Mr Allen told members that the NZSE noted that while the second reading of the NZSE Restructuring Bill had been passed, final enactment was now likely to be next year.
Nevertheless the NZSE was progressing a new business plan, which focuses on its core business and enables it to develop as a "for profit" company.
"Preparatory changes include revised listing fee scales (already completed) to justify the continued reinvestment and the NZSE's cost of capital. We are also looking at our customer base and in particular will be developing a presence in Auckland and expanding the NZSE's executive team."
Mr Allen said it was clear internationally that the trend for Exchanges was toward demutualisation and listing.
Internationally 32 per cent of exchanges are publicly listed and 38 per cent are private "for profit" companies while only 30 per cent are mutuals or in other forms.
Mr Allen said regulatory development was fundamental to the process of demutualisation and listing, and the adoption by the NZSE of the role of promoter of the New Zealand capital market.
He said the concept of co-regulation, where the Exchange and regulatory bodies worked together was well accepted by the Exchange.
He said the government intended legislation for continuous disclosure, insider trading enforcement, and generic exchange registration and rule approval and for the Securities Commission to receive information and have the power to intervene, especially in areas such as market manipulation.
However the NZSE would continue as the "frontline" regulator with a strengthened primary regulation and support structure, which involved the SMARTS surveillance system and the recent introduction of stronger Regulation 19 requirements for client information and dealing procedures.
Mr Allen said the transition from the current rules would involve accreditation replacing membership and the concept that the rules would constitute a contract with firms and their employees.
Under this structure the NZSE had decided that it will allow sole traders to continue trading, provided they meet all the rules and regulations of the Exchange.
Mr Allen said the demands of accountability, compliance, transparency of operation and risk management meant that all firms needed to be treated equally in terms of compliance.
The decision on sole traders would require them to have the same dealing and client information procedures in place.
Mr Allen noted after the meeting that the new Regulation 19 - Client Orders rules, made it important for sole traders to meet the requirements.
"Regulation 19(3) on Controls and Procedures specifically requires compliance checks and the nomination of a suitable person as Compliance Officer, by member firms, and for that person to regularly provide independent reporting to the Principal that the firm complies with the relevant business and industry requirements, and Regulation 19(3)(f) states that nominated compliance officers must not undertake any operational activity within the member firm that involves the receipt, recording, or processing of orders".
Mr Allen said this degree of separation was essential to maintain investor protection and the Exchange believes that all firms should comply with these requirements.
He told the meeting that the cultural change from NZSE's historical focus on brokers and information vendors, would see a need to focus instead on existing and new company listings, the need to offer new products and investigate new markets, the need to think in terms of providing services to all capital market participants and the need to form partnerships.
"This would see the NZSE taking a leadership position in capital market's relationships with customers, shareholders, regulatory bodies and politicians and business groups."
