NZX to exclude off-market deals from minimum crossing threshold

NZX to exclude off-market deals from minimum crossing threshold. Photo: Getty Images

NZX won't force off-market transactions to meet a new minimum crossing threshold as long as they improve price transparency and will go ahead with a new pricing structure from October.

The Wellington-based stockmarket operator has been talking with market participants in a wider strategic overhaul as it attempts to revive interest in the local bourse. So far it's been successful in getting traders to lodge their orders through the market with 53.3 percent of transactions being lodged on-market compared to 39.8 percent a year earlier and 23 percent two years ago.

In April NZX took a consultation paper to the market floating the prospect of ensuring trades outside the formal secondary market were at least $50,000, which it estimated accounted for 5-to7 percent of off-market trades. NZX today said it will introduce a $50,000 minimum crossing size for trading on the main board and NZAX markets, but that off-market trades can be made below that level "provided they result in 'price improvement' for both sides of the trade".

The stock market operator said it received six formal submissions and extensive feedback from the New Zealand Shareholders' Association, institutional investors, Transparency International and the Financial Markets Authority, which it took on board in settling on the amendments.

"The minimum crossing size will be reviewed regularly to ensure it remains fit for purpose as NZX’s markets develop further," it said in a statement. "Changes will also require that at least one side of a crossing relates to a single party."

The changes take effect from Oct. 1 and include a new pricing structure, dropping the $1.31 per trade fixed fee and replacing it with a variable or value-based framework, which NZX said "aligns with broker business models and will enable them to price for their services with more certainty".

NZX is set to report first-half earnings next week, which Forsyth Barr analyst Hayden Strickett said will likely show modest growth as funds management growth offset "softer listing fees and trading". The stock market operator generated $3.8 million of revenue in calendar 2017 from market participants, up 4.4 percent from a year earlier, while fees from securities trading rose 0.9 percent to $5.8 million and securities clearance rose 4.4 percent to $5.9 million.

NZX shares last traded at $1.09 and have decreased 2.7 percent so far this year.