NZX, the stock market operator, named First NZ Capital as the first brokerage to agree to be a market maker for its yet-to-be-launched NXT market for small and medium-sized companies.
The Wellington-based exchange operator's new market, whose less-onerous disclosure regime requires key operating metrics rather than a full suite of financial information, was approved by the Financial Markets Authority last September. As part of the approval, NZX is appointing market makers to promote confidence and liquidity on the NXT, which is designed for companies with a market capitalisation of $10 million to $100 million.
"The intention to appoint First NZ Capital, one of New Zealand's leading finance houses, as the designated NXT market maker is the final critical element prior to the trading launch for NXT," Aaron Jenkins, head of markets, said in a statement.
The stock market operator had originally planned to launch NXT last year, but that was delayed as it awaited FMA approval and sought companies to list. Edison Investment Research was named in December as the default NXT research provider.
NXT will ultimately replace the decade-old secondary board, the NZ Alternative Index (NZAX), which has languished from a lack of investor interest. No new additions to the outgoing market will be accepted once the new platform is up and running.
Currently 24 companies are listed on the NZAX and can remain there indefinitely. Those contacted by BusinessDesk last month had a range of plans, with most content to wait and see whether NXT achieves critical mass before shifting and incurring higher costs on the new market.
Under the FMA registration requirements, the NXT market has a separate website and branding from the NZX, as well as a risk warning where investors are informed of the differences between the new market and other NZX markets. Listed companies will have to appoint independent directors and a dedicated 'sponsor' to provide an advisory role for the first three years of listing.
NZX will also have the right to refuse a listing and companies must show the operating metrics chosen do accurately measure the company's performance. New market companies will also be required to graduate to the NZX's main board once they reach a certain size.
Shares of NZX last traded at $1.15 and have fallen 1.7 percent since the start of the year. The stock is rated an average of 'hold' with a minimum price target of $1.26.