The New Zealand Exchange (NZX) has bowed to market pressure and paused its plans to establish a central clearing house for share trades.
Frustrated by technical hitches which prevented brokers from checking investors' holdings before they executed trades, NZX began work on a clearing house in March.
The move was
widely opposed by share registries such as Computershare, who feared NZX was muscling in on their business.
Now, after consultation with the industry, the exchange has backtracked.
NZX head of regulatory and public policy Elaine Campbell said: "We have agreed not to proceed with the CCH [central clearing house] at this time, in order to give registries the opportunity they sought to demonstrate the effectiveness of improvements they have made to their technology.'
She said the decision would be reviewed in 12 months.
NZX had proposed a clearing house to give access to shareholder balance information and to record settled trades during a trading day.
Plans were to extend NZX clearing and settlement functions to include a snapshot of every listed company's share register, which would be uplifted from share registries each morning into a central clearing house.
The aim was that if external telecommunications links broke down, trade could continue, as all the information required would be in-house at the exchange.
Since last year's glitches, NZX has invested in technology to improve market reliability. The registries have also advised that they are committed to technology improvements.
"The availability and reliability of New Zealand markets is critical to NZX," said Campbell.
"We will hold the registries accountable for those improvements via a robust set of service level agreements."
