NZX has reached agreement in principle with Edison Investment Research relating to the appointment of Edison as the foundation NXT market research provider.
The provision of independent research on all NXT listed companies is a key design feature of the market, which aims to provide quality, frequent information to investors.
The NXT company research reports will be available to view publicly and to download for free on NXT.co.nz. Standard research coverage on NXT companies will include an initiation report, follow up reports after the release of each of NXT company’s half year and full year results, and special reports where applicable.
NZX Head of Markets Aaron Jenkins commented: “We are delighted that Edison, a leading investment intelligence firm, intends to provide independent research on NXT listed companies.”
“Currently there is a lack of research on many small to mid-sized NZX listed companies, limiting the breadth of information available to investors. Financial advisors are also limited in their ability to advise on listed companies without independent research coverage. We therefore consider the NXT research provider initiative critical to driving greater interest and liquidity in smaller stocks.”
Neil Shah, Director of Research at Edison commented: “We are delighted to have been chosen to support the NXT’s innovative market design. We have long advocated that exchanges have a pivotal role to play in facilitating research coverage for issuers and believe that this innovative independent research scheme on NXT listed companies will be of benefit to all stakeholders and issuers in the New Zealand small and midcap market.”
NZX and Edison are finalising the arrangements for the research services. NZX will also appoint a foundation market maker for NXT, with the aim of improving the market’s depth and liquidity.
The timing of NXT’s launch depends on companies being ready to list. NZX is continuing to work with a range of companies looking to list on NXT, some of which will be new listings and others that propose to move across from the NZAX. NZX currently expects the first company will list in Q1 2015.
NZX Reference Number
In another development, investors can now register on NXT.co.nz for an NZX Reference Number. An NZX Reference Number ensures that retail investors have read and understood the NXT warning. The NXT warning highlights that NXT is a market designed for smaller companies typically at an earlier stage of business development and accordingly the risks of investing in companies listed on NXT may be higher than investing in other companies.
Anyone can purchase shares in NXT companies (once there are companies listed on NXT), however they must do so through an NZX Participant (broker). A broker may request an NZX Reference Number from a retail investor prior to purchasing shares in a NXT company, to evidence that the investor has read and understood the NXT warning.
To register for an NZX Reference Number please visit the NXT website: https://nxt.co.nz/users/new
Key features of NXT
- A market aimed at small to mid-sized businesses with an expected market cap of $10 - $100 million
- Reduced costs and complexity, during both the listing process and ongoing
- More support for companies listed on the market
- A streamlined regulatory environment, with a set of simpler, template based rules and procedures
- The presence of market making and research to aid efficiency and liquidity
- More information on companies for investors through quarterly updates, research coverage and reporting by companies of key operating milestones