And just for the record so I can tell you all I told you so, the only 'A' share I have left is ANZ.
Start piling in everyone!
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Would the combined exchange look to compete and kill NZX, or buy it out? Surely the latter is more likely. New Zealand isn't large enough for two competing companies - and everybody knows it. It would be much simpler & cheaper to just buy NZX, and the threat of competition would be enough to ensure the takeover premium was not excessive.
I'm not sure exactly how rational it is but the thought of the national securities exchange (which has some regulatory role) being owned and operated by a foreign corporation is unsettling even if there are synergy benefits. Presumably there are conflicts of interest at some stage as well. Strikes me that best interest of the nation is a large factor in this situation
I guess there are securities exchanges not locally owned in other countries but perhaps in these cases they are not the only bourse eg there is competition.
There are a few objectors popping up in Aussie for this one (the SGX bid)
If it goes through then (barring legal restrictions) the NZX will be a goner. Of course it may well get a good t/o offer but that will in the long run just be another contribution to the demise of our own capital markets
edit : relevant article
ironically listed on the nzx website (well I guess not truly ironically given that its angle)
http://www.nzx.com/home/4272737/ASX-...or-New-Zealand
The ASX attempted to take over the New Zealand stock exchange in 2001, and was rebuffed, largely on national interest arguments.
Looks like there's a lot of kerfuffle about this politically (who would have thought eh?):
- the Greens (1 MP + a number of Senators) have stated they will not support the merger
- Independents/crossbenchers Tony Crook, Andrew Wilkie & Bob Katter said they did not support the merger
- the Opposition is talking about how they really do support foreign investment in principle, but there's the whole "national interest" thing
- the Treasurer, Wayne Swan, has issued a statement full of the "national interest", "market integrity" and the "regulatory process" (you can successfully guess the rest)
The transaction needs to be approved by Parliament indirectly, as regulations need to be changed allowing a party to hold more than 15% of the ASX shares. Its interesting to note that the ASX share price jumped 20% when the offer was announced (much less than the 37% premium) and when the Greens leader made his comments they dropped 7.5%. So its no done deal.
Sources:
http://www.smh.com.au/business/asx-t...026-171la.html
http://www.smh.com.au/business/indep...028-174is.html
Encouraging news on the Dairy Futures market today. Record volume of trading after very slow start.
Will be interesting to see how that pans out.
With regards to their mire recent results does anyone know how they earn revenues from clearing house outside the usual trading revenues?
Thanks And Regards,
M
NZX pulls the plug on its Australian exchange jv.
http://news.theage.com.au/breaking-n...114-19q5v.html
A clearing house makes money from interest it receives, on the margin the users (brokers) deposit with the clearing house, to bear the risk of settling every trade (counter party failure). Addtionally the margin the brokers provide will not always be cash, but securities as well. The clearing house can then lend there securities out to third parties, for a fee, and the third parties can use the lent stock to sell short securities.
On the ASX merger taking over NZX, why bother? why target bread crumbs, when you already own a bakery?
NZX completes 2,000 trades a day, compared to ASX 400,000 trades a day, the revenue and effort to secure the extra NZX revenue is easier done by just having the big companies dual list... oh yeah that already happens, FBU, TEL, AIA, AIR, IFT, are already listed on asx, are more traded there, and more liquid, so ASX already get a piece of the pie, and over time their piece has grown.
NZX is a data merchant business, that as a side also runs an exchange. For accurate analysis, compare NZX to Iress, Bloomberg, or even APN, rather than ASX.
NZX has been milking monopoly profits by fee gouging industry participants - so much so that the industry is shrinking and the day of reckoning is coming fast.
Mark Weldon will be out of there though with his options etc cashed up before the inevitable happens - his successor will be left with a stuffed goose which used to lay eggs.
What a disgrace.
Meanwhile, 'those that know best' are encouraging NZers to save and invest in wealth creation.
Little wonder the kiwi property love affair is what it is.
V.