NZX to remove 20 minute delay on announcements

Friday 24th July 2009

NZX is preparing to axe its controversial "20 minute rule", which feeds market-sensitive company announcements to paying customers before the rest of the market sees them.

A spokeswoman for the NZX, which operates and is a regulator the New Zealand share trading platform told BusinessWire: "We've been consulting with vendors and participants for some time with a view to remove the 20 minute delay for company announcements on the website."

The admission comes on the same day as New Zealand Shareholders Association chairman Bruce Sheppard accused the NZX of "facilitating insider trading" by favouring subscribers over the public in its release of announcements that listed companies are obliged to make to the exchange under its Listing Rules.

Such releases by listed companies typically include sensitive information on earnings, major transactions and other corporate actions that would be expected to have a material impact on a shareholder's view of the company's value.

The release of such statements to the NZX is closely coordinated and generally overseen by listed companies' legal counsel, such is the importance of ensuring that market participants are informed simultaneously to prevent any party having opportunities to trade which others do not.

The 20 minute rule has been widely criticised as subverting that outcome, but is consistent with the NZX's strategic focus on driving new revenue from data sales.

The move will take some of the wind out of the NZSA's sails, as it prepares to launch a campaign to have the NZX's regulatory functions removed and placed with a government agency.

Led by the NZSA's newest board member, John Hawkins, the campaign will "combine the voices of people with an interest in this space", says Sheppard.

"The NZX makes most of its money selling information, and a few years ago it introduced this 20 minute rule," Sheppard told the meeting. "The information gets sent to payers 20 minutes ahead. The NZX is effectively facilitating insider trading. But who is the prime regulator responsible for policing insider trading? The NZX."

Sheppard said the various agencies currently regulating securities markets - the NZX, Securities Commission, MED, and Companies Office - all had their own systems and were "relatively dysfunctional".

Another focus for the NZSA this year would be encouraging public companies to rejuvenate their boards.

One public company, whom he did not name, has already agreed to participate in a "junior directorship" programme to expose up and coming business leaders to corporate governance disciplines earlier in their careers.

Businesswire.co.nz

Comments from our readers

No comments yet