Stock Exchange members sway on merger plans

Friday 19th January 2001

HUSH: Simon Allen is keeping quiet about talk that the merger is unlikely to proceed

By Nicholas Bryant

New Zealand Stock Exchange chairman Simon Allen will not publicly acknowledge those who say his favoured merger with Australia's exchange is on the skids.

"It would be foolish. There hasn't even been a formal proposal," Mr Allen said.

But Wellington's financial community is full of talk that the merger proposal has been shelved and the NZSE is seeking a dignified retreat from the issue.

On the other hand, many of the big sharebroking firms which depend on the volume of trades they transact are understood to be supporters of a merger, eyeing profits in a more liquid market.

But when it comes to a vote on demutualisation, and possibly a merger, the NZSE's 40 member firms will be voting alongside 274 individuals - a total of 314 votes. A vote of 75% in favour would be required on both matters.

Demutualisation is expected to receive widespread support.

The most noise against a merger has come from individuals within powerful firms, some of whom, it is understood, have been told in no uncertain terms which side their bread is buttered on.

That may mute the naysayers for now but ballots are conducted secretly and all sides admit it's still early days for the issue.

Meanwhile, some brokers believe a demutualised exchange, listed on the main board but with no formal ties to Australia, is the way ahead.

They believe it would leave the market able to move rapidly into any future exchange alliances while giving motivation for better standards and performance.

Mr Allen said demutualisation was expected to give a best-practice corporate structure as well as a best-practice shareholding structure, although he hadn't considered the option of listing a demutualised entity.

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