exchange (AX) through its final paces.

The exchange hopes to have the AX, a new secondary market, up and running by August to replace the unlisted, or secondary market, and the poorly performing new capital market (NCM).

A revised proposal, released in mid-December, outlined several "radical" changes to the existing role of brokers, new trading mechanisms and recommendations on the role of research , exchange markets development manager Geoff Brown said in a statement.

Now the exchange plans to commission user groups to test and refine every aspect of the new market over the next two months .

"The original aim for the AX was to create a market that would be simple and cost effective for New Zealand's smaller growth-oriented companies to raise capital," Mr Brown said.

"We want to create a platform that encourages new listings and increase liquidity in the market."

People are being invited to join the user groups which Mr Brown said would represent all areas of the market, including listed and unlisted companies, government, the broking community, accountants, banks, lawyers and information providers.

They would be asked to look at six specific areas: the legal and regulatory environment, research and information sources, the company sponsor role, the trading microstructure of the market, non-standard listings, and unlisted and potentially listed companies.

Talks would then begin between the exchange and companies looking to list on the AX board.

Mr Brown said potential candidates included smaller companies on the main board as well as those on the NCM and unlisted boards.

"NZSE will also be actively targeting unlisted companies in all sectors of New Zealand industry, encouraging them to list."

Mr Brown said the new market would have an emphasis on being cost efficient for small companies .

To encourage the number and type of firms involved, the "organising broker" would be changed and an underwriting distribution panel will be formed to facilitate capital raising and distribution.

A trading "micro-structure" would also be developed to improve liquidity for smaller companies.

Mr Brown said the ultimate structure was expected to be finalised by the end of April.

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