The New Zealand Shareholders' Association is highly critical of NZX's performance but will nevertheless support the election and re-election of two directors.
"NZSA considers that NZX (is) moving down the right track with the changes it has introduced to date and we have found the company responsive to reasonably expressed suggestions for change," NZSA says in its advice to members.
"We remain unconvinced that constant upheaval will be effective and would prefer to see another year pass to measure what has already been altered," it says.
"We do agree that NZX needs to be very careful to control costs and there have been some signs that management needs to do better in this area."
It damns NZX with faint praise by noting that its moves to encourage more on-market trading have been effective in lifting the percentage from 27.4 per cent to 53.4 per cent.
"NZSA has long been concerned at the volume of off-market trading compared to overseas exchanges and the negative impact on price disclosure and transparency," it says.
"A successful exchange must ensure that retail investors are not shut out of price disclosure if it is to retain those investors' confidence."
The organisation repeated past criticism that it wasn't invited to join the steering group formed to look at how to improve NZX, including reviving equity listings which have fallen to 138 in December from 173 in December 2015. NZX is expected to deliver a 10-year vision and growth agenda for capital markets in the September quarter.
"This lack of fundamental involvement ignores the independent retail investors who do not invest via one of the broking or investment organisations who are, in our view, over-represented on the steering committee," NZSA says.
It notes chief executive Mark Peterson, appointed in April 2017, has introduced a wide range of initiatives, including signing a memorandum of understanding with the Singapore exchange, but "the benefits of these are yet to be seen."
It notes the falling number of equity listings and says listings would need to be about 450 to compare with the ASX on a population basis.
"The fact remains that there are a significant number of large private companies that have not been able to be attracted to the market," NZSA says.
"We are aware of the excuses on both sides including cyclical patterns and the rise of private equity groups, but this is of little comfort to retail investors looking to spread their investment over as wide a range of companies as possible," it says.
"In addition, there are significant and increasing New Zealand Super Funds funds and KiwiSaver funds looking for a home but, without over-weighting, they have no room left to invest within NZX."
James Miller, who has been on NZX's board since August 2010 and was appointed chair in May 2015, and Elaine Campbell, appointed in February this year, are up for re-election and election respectively.
NZSA says it can understand the board wanting Miller to stay on, even though he will have served a total of nearly 12 years at the end of his next term, "given that five of the directors have been appointed within the past two years."
NZX has seven directors and NZSA praised the "excellent and clear board skills matrix" published in the annual report and says it recommends other companies follow NZX's example.
"It shows that the current board have a strong range of skills that are appropriate to the business. We do not want to see a return to any one part of the markets have excessive representation and influence."
NZSA notes that until demutualising and listing on its own exchange in 2002, NZX "was widely seen as a closed shop that primarily enriched the brokers who were members," and that some market participants feel "that the mutualisation mindset remains."
NZSA is also supporting the approval of the auditor's remuneration.