Good move by Exchange

Press, 10 April 1978, Page 24

Good move by Exchange

by

ADRIAN BROKKING,

commercial editor

After only one week of; ■trading on the newly-formed! 'Christchurch Invercargill! ; Stock Exchange it would; appear that the move is: proving a great success. Trading volumes on the: Christchurch floor were! 'higher last week, in spite of I • the fact that the market ■ seemed to flatten out some-! : what. “Invercargill sharebrokers i appeared to use to good) effect their Christchurch counterparts.” said the Secretary of the Exchange (Mr ,P. F. Maples). Because the Southern brokers now have immediate contact with the Christchurch market, and through their Christchurch operators! (with the Auckland and Wel-i |lington exchanges, they take. I oart in . the process of price! formation, rather than having to wait for prices to be set. 'You might say that because of the merger Invercargill stockbrokers have [gained entry into the mornling market,” Mr Maples! [said. At the same time Christ-1

church investors benefit from the greater activity on i the Christchurch floor. Of the 11 metropolitan members of the former Invercargill Exchange eight have joined the combined, stock exchange, and two of! the three Invercargill country members havr also come: lover. In every respect th merger appears to be a good move, it can only advance the movement towards a truly national exchange — although at present such a move would probably be still too expensive. The trend will also be reinforced by the decision of the new exchange to go | “seatless." The Auckland Stock Exchange has made the same decision. Until last week membership was based on a sys-; tern of new members’ buying the seat of a retiring or deceased member. As seats, were backed by assets owned by the stock exchange and had a certain goodwill, a seat in Auckland might cost up to §12,500 (as happened in 1974) but has

averaged about §lO.OOO over [the past five years. In Christchurch no seat has changed hands for quite a few years: the last seat is believed to have been sold for SI 500. in a prix ate transaction between a new and an outgoing member. i From now on seats will have no sale value A new elected member will ha\e only to pay an entrance fee. That will. b> previous standards, be "moderate.” In addition, new members will have to meet certain standards based on educational qualifications and professional experience, and must be able to satisfy the exchange as to their financial liquidity. All partners of a broking firm will be required to obtain full membership. The abolition of exchange “seats” is a good move: it removes the feeling that the exchange is a “closed club." and is likely to make the New Zealand sharemarket an even more competitive and freer institution than it •already was.