Regulatory proposals causing Unlisted's plans to stutter

Uncertainty surrounding a proposal to force share trading platform Unlisted to become a registered stock exchange cost the company an issuer yesterday - and has been driving away potential customers.

The company wrote to the Minister of Commerce Pete Hodgson yesterday to request an update on a proposal to bring it under the Securities Market Act.

By not registering as an exchange under the Act, Unlisted avoided the requirements to subject its companies whose shares trade on its platform to regulations like insider trading rules and continuous disclosure rules. That has allowed it to offer a low-cost service to issuers.

But manager Bruce Cossill said yesterday that only one company had joined the facility since the Government announced in December that it intended to make Unlisted register under the Act. Prior to that two new issuers a month on average were listing their shares.

"All of the issues we had in the pipeline have gone," said Cossill.

Yesterday shares in the investment company founded by former Air New Zealand boss Jim Scott, Aquiline Holdings, were removed from Unlisted at the company's request.

Aquiline's investor relations manager Brenda Crene said the action was taken because of uncertainty surrounding the government review of Unlisted, as well as a planned Unlisted fee increase and because Aquiline shares had not traded as much as the company had hoped.

Aquiline shares were trading at $20 before they began trading on Unlisted and have not traded since February. Cossill said they last traded closer to the $5 mark.

From July 1, Unlisted will increase the charge to companies whose shares trade on its facilities from $5000 a year to $9750. Cossill said the 95 per cent increase was mainly due to improved features being added to the share trading facility and the benefit it delivered to issuers.

But he said the cost of fighting the proposed regulation had also contributed to the need for a price rise.

"The regulatory battle has not been a cheap exercise."

Cossill said the proposal had "played havoc" with the company's business plan.