A third trading platform on the New Zealand stock exchange -
for companies with a market capitalisation of $10 million to
$100 million - could be launched within a few months,
depending on regulatory approval.
Among several proposed rule and procedural changes, could be
savings in initial public offering (IPO) costs, smaller more
concise prospectuses and a replacement for financial
Yet to be formally named, the third ''growth market''
platform, would, in two to three years' time, replace the
alternate (AX) platform, NZX head of markets Aaron Jenkins
Asked why a third trading platform was needed, Mr Jenkins
said: ''Feedback from smaller, growing companies is that
complexity on the main board has been an impediment [to
listing]. We want to bring more companies to the market,'' he
The NZX was still finalising the rules with the Ministry of
Business, Innovation and Employment and Financial Markets
Authority, he said, when contacted.
Following recent completion of a formal consultation process,
NZX has an application to the Minister of Commerce, Craig
Foss, for the ''growth market'' to be exempted from the
continuous disclosure requirements of the main board, under
the Securities Markets Act.
The request is being considered by the Ministry of Business,
Innovation and Employment.
Mr Jenkins was asked why the exemption from continuous
disclosure was being sought, given that it counted as
transparency for investors, and towards insider trading.
He said insider trading was already covered by existing law,
and continuous disclosure would come under a new regime of
''proscribed disclosure''; in that the NZX would have a list
of events which would require immediate disclosure.
Examples of immediate ''proscribed disclosure'' would include
issues such as a company breaching its banking covenants, or,
if it were to miss its business targets by 20% or more.
''There's less requirement to have to ring the lawyers [for
advice],'' Mr Jenkins said.
Investors would benefit from the release of independent
research into the listed companies, quarterly reporting by
them, and use of ''market makers'' on the ''growth market''.
The market makers, yet to be chosen from one of six
brokerages in the country, would be contracted to buy and
sell shares, promoting liquidity in the stock.
He said the market makers would take the gains, and the
losses, from their share trading, as well as being paid by
As an example, he said about one-third of listed companies
did not have consistent daily bid and offer prices, showing a
lack of liquidity for investors.
A prospectus would not require financial forecasts, which
would be replaced by providing ''key operating metrics'',
such as expectations of customer or contract growth.
The size of prospectuses would drop from more than 100 pages
to about 40, and while IPO fees would not change, the
prospectus changes could produce savings in IPO costs of
$100,000 to $400,000, he said.