GENERAL: NZX: Index Information Update

23 Feb 2010 5:12 pm

NZX 23/02/2010 GENERAL

REL: 1712 HRS NZX Limited

GENERAL: NZX: Index Information Update

23 February 2010 - In response to ongoing interest in NZX's indexes and their business model, NZX wants to provide the following information and details.

As outlined in NZX's release of Monday, 22 February 2010, index products globally are subscription products. They are costly to produce - regardless of who produces them. Some organizations that produce them are media organizations (e.g. Dow Jones, FTSE), some are financial institutions (e.g. Frank Russell, MSCI, S&P), and some are exchanges (e.g. NYX, Deutche Bourse, NZX). In each case the cost of production is material. In the NZX case, the revenue from subscriptions does not cover its direct costs in the index area - but NZX is willing to fund the investment to provide the right set of market benchmarks for this market.

Importantly, there is no regulatory requirement for NZX to produce or distribute indexes.

In terms of distribution, each of Reuters, Bloomberg and Iress take the product directly, as well as a large group of brokers and fund managers. Under the NZX Rules, and trading systems, orders into the NZX trading platform system can only be entered by regulated NZX Participants. Regulated NZX Participants have access to either, or all of, Iress, Bloomberg or Rueters. Importantly, retail investors can transact on the NZX market through a NZX Participant who would generally have such information.

NZX also notes that MSCI global indexes, and S&P ASX Indexes include information on NZX listed stocks, as do a number of other indexes globally. These are all subscription products, and much less widely available in New Zealand than the NZX products.

NZX is undertaking a full review of its index processes, including the distinction between monthly and quarterly index reviews. NZX will also be assessing some of the methodology of constructing those indexes. NZX shall inform the market of the results of such review. End CA:00191541 For:NZX Type:GENERAL Time:2010-02-23:17:12:47

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