The National Stock Exchange of Australia, or NSX, launched an assault to take on the ASX "head to head" on Feb. 20 with a bid to lure the country's mining explorers to list at a conference in Fremantle, Western Australia.
Long-standing director Ann Bowering took over as NSX CEO in June 2016 after Emlyn Scott resigned and major shareholder The Financial and Energy Exchange sold its 62% stake after having previously tried to take over the NSX in 2011.
As the first speaker at the RIU Explorers Conference, she told delegates of the NSX's efforts to revamp by closing offices in Newcastle and Melbourne, making those teams redundant, opening a new base in Sydney and creating a whole new team, though the board remained largely unchanged.
Bowering described a 12-month project that started in June 2016 having engaged IRESS to build the NSX into their platform, and now more than 80 securities totaling over A$4.5 billion are trading on the NSX allowing 23 participating brokers.
Though NSX companies are now traded through IRESS using a Nasdaq trading system like the ASX, Bowering said a key point of difference is the NSX's minimum spread requirements of 50 shareholders.
That advantage enabled companies to access capital markets without the need to invest in excessive distribution, she told S&P Global Market Intelligence.
"As the market grows over time we'll be able to find specializations that work [for mining explorers], be they building relationships with other markets [the first question asked from the floor], or structuring rules that enable better liquidity or disclosure, or programs," she said.
Bowering told delegates that the NSX's strategy was clear — to become a globally competitive exchange with a "vibrant, liquid and diverse debt and equity market competing head to head with ASX to attract the best listings in that market."
"A wave of entrepreneurial activity coupled with high retail investor participation rates in Australia has opened up significant opportunities for us," she said. "The ASX Top 200 has remained largely unchanged over the past decade yet the national and global economy have changed dramatically. In my view, the lack of competition for listings has created an inefficiency in the allocation of capital."
She said many fund managers look offshore for allocating capital despite the fact that Australia has the fourth-largest pool of investable funds.
On that basis, she said, it was important that the ASX had decent completion to facilitate innovation and broaden investment opportunities in the marketplace.
Morgan Barron, owner of Ventnor Capital which has applied to be an NSX nomad as Ventnor Securities, also told S&P Global Market Intelligence on the conference sidelines that the NSX would make the process of listing a lot quicker and therefore increase capital efficiency, particularly after the recent market correction severely affected some Australian companies.
Barron also noted that brokers could use the product now, whereas before, the NSX was "really hard to trade on."
However, he warned that the NSX must not become a "second board" for companies that could not list on the ASX.
"What you don't want is people saying 'I can’t list on ASX so I'll list on NSX,' because if the valuation is wrong for ASX, it's wrong for NSX," he said. "That's what we've got to watch — we need to make sure there's good quality on there. So if there's good quality and there's liquidity and the capital structure is designed right… I reckon it's good for the exploration industry to have another avenue to capital."
Denis Rakich, director and company secretary of ASX-listed junior Ausgold Ltd., said the ASX still had plenty of enticements as the right choice for resources companies.
"Investors want to be investing in companies where the securities are listed on a market that's well regulated, but not over-regulated; and from a company point of view, we find the ASX is very transparent," he told S&P Global Market Intelligence on the conference sidelines. "The [ASX] regulatory issues make sense; it's very easy to work with the ASX, which means it's good for the company and good for investors."
"Investors have confidence that companies are being compliant and the information that’s going out is real, accurate information from a resource point of view," he said.