NZSE Issues Revised Proposal For Indices

The New Zealand Stock Exchange today released a revised proposal for reforming the NZSE Indices.

After a lengthy submission period, and with over 25 submissions received, the NZSE has taken on board a large amount of comment surrounding how the Indices will be reformed, and believes that the revised proposal circulated today for final submission, meets market expectations.

The proposal includes the following main revisions:

1. As initially proposed, the NZSE50 will still exclude all holdings above 20%, but will also exclude holdings between 10 and 20% which are considered strategic.
2. The NZSE50 $1bn free float up-weighting rule will be amended so that changes only occur on the basis of a six month average (a buffer zone will also be imposed to avoid any potential gaming problems).
3. The NZSE10 will be a free float adjusted market capitalisation weighted (so the index more closely tracks the NZSE50).

Market & Relationships Manager for the NZSE Geoff Brown said "We received a lot of comment on the proposed changes from the market - 95% of which were positive. Importantly, the submissions received signal that there is support for the headline changes we announced - to move to a free float index, and to gross values.

"The revised proposal takes on board all the inputs received, and we believe meets our objectives of ensuring that we have listened to the voice of the market.

"We believe the recommendations in the revised proposal will ensure that all the NZSE indices are both more measureable, and more investible, for the broad range of investors in New Zealand".

The new proposal is open for final comment until the end of November. The new indices are expected to be calculated from 01 January 2003.

A copy of the proposal can be found by clicking here.