The NZX has scrapped its plans to launch a low-cost rival trading platform to the ASX after four years of trying to get a licence without success.
The New Zealand stockmarket operator, which owned 50 per cent of AXE ECN, said yesterday the shareholders had decided to wind up the
company.
It set up the business in 2006 with investment banks Citigroup, Macquarie, Merrill Lynch, Goldman Sachs and Commonwealth Bank and began applying for an Australian Markets Licence in early 2007.
Yesterday the company said that after a review and careful assessment of the market AXE did not see opportunities for its business model to generate sustainable returns.
NZX spokeswoman Rowan McCrae said Australia was now a completely different marketplace from when the electronic communications network company was set up.
"The profit pool has shrunk. The ASX has dropped its prices significantly and Chi-X [another rival exchange] has also entered the market. These market dynamics mean it's not sensible to keep it operating."
However, NZX retained the right to use the name and could use it in the future for another venture.
"We still have the rights to that. As and when something comes up we may use it."
The NZX wrote off a $3.596 million investment by its parent company and a $1.822 million loss in AXE ECN in its June 2009 financial accounts.
Yesterday it said a non-material payment would be made to the NZX by the other shareholders.
McCrae said the NZX continued to operate its other Australian market businesses, the grain exchange and grain information unit.
