BNP Paribas beefs up NZX credentials as depositary participant

BNP Paribas has become the first global custodian to join NZX Clearing Depository. Photo / 123RF

BNP Paribas has expanded its local credentials, becoming the first global custodian to join NZX Clearing Depository.

NZX today accredited the Australian branch of the French bank as a depository participant. Its Singapore branch was an early starter on the local stock market's derivatives operation, and is already a clearing participant.

"The NZX depository access aligns with our augmented custody programme which aims to increase process automation and achieve faster corporate actions and income announcements," BNP Paribas New Zealand manager Doug Cameron said in a statement.

"This initiative complements our strategy to access new market segments and bring new solutions to our global sell-side clients."

BNP Paribas Fund Services Australasia's New Zealand branch generated a profit of $3.2 million in calendar 2017 on revenue of $16.6m, the bulk of which came via custody and administration fees, according to the latest accounts filed with the Companies Office.

The firm signed up to NZX's dairy derivatives market soon after its launch in late 2010, and was accredited to equities derivatives in 2013.

NZX has shifted its focus back to the core market under the leadership of Mark Peterson, rolling out new listing rules, a simplified market, and a more attractive pricing schedule.

Peterson told shareholders at this month's annual meeting that lifting the number of traded securities, market participants and investor connections should flow through to greater liquidity in the secondary market. Hobson Wealth Partners was accredited as an NZX cash market trading and clearing participant last year.

Benjamin Phillips, NZX markets development & clearing executive director, said BNP's accreditation reinforced the stock market operator's efforts to provide a more efficient, innovative, and cost-effective central securities depositary service.

"This accreditation will continue to ensure NZX provides investors in our capital market with greater choice in relation to the way their financial assets are held, and the cost they incur for central securities depository services," he said.

NZX generated $6m in clearing fees on equities and debt in calendar 2018, up from $5.9m a year earlier. That was the biggest contribution to the $16.7m of revenue NZX gained from the secondary markets that year.

Separately, NZX said it had been recognised as a designated offshore securities market (DOSM) by the US Securities Exchange Commission. That means NZX participants will be able to trade on their clients' behalf without the requirement of maintaining a reasonable belief that their customer is a non-US domiciled person.

"The DOSM recognition represents another key step in NZX's strategy to facilitate the growth of New Zealand companies internationally, and also recognises the high standards under which NZX operates its markets, placing NZX among the world's leading exchanges who have already earned such designation," the stock market operator said.

Another leg to Peterson's strategy has been expanding NZX's international links. That's included memoranda of understanding with Nasdaq and the Singapore and Hong Kong exchanges in an effort to raise the New Zealand market's global profile and examine ways for the bourses to cooperate.

NZX shares were unchanged at $1.01.