Another Exchange Not Likely Here

Press, Volume CVI, Issue 31276, 24 January 1967, Page 16

Another Exchange Not Likely Here

Australia’s second stock exchange, known as the Second Market, appears to have made an encouraging start, but, whatever the outcome, it seems highly unlikely that a similar rival could operate in New Zealand.

The major obstacle would be the volume of business. There is not the turn-over in this country to support two nation-wide exchanges.

The turn-over on the Sydney exchange last Thursday was 512,000 industrials and 276,000 mining, while on the Melbourne exchange the turnover was 433,000 industrials and 240,000 mining. Total turn-over in Christchurch yesterday was 7735. The highest in any one week last year was 131,461. Turn-over in Auckland and Wellington is certainly higher but even all four major exchanges in New Zealand would not have a total tradi „ turn-over approaching that recorded by either Sydney or Melbourne. Unfeasible This in itself would seem to make a second market unfeasible. To compete, a second market would have to

charge lower brokerage than the IL per cent generally ruling on listed shares in New Zealand. Whereas in Melbourne and Sydney the Second Market’s main task is to “marry” buyers and sellers, it would be more difficult to do this here with the lower business offering.

The Associated Australian Stock Exchanges charge 2 per cent and are currently believed to be considering a n ’ scale of charges. To compete against this, Second Market is charging 1 per cent, but double this on parcels ranging from 200 for 50c to 100 c shares to 1000 for prices below 20c.

Parcel Sizes The average size of the parcel in New Zealand is small, probably around 500, with a large proportion of sales of only 100 If a second market here were to attract the smaller investors, it would have to charge less than 1 per cent

on small parcels, and this would leave little profit. Different exchanges have competed with one another before in New Zealand. Two Operating In the early 1900 s, there were two exchanges in Christchurch. The first was called the Christchurch Stock Exchange, and the second, which was the forerunner of today’s exchange in Oxford terrace, was called the Stock Exchange of Canterbury. In 1931, another competitor, known as the Canterbury Stock Exchange, was formed on November 3. Members of the other exchange were allowed to deal with members of the new market. But because the new exchange was not a member of the New Zealand association, the ruling brokerage rates had to be charged.