Geoff Brown, NZSE Ltd Markets Development Manager, said that commissioning user groups to test and refine every aspect of the new market will ensure the AX has the optimal structure.
"The original aim for the AX was to create a market that would be simple and cost effective for New Zealand's smaller growth-oriented companies to raise capital. We want to create a platform that encourage new listings and increase liquidity in the market. To ensure the AX achieves these objectives we believe it's imperative that it be tested by those that will be most affected by it."
AX market user groups are now being formed and are made up of representatives from all areas of the market, including listed and unlisted companies, government, the broking community, accountants, banks, lawyers and information providers. User groups cover six specific areas and participants will be asked to explore the following:
- Legal and regulatory environment
- Company sponsor role and the distribution process
- Research and information sources
- Trading microstructure of the market
- Non-standard listings
- Unlisted and potentially listed companies
Once the proposal has been finalised, NZSE will begin discussions with companies to transition to the AX board. Potential candidates include companies on the NCM and unlisted boards, as well as smaller companies on the main board. NZSE will also be actively targeting unlisted companies in all sectors of New Zealand industry, encouraging them to list. The AX is designed to make public capital-raising easy and attractive for New Zealand's small-to-medium sized companies that are looking for ways to fund and accelerate growth opportunities. The new structure focuses on four key pillars as outlined below:
- Quality companies: Transparency, not artificial constraints, will drive quality. NZSE will work to place the onus of bringing quality issues to market on company sponsors-and also to deliver power to investors through increased access to information and enhanced information quality.
- Cost efficient process management: A set of listing rules (specific to each listing type) combined with existing legislation and regulation will balance the needs of investors and of small companies. NZSE will also commit resources to facilitating listing and ongoing compliance.
- Primary market: access and participation: The type and number of firms eligible to bring an issue to market will be expanded by redefining the "organising broker" role and broadening participation. An underwriting/distribution panel will be formed to facilitate capital raising and distribution.
- Secondary market: structure and support: A unique trading structure or "microstructure" will be developed to improve liquidity for smaller companies. Furthermore, increased quantity and quality of information, research, as well as NZSE marketing and education efforts will grow trading volumes and contribute to improved liquidity.
It is envisaged that the ultimate structure will be finalised by the end of April, with the new market being launched in August, subject to approval of all rules and regulations
