NZX move welcomed

The NZX hopes to launch a new growth market in the next year. Photo / Mark Mitchell

Market participants have welcomed a move by the NZX to separate its functions as a market operator and regulator.

The change was one of three initiatives announced by the stock exchange yesterday by new chief executive Tim Bennett.

Bennett, who took over from long-serving chief executive Mark Weldon in May, said plans to improve customer service and market regulation were driven by feedback from the industry.

The changes also come ahead of an annual review of the NZX by new investment watchdog the Financial Markets Authority, expected to be released today.

"The changes we are announcing are in my view the changes we need to undertake," said Bennett.

"They are also in line with feedback we have received from the Securities Commission in the past."

The NZX is to create a market services group responsible for the day-to-day operations of the listed market headed by Simon Smith.

Bennett said that previously the various functions, which include issuer services, market surveillance, clearing operations, derivatives, indices and data operations had been split across different parts of the business.

Bringing it together would ensure its customers had a single point of contact.

Bennett said he was also focused on ensuring there was a much lower level of staff turnover - a key issue in the past.

A second more tightly focused regulation team would be led by its current head of market supervision Robyn Dey. The team would be responsible for issuer regulation, participant compliance, enforcement and markets policy development.

The role of corporate counsel, which had been part of the market supervision team, would report to a newly created chief financial officer role.

Bennett said he was also looking to appoint a head of cash markets to oversee the development of its equity and debt listings and focus on encouraging new listings.

The role will be Auckland-based and part of plans to increase NZX's Auckland presence from three staff to around 10 to 15 people in the next year.

Bennett said he hoped to fill both new roles in the next three months.

The NZX would also take on more staff this year to handle the new initiative being set up by Fonterra involving Trading Among Farmers.

Bennett said the exchange hoped to launch a new growth market in the next year and wanted to improve liquidity in the existing market.

"At the moment there are quite a lot of off-market trades at the top end. We want to find out why that is."

He also hopes to improve liquidity in small and mid-sized companies.

One way of doing this would be to follow the Australian stock exchange in funding some research, Bennett said.

Mark Laing, Telecom general manager capital markets, welcomed the changes. "The NZX is in a unique position as both a market operator and regulator and a clear delineation between these functions will increase confidence and clarity," he said.

Securities Industry Association chairman Frank Aldridge said they were positive steps, especially building longevity with staff - an issue the association had raised in the past.

NZX CHANGES
* Separate regulatory and operational functions.
* Upgrade customer service.
* Improve market regulation.