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UPDATE 1-NZX plans to scrap junior markets NXT and NZAX
June 26, 2017 / 11:12 PM / in 6 months

UPDATE 1-NZX plans to scrap junior markets NXT and NZAX

(Updates throughout with more detail, context, background)

WELLINGTON, June 27 (Reuters) - New Zealand’s stock exchange NZX said on Tuesday it will likely fold its two junior equity markets into the main bourse after they failed to attract companies.

NZX said that feedback from the market indicated that NXT Market and its precursor, NZAX, were not meeting the needs of targeted smaller firms.

The indices, which are home to a combined total of just 22 companies, were designed to let smaller companies raise capital amid less rigorous compliance rules than the broader market.

“The NXT Market hasn’t developed as quickly or effectively as we had hoped,” NZX Chief Executive Mark Peterson said in a statement. “NZX has been speaking with the market for some time about how we can look to simplify the structure and operation of our equities markets to ensure its design meets the needs of everyone.”

Only four firms are listed on the NXT, including manuka honey firm Oceania Natural and mobile phone advertiser Snakk Media. The market was launched in June 2015, targeting small to medium-sized businesses with a market capitalisation of NZ$10 million ($7.3 million) to NZ$100 million.

The NZAX, or NZAX Alternative Market, has 18 companies. Launched in 2003, it closed to new listings with the launch of the NXT in 2015.

The NZX will begin a formal consultation process on its market structure in the third quarter, with consolidation the “likely outcome”, it said in its statement. It did not immediately set a date for a final decision.

The NZX said it may let smaller companies operate under different disclosure rules on the main bourse, but did not specify how that might be possible.

“NZX is considering whether differential requirements for smaller companies should be part of the solution and if so how that may be achieved in the context of a simplified equity board structure,” it said.

$1 = 1.3731 New Zealand dollars Reporting by Charlotte Greenfield Editing by Jane Wardell and Richard Pullin

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