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NZX defends its closure decision

Wednesday 20th August 2003

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The Stock Exchange says defended its decision to suspend trading on the NZX and says that the problems which closed the market for most of today were "not the result of a failure of any NZX technology."

The market was due to reopen around 4.30 pm, and will finish trading at its normal time. There will be no extension of trading today, NZX says in a statement.

NZX says the problem was with the electronic messages originating from RMLT, one of the three New Zealand share registries that manage the transfer of shares between brokers accounts and clients accounts in New Zealand.

"The faults were due to a RMLT software upgrade," the exchange says. "NZX management accordingly decided to halt trading in the market."

It says that the market was kept closed until it confirmed conclusively that all shareholder balances within the RMLT registry were correct and all client positions accurate; and that the message uplift had been restored to NZX's satisfaction.

"The messaging failure meant that NZX was unable to confirm that transfers of shares were being properly recorded."

"The real time inability to confirm trades against holdings compromised the integrity of the market."

The statement says that the exchange has "a zero risk tolerance policy and determined the appropriate action was market suspension until market integrity had been restored."

Under the current system of share transfer, NZX is dependent upon the efficient and consistent operation of New Zealand share registries. Conversely, in Australia the ASX controls the entire chain of events and information required to ensure that trades can be internally matched against holdings.

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