A reminder to submit your thoughts

You have until 17 November 2017 to submit your thoughts on the 79 Questions posed by NZX as part of its review of the Main Board/Debt Market listing rules (Listing Rules). If you do not wish to make a detailed submission, a survey of 42 questions (with yes/no/tick the box type answers) has been designed as an alternative method to submit your thoughts. Responses to the survey can be provided on an anonymous basis and will not be published. We think this is a great way to get feedback and strongly encourage participation.

A quick overview of the review

While there have been changes to specific aspects of the Listing Rules over time, they have not been reviewed in their entirety since their introduction in 2003.

The key objective of the review is to establish a modern set of Listing Rules that are easier for listed companies to understand and apply, while appropriately protecting investors to increase confidence and participation in New Zealand’s markets.

One aspect we are particularly interested in is how the rules will be structured to promote innovation and flexibility - a purpose of the Financial Markets Conduct Act 2013.

Currently, differential standards are delivered via three separate equity markets and rule sets. NZX’s view is that the retention of even two separate equity markets with separate rules maintains a level of complexity that is unnecessary - particularly when feedback has indicated that the NXT is not effectively meeting the needs of SME issuers or investors in those entities.

The Discussion Paper explores having in place a modular approach for the updated Listing Rules that will reduce the complexity of having different rule sets. The preferred course of action identified in the Discussion Paper is to have a single equity market and a single set of Listing Rules, but with differing standards for smaller equity issuers. We think that this approach, which is adopted by the LSE and the UK Listing Rules, makes sense in a world where issuers are constantly evolving and there is no one-size fits all.

In terms of flexibility we support the proposal for the introduction of specific rules for funds that will cater to their particular features and risks (similar to how debt is regulated differently to equity). As pointed out in the Discussion Paper, NZX’s market for funds is underdeveloped compared to other markets. A key reason for this is because the Listing Rules are drafted for operating companies. This means funds need to apply for a myriad of waivers to list and comply with ongoing obligations. We agree that having a rule set for funds will present a strong opportunity for market development.

Being a part of a global firm, we often work with our global colleagues on transactions involving overseas listed issuers that have a New Zealand element. Many of these issuers have depository receipts on the ASX, LSE, HkeX and SGX. The Discussion Paper asks for feedback on appetite to list these, and other financial products.

There is plenty to think about and these are just a few of the proposals raised in the Discussion Paper. Other proposals in the Discussion Paper look to address the following objectives:

  • Enhance investor protections to increase confidence and participation in our markets
  • Improve access for foreign listings to expand the range of investable products for New Zealand investors
  • Remove unnecessary compliance costs, introduce tools to reduce the cost of compliance and ensure the rules are easy to navigate and use

What is next?

Once feedback is processed, NZX plans to conduct further workshops before preparing the Listing Rule amendments. It is anticipated that further feedback will be sought in April 2018 once an exposure draft of the new Listing Rules is created. The proposed date for the amended Listing Rules to take effect is quarter 4 of 2018 and there will be a transition period following this date.

The full indicative timetable for the review, which is included in the Discussion Paper, is set out below:

Publish discussion document and survey seeking initial feedback

27 September 2017

Initial consultation and survey feedback

due 17 November 2017

Process feedback, conduct further workshops, prepare rule amendments

December - April 2018

Publish exposure draft seeking feedback on draft rules

April 2018

Further feedback

due May 2018

Refine rules and send application to FMA for approval

Early Quarter 3 2018

Announce approved rules

Quarter 3 2018

Amended rules to take effect

Quarter 4 2018

Transition period and refinement of rules

Half year 1 2019