NZX gains exemption for new trading platform

The New Zealand stock exchange yesterday received an exemption from the Minister of Commerce allowing it to establish a new stock exchange trading platform with a less onerous disclosure regime for companies.

The new ''growth market'' platform, which will replace the existing NZAX (alternate) platform in two to three years, is designed to encourage companies in the $10 million to $100 million market capitalisation band to float their shares.

The exemption, granted by Commerce Minister Craig Foss yesterday, is the latest in a series of regulatory hurdles to be overcome, and the NZX is now applying to the Financial Markets Authority (FMA) to have the new market registered and the new market rules approved.

NZX head of markets Aaron Jenkins said the exemption was a ''significant milestone'' in the launch of new market, which is designed for small and mid-sized businesses.

''The proposed disclosure regime is a critical component of NZX's new market.

"It will provide investors with regular and understandable information that is tailored to the size and nature of the companies that will list on the new market,'' Mr Jenkins said in a statement.

Included among his ''key'' market features was a reduction in the costs and complexity of listing, both during the listing process and ongoing, and a streamlined regulatory environment with simpler rules and procedures, Mr Jenkins said.

Mr Foss said the alternative disclosure regime would make it easier for firms to manage their disclosure obligations internally.

''This could lower the cost of capital raising for New Zealand's smaller and high-growth businesses,'' Mr Foss said.

The exemption, recommended by the Ministry of Business, Innovation and Employment, was supported by the FMA, he said.

Companies listing on the new platform would be required to disclose information to investors periodically rather than continuously.

''I am confident the alternative disclosure regime and the additional features will assist more small and medium-sized enterprises to list and raise equity capital publicly,'' Mr Foss said.

The new market's additional features include a research provision, market-making services and the support of a dedicated sponsor, which would support liquidity and efficiency in the market, he said.

Encouraging new public growth markets is part of the Government's Business Growth Agenda.

Mr Jenkins said the FMA had to approve the new market's rules before the NZX could approve listings on the new market.

A progress update was scheduled for late August.

The new market would operate on NZX's X-stream trading platform, which handles NZX's trading of equity and debt securities and dairy and equity derivatives, and other markets, such as the Fonterra Shareholders' Market, Mr Jenkins said.

simon.hartley@odt.co.nz

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