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NZX and S&P Dow Jones enter indices deal

26 Feb 2015

NZX, New Zealand's only licensed stockmarket operator, has entered into an agreement with S&P Dow Jones Indices, the international market indices firm, to produce and commercialise new indices across equity markets and fixed income securities.

Under the deal the NZX 50 Index, which contains the country's top 50 listed companies, will become S&P/NZX50, the Wellington-based company said in a joint statement with the global indices firm. From June 21, S&P DJI will calculate, publish and disseminate NZX indices as well as distribute and market the indices offshore, with the intent to lure more international investors to the local bourse.

"This partnership will put the New Zealand market on an equivalent footing with other leading markets around the world in terms of calculation methodology, format and distribution," chief executive Tim Bennett said. "We are looking forward to a constructive and fruitful relationship with S&P DJI."

The news comes after NZX acquired fund manager Superlife last year for $20 million in cash and shares, with a potential further earnings payout of $15 million. NZX wants to use SuperLife as a platform to accelerate growth of its Smartshares exchange traded funds (ETFs) to benefit from growth in the New Zealand funds management sector seen at an annual 10 percent to 15 percent over the next 10 years, driven by KiwiSaver and increased household savings generally. SuperLife had $1.27 billion funds under management as at Jan. 31, giving NZX a total FUM of $1.7 billion once its existing Smartshares business is included.

The partnership between NZX and S&P/DJI follows offshore markets to use the firm's indexing systems, including markets in Australia, India, Japan, Peru and Canada.

"New Zealand has all the typical characteristics of a developed market economy but meanwhile boasts immense potential for the growth of index-based investing," commented Alex Matturri, Chief Executive Officer of S&P Dow Jones Indices. "We are committed to raising the global profile of the NZX indices with our well-recognised marketing and international commercialisation capabilities that utilise the strength of our brand and over 115 years of experience in providing transparent and independent financial market indices."

Shares of NZX closed the day down 0.9 percent to $1.14, and have fallen 1.7 percent since the start of the year.

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