Mark Fryer: Glitches take the shine off at NZX

COMMENT

Once, the NZ Stock Exchange appeared to have a simple strategy: "Build it and they will come".

In other words, create an efficient, cheap, reliable market and companies will automatically appear with shares to list, and punters with money to invest.

They built it, but they weren't knocked over in the rush. Then came the bright and shiny NZX, and the notion that merely running an efficient marketplace wasn't enough - innovation, regulation and marketing were the name of the game.

And innovate, regulate and market they did. There was greater disclosure, new listing rules, new trading hours, a new benchmark index, and a new NZAX board, for growth companies.

And, by good management and a dash of good luck, the new strategy has so far proven more successful than the old.

As of last month, the market capitalisation of shares listed on the exchange stood at $51.7 billion, up from $41.2 billion a year earlier. The volume and value of shares traded were also up, as was the number of companies listed.

Just as encouraging are signs that small shareholders are creeping back into the market.

For all of that, chief executive Mark Weldon and his team deserve the largely positive reaction they have received.

Now comes the "but", and it's a big one.

In the middle of all this progress, as welcome and as hard to overlook as a corpse at a wedding, are the technical problems that keep bringing trading to a halt.

Yesterday was the fifth time since last August that the NZX has had to stop buying and selling of at least some shares.

It could be argued that most of the 70-odd stocks affected by yesterday's "connectivity issue" weren't exactly market giants, that it was a quiet day, that any trades will be done later anyway, and that not all the problems are of the exchange's making.

None of which is the point.

Just as we expect the light to come on when we flick the switch, so we expect the market to be there, open and ready to trade. Customers are funny that way.