Published On: Thu, Aug 28th, 2014

NZX Announced Details Of Its New Market NXT

Tim Bennett, CEO, NZX -

Tim Bennett, CEO, NZX –

NZX announced on 28 August that its new market for smaller, high growth companies will be called NXT (“Next”). NZX held an event in Auckland this morning, attended by Minister Steven Joyce and a range of companies and industry representatives, to provide an update on progress as NZX works towards the launch of the NXT market:

– The NXT market website is now live and accessible at: NXT.co.nz. Interested investors can also sign up for updates

– NZX is working with the Financial Markets Authority regarding its application for registration of the market and approval of the listing rules. The FMA application followed Ministerial approval received in July that allows NZX to establish the NXT market using an alternative disclosure regime rather than the traditional continuous disclosure requirements of the NZX Main Board

– The timing of the launch of NXT depends on FMA approval and companies being ready to list. NZX currently expects this to be Q4 2014

– The set up and testing of the trading and clearing infrastructure has been completed. Prior to the market’s launch, NZX will provide an update on the final test cycle

NZX CEO Tim Bennett commented: “The NXT market is innovative – we’ve taken the best of what other markets around the world are offering and combined that with the unique market environment and regulatory structure we have in New Zealand, to design a market that is fundamentally different.”

The market will have a new disclosure regime that will be simpler for companies and investors. In addition to regular financial reporting, a key feature of disclosure on the NXT market will be quarterly reporting of the underlying drivers of business performance or Key Operating Milestones (”KOMs”).

Underpinning the market’s design is the new regulatory regime in place in New Zealand, the Financial Markets Conduct Act, which came into effect this year, and provides the flexibility to develop new markets for different types of companies and groups of investors.

Mr Bennett commented: “Many businesses operating in New Zealand need additional capital for growth. Currently it’s time consuming for them to find capital, and can be a drain on their limited resources. Inability to raise low cost capital hampers their growth and ultimately New Zealand’s economic prosperity. That’s the problem the NXT market will address.”

“We called the market NXT because it reflects “what’s next” for both potential listed companies and investors in those companies. We’re talking to lots of New Zealand businesses that are growing rapidly – they need new capital, they’re looking to expand – they’re asking, what’s next?”

“We’ve also talked to lots of founder shareholders who have been invested in business for many years and they’re also asking, what’s next for me and my business? And we’ve got a great group of active investors in New Zealand who are looking for new investment opportunities – and they’re asking, what’s next for their portfolio?”

Other points
NZX will appoint a market maker and research provider for the NXT market which will aid liquidity, as well as providing independent analysis to investors on NXT companies.

NZX intends to continue to support companies that are listed on the NZAX market for the foreseeable future. Once the NXT market has launched, NZX will no longer accept listings on the NZAX and will instead encourage companies to either list on NXT or the Main Board, as appropriate.

Key features of NXT:

– A market aimed at small to mid-sized businesses with an expected market capitalisation of $10-100 million

– Reduced costs and complexity, both during the listing process and on an ongoing basis

– More support for companies listed on the market

– A streamlined regulatory environment, with a simpler set of rules and procedures

– The presence of market making and research to aid efficiency and liquidity

– Better information on companies for investors through quarterly updates, research coverage and reporting by companies of key operating milestones

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