NZX names new market "NXT" as it awaits FMA go-ahead
By Suze Metherell
Aug. 28 (BusinessDesk) - NZX, the stock market operator, has revealed its new market with lighter disclosure
requirements will be called NXT, as it waits on the final go-ahead from the Financial Markets Authority.
The Wellington-based stock market operator wants to lure more small-to-medium sized firms to the bourse with less-costly
disclosure rules, filling a funding gap for SMEs that was first identified in the 2009 Capital Markets Development
Taskforce led by investment banker Rob Cameron. In July, Commerce Minister Craig Foss granted a ministerial exemption
allowing a less-onerous disclosure regime for NZX's NXT.
"Many businesses operating in New Zealand need additional capital for growth," chief executive Tim Bennett said in a
statement. "Currently it's time consuming for them to find capital, and can be a drain on their limited resources.
That's the problem the NXT market will address."
NZX is now waiting on final approval on NXT market registration and rules from the FMA and said its expects to launch
NXT in the final quarter of this year, reliant on approval and the number of companies ready to list. FMA had 40
business days from the NZX application to make a decision, which approximately falls in late September. Papers obtained
under the Official Information Act, detailing advice Foss received over the ministerial exemption, show NZX had been
keen to launch NXT in the first half of this year.
Companies will be able to use key operating metrics to outline their business performance instead of more onerous
prospective financial information requirements in their projections, and will have a higher threshold on what
information triggers market disclosure than exists in continuous disclosure. NXT will ultimately replace the NZ
Alternative Market, and once it is launched no new additions to the small cap market will be accepted.
The market has a distinct website and branding from the NZX, as well as a risk warning where investors are informed of
the differences between the new market and other NZX markets.
NZX's proposed new market aligns with the government's own agenda to deepen New Zealand's capital markets. The Capital
Markets Development Taskforce proposed exemptions for markets to coax smaller companies to list and more easily raise
capital in the early stages of business, while the intent behind the Financial Market Conduct Act, which is coming into
effect throughout the year, is to promote growth companies and encourage diversity of financial products.
The NXT market will provide investors with company research to further promote confidence and liquidity on the new
bourse. Listed companies will have to appoint independent directors and a dedicated 'sponsor' to provide an advisory
role for the first three years of listing. NZX will also have the right to refuse a listing and companies must show the
operating metrics chosen do accurately measure the company's performance. New market companies will also be required to
graduate to the NZX's main board once they reach a certain size.
The ministerial exemption will apply under the Securities Act until December, when the Financial Markets Conduct Act
comes into effect. Cabinet has agreed to enact regulations to allow the exemption under the new law.
(BusinessDesk)