NZX Expands Asset Suite with Exchange Traded Options

The NZX is slated to launch a new equity options offering for market participants, following the approval of New Zealand’s

NZXThe NZX is slated to launch a new equity options offering for market participants, following the approval of New Zealand’s Financial Markets Authority (FMA) – the exchange is targeting an April 24, 2015 launch date, according to an NZX statement.

The NZX Limited operates capital, risk and commodity markets in New Zealand, whilst providing information and data to help foster business decision-making – the NZX is the only registered securities exchange functioning in the country.

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The recent development and launch of options on the NZX builds off of a period of solid and stable growth in 2014 for the exchange. Earlier this year, the NZX revealed its operating metrics for the previous calendar year, which highlighted a robust performance for New Zealand’s capital markets, as well as a solid uptick in market capitalization.

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The advent of equity options are an additional ambition in the development of New Zealand’s capital markets – back in June 2014 the index saw the launch of the NZX20 Index futures contracts. The decision to utilize an equity options offering is due in large part to the globally traded nature of the instrument, as well as its popularity across a number of leading exchanges.

The NZX’s inaugural options contracts will be based on Fletcher Building Limited Ordinary Shares (FBU), Spark New Zealand Limited Ordinary Shares (SPK) and Trade Me Limited Ordinary Shares (TME). In addition, the NZX has further ambitions to offer an enriched suite of options on more stocks at a future date.

tim bennet
Tim Bennett, CEO, NZX

According to NZX CEO Tim Bennett in a recent statement on the options offering, “The development of an equity derivatives market is of significant importance to ensure the long term viability and success of New Zealand’s capital markets, offering a vital risk management tool for institutional and retail investors alike.”

In particular, the new fledgling equity options market will be supported by First NZ Capital Securities Limited, given its role as an accredited NZX Derivatives Market Trading and Advising Firm, as well as BNP Paribas Securities Services SCA – an accredited General Clearing Participant, Legal Title Transfer Depository Participant and Depository Participant, satisfying clearing services needs.

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