By Joe Helm
The New Zealand Futures and Options Exchange (NZFOE) will remain unchanged if its parent, the Sydney Futures Exchange,(SFE) is taken over by the Australian Stock Exchange later this year.
The Australian Stock Exchange announced a $A140 million ($NZ166 million) cash and scrip bid for the Sydney Exchange this week.
The
merger will depend on Sydney Futures Exchange members voting in favour of demutualisation in September and also on regulatory approval. The merger is scheduled to start in early November.
Les Hosking,chief executive of the Sydney Exchange, said the merged entity would continue to trade on the New Zealand Exchange unchanged.
"It needs its own identity to trade and market New Zealand instruments" he said. "There is also the regulatory requirements. We have to abide by New Zealand regulations to trade there."
Mr Hosking said there would be advantages for the New Zealand exchange in the merger in getting access to the larger potential retail customer base of the Australian Stock Exchange.
"Liquidity helps," Mr Hosking said. "A combined entity will help achieve that."
Mr Hosking said turnover on the NZ Futures Exchange had been modest since the Sydney exchange bought it in 1992.
The Sydney exchange had not been able to reduce fees to attract more trading volumes. In the period from January to March this year the NZ futures exchange's trading volume was down 7.6 per cent on the same period last year. In March it fell 23.3 per cent to 93,083 contracts.
The major reason for the fall was a 23 per cent fall in 90-day bank bill contract and a 77 per cent fall in the three year Government stock contract after the Reserve Bank adopted the official cash rate early in March.
That took the volatility out of interest rates. Mr Hosking said the NZF exchange had made "slight profits" in the last two years and the Sydney exchange had not seen a full return on its investment.
