Share registry venture moves fast

NZX chief executive Mark Weldon and ASX Perpetual managing director John McMurtrie at yesterday's joint venture announcement. Picture / Geoff Dale

Shares in stock exchange operator NZX hit an all-time high of $9.28 yesterday on news the company had formed a joint venture with an Australian firm to own and operate a share registry business.

NZX and Sydney's ASX Perpetual - itself a joint venture between the Australian Stock Exchange and Perpetual Trustees Australia - will be equal partners in Link, which will open for business in mid-February.

Link, which aims to capture 40 per cent of the market, has already made its first move. After being incorporated as a company yesterday morning, the new entity will sign an agreement to buy Ashburton-based BK Registries for an undisclosed sum.

NZX chief executive Mark Weldon said Link would increase competition in the registry industry and benefit all listed companies.

It was also an important step for NZX as a business and showed the company would invest in economically sound and mutually beneficial links between Australian and New Zealand businesses.

Link offered a high-quality earnings stream and stability away from the ups and downs of the sharemarket.

ASX Perpetual managing director John McMurtrie said it made sense to join forces because NZX plans coincided with his company's.

"Link will not only deliver a premium level of service to New Zealand issuers, it will also deliver a seamless service to dual-listed entities such as Telstra," he said.

NZX has paid $3 million into Link to fund initial software development and working capital. ASX Perpetual brings Link its registry software - oscar - and any necessary developments and enhancements.

Weldon said the money to set Link up came from NZX's balance sheet and that the new entity should be "cashflow-positive very quickly".

Investors seemed to agree, pushing the share price up on the news. NZX shares listed in June last year at $3.60.

Neither NZX nor ASX Perpetual expect to make further capital contributions. The money to buy BK came from a loan secured by BK's cashflow.

At present, two share registers operate in the New Zealand market: Computershare with an 85 per cent to 90 per cent market share and BK with the remaining stake.

Link will offer a full registry service for equities, fixed interest, debt and unit trust products, web access for investor information, and employee share plan registers. It also claims the first single transtasman platform for dual-listed securities.

Computershare group managing director Asia Pacific Stuart Crosby was unfazed by the revamped competition.

"We operate in competitive environments everywhere we operate and the landscape is continually changing," he said.

No decision has been made yet on whether the BK name will be retained but Weldon said the company's 12 staff would continue to run the operation from its South Island premises. A second office would be opened in Auckland and staff numbers would grow alongside the business and marketshare.

Weldon deflected suggestions the joint venture was the first step towards a transtasman exchange merger. "There are no implications."

The unveiling of Link comes just days after NZX shelved plans to develop its own central clearing house. Frustrated by external telecommunications glitches disrupting trade, the exchange floated the idea of offering clearing services in-house. After extensive market consultation, these have now been put on hold to give Computershare and BK time to address any systems problems.