NZX clearing house up by July, says Weldon

NZX chief executive Mark Weldon. Photo / Mark Mitchell

NZX chief executive Mark Weldon says the company's long discussed clearing house should be up and running and by late July.

After it begins operation, only those brokers who become officially credited to the clearing house will be able to deal with it directly while others will have to go through the accredited firms.

Weldon said around 25 NZX employees were working full-time on getting the clearing house ready.

Final application forms were signed off by the NZX board yesterday and submitted to the Securities Commission and Reserve Bank, he said.

Weldon said derivatives trading would become possible soon after the clearing house became active.

"The infrastructure's in place ... the products have been developed ... everything is on track to [happen] quite quickly after the clearing house launches."

The NZX yesterday reported a 3 per cent decrease in first quarter earnings (EBITDAF) against the first quarter of 2009.

However, the acquisition of energy and agri-businesses by the NZX during 2009 made a year-on-year comparison difficult.

Earnings for the first quarter of 2010 were up 60 per cent, or $4.6 million, when compared with the final quarter of last year.

The company reported an operating revenue of $11.9 million for the first quarter of 2010.

Forsyth Barr analyst Guy Hallright said it was too early to say how well the NZX's new acquisitions would perform.

"The costs involved with those [acquisitions] are holding back profits in the short term, but the company seems pretty confident that they'll prove worthwhile and profits will be boosted in the future, which I'm sure they will," he said.

Weldon said a successful cost reduction programme had seen operating expenses falling by 18 per cent since the final quarter of 2009.

He added that a process of "natural attrition" had enabled employee numbers to be reduced in some areas of the business.

"We chose not to make people redundant and I think that was the right thing to do."

The NZX was confident the clearing house and derivatives trading would become a significant part of the exchange's business, Weldon said.

He said it was important that New Zealand had distinctive derivatives trading - where it could carve out a "specialist role" in global capital markets.

Weldon said it was "fair to say" that - apart from the well-publicised floating of Ecoya - expected new listings on the NZX had failed to materialise.

Continued uncertainty resulting from upheaval in European markets may be causing some IPOs to be put on hold, he said.