NZX to review its index processes

The New Zealand Exchange (NZX) will review its index processes following its turnaround on a decision to promote Allied Farmers in the Top 50 list.

In a statement released after the market closed yesterday, the New Zealand sharemarket operator again defended release of the make-up of its NZX-50 index to a subscriber service rather than to all investors at the same time.

The indexes were subscription products and were expensive to produce, it said.

However, it did say it was reviewing its index processes, including the distinction between monthly and quarterly index reviews and some methodology of constructing those indexes.

It was the second day in a row it defended itself over the issue, which blew up last week when NZX changed its mind about including Allied Farmers in the NZX-50 index.

The company said its share price rose after a memo was sent by NZX to subscribers of its Market Indexation Memorandum Service advising of Allied Farmers inclusion in the index. Its shares fell on notification on Friday that it would not be included.

The memo goes to data vendors, fund managers and market participants, including Bloomberg, Thomson Reuters and Iress.

The Securities Commission is investigating issues relating to the release of the information.

The New Zealand Shareholders Association and Allied Farmers regard the data as material and price-sensitive and would prefer it to be released to all investors at the same time.

NZX said the monthly index memo was distributed to a wide group and the distribution of index-related information via these channels was a common global practice.

Allied Farmers chief executive Rob Alloway said information which was material to security should not be included in a subscriber service unless it was also distributed publicly.

- NZPA