NZX ready to take on competitors

Thursday, 25 September 2008

NZX chief executive Mark Weldon today called on outgoing ASX chairman Maurice Newman to embrace competition rather than make disrespectful remarks about the New Zealand share market.

Speaking to the ASX annual meeting for the last time as chairman, Mr Newman said six listings on the ASX had larger market capitalisations than the entire New Zealand share market.

He said rather than feeling smug about that Australia should remember it could go the same way as New Zealand.

There were risks in over-representing the interests of consumers in a prosperous community with a small population, he said.

"I understand the politics, but, as with New Zealand, limiting critical mass and becoming internationally irrelevant is a most unattractive option and is the ultimate pathway to becoming a poor branch economy," he said.

Mr Newman was in charge of the ASX when it tried unsuccessfully to merge with the New Zealand stock exchange in 2000 in a move widely seen in New Zealand as a takeover. Now the New Zealand share market operator NZX is part of share-trading platform AXE ECN, one of three would-be rivals to the ASX.

Mr Weldon said Mr Newman's comments served merely to confirm that the ASX continues to attempt to shore up its dominant position in light of growing diversity and competition in his home market.

"Fundamentally the comments made by Mr Newman show a lack of respect for New Zealand as a neighbour and competitor, and for the ASX's own competitor, NZX," Mr Weldon said.

When the New Zealand share market rejected the takeover attempt by the ASX, its board was not convinced that New Zealand capital markets would be run by the ASX in the long-term best interests of New Zealand and New Zealand companies.

"Instead, we would have seen NZX run solely in the best interests of the ASX, which is not aligned with growth in New Zealand or its corporate sector," said Mr Weldon.

"NZX deeply respects Australia, and the accomplishments of its corporate sector. NZX also believes that the Australian corporate sector and capital markets will benefit significantly from exchange competition there and, more broadly, would benefit from a strong New Zealand neighbour that competes effectively on tax and other policy settings," said Mr Weldon.

The NZX wanted ASX to join with it and seek a passporting arrangement that allows New Zealand and Australian exchanges, and broker dealers, to compete effectively in each other's markets without duplicative regulation.

- NZPA