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Unlisted market posts 40% volume gain, defends reputation

Friday 25th July 2008

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Unlisted, the internet-based stock trading system that offers cheaper and less-onerous listings than the NZX for smaller companies, said trading volumes jumped 40% last quarter.

In the April-June quarter, there were 425 trades, with 5.3 million shares valued at NZ$3.6 million changing hands. That's up from 303 trades, worth NZ$2.6 million in the previous three months, Unlisted said in a quarterly newsletter.

The fledgling market, with an aggregate value of about NZ$1 billion, is a fraction of the size of the capitalization of NZX's equities, at NZ$55 billion. Unlisted isn't a registered stock exchange under the Securities Markets Act, meaning investors don't get the protections of that law covering insider trading and directors' interests.

Bevan Wallace, Unlisted chairman, said he wanted to "bust" the myth that the platform is unregulated and its stocks a riskier proposition.

"The scope of rules and regulations applying to Unlisted issuers is not quite as broad" as those for a registered exchange," he said. Still, the Companies Act, Securities Act, Financial Reporting Act and Takeovers Code still apply and Un listed provides an "important niche."

Brokerages have lined up to participate, including Goldman Sachs JBWere, First NZ Capital and ABN Amro Craigs, and companies including Open Country Cheese, currently under takeover offer, and New Zealand Rural Property Trust, controlled by interests associated with Selwyn Cushing's family, are listed.

"Unlisted is considerably cheaper" than the NZX, Cushing told BusinessWire this week. "The cost of compliance with the NZX is prohibitive. Anybody can sell or buy on the Unlisted platform," he said.

The Unlisted listing suited Rural Property because it doesn't need to raise money from institutions and has never been "a big borrower."

Wyatt Creech, chairman of Kaimai Cheese Co., which joined Unlisted in May 2007, said the platform provides "a transparent forum and market to trade shares" and reduce time the company has to spend on administration.

To be sure, companies traded on Unlisted haven't fared any better than the broader New Zealand stock market. The Unlisted Weighted Average Market Price Indicator fell 5% in the April-June quarter.

By Jonathan Underhill

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