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Stock Exchange campaigns to win over merger naysayers

Friday 8th December 2000

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SIMON ALLEN: 'Change whips around and bites those who put up walls'
By Nicholas Bryant

The Stock Exchange is launching a campaign promoting a merger with the Australian Stock Exchange and respond to some of its critics.

The National Business Review has acquired a draft document that charts the likely future shape of the market, with 12 draft propositions and responses.

Stock Exchange chairman Simon Allen said it had not been decided exactly how the exchange would use the dozen points but said it was likely they would be a template for helping members and investors understand the implications of a single Australasian stock market.

"Change whips around and bites those who put up walls," Mr Allen said.

Proposition one tackles corporate governance: "New Zealand has a reputation with some international investors and local critics for poor corporate governance and regulatory regimes and poor economic performance. How will this change?"

Response: "This is not a merger issue, it is a governance issue and a regulatory regime issue. A harmonisation of regulatory outcomes will help to deal with regulatory perceptions, while issues of corporate governance will be subject to peer pressure from Australian companies."

Mr Allen said the responsibility for some reform would go to the governments of both countries as the exchanges had no right or ability to harmonise the rules, regulations and sovereign issues of the two countries.

"If you had a merged market any differences [such as insider trading rules] would be highlighted and when that happens you get the impetus for discussion."

One piece of harmonisation Mr Allen accepted would be useful was Australia's suspension-of-trading rule for backdoor listings, a rule designed to give greater transparency to the future of a company to shareholders.

Numerous examples of almost overnight changes of company direction at the behest of entrepreneurs like Eric Watson have occurred here.

Other issues canvassed in the 12 points are whether the NZSE has no choice to merge or major companies will migrate, whether the local market would be submerged by the Australian and whether local stocks would fall off the research radar screen in a merged market.

The draft propositions can be viewed at <www.nbr.co.nz>.

Mr Allen said no change had been made to a possible timetable of the merger and that discussions were progressing well.

Under the timetable an investigation into all aspects of a merged exchange will be completed by the end of this year.

A proposal will be put to the exchange's 300-odd members in January and by July some form of merger could be evident.

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