The Newcastle Stock Exchange was founded in 1937. Why in Newcastle and why did relocate?
The Newcastle Stock exchange Exchange was founded in 1937 to cater for the thriving regional economy, engaging businesses and investors that were developing markets and businesses that were localised around Newcastle. Local exchanges were and have been a part of Australia’s economic landscape throughout recent times. It is not that long ago that all of our major capital cities had their own exchanges. The ASX only came into being through the merger of these state-based exchanges in 1987. But time progresses. Seeing an opportunity to pursue a much broader opportunity emerging in the national markets the NSX changed its name to the National Stock Exchange of Australia to become the venture exchange of Australia. Other exchanges such as AIM in the UK and the Venture Exchange in Vancouver had proven the importance and demand for alternative listing venues leading to more diverse investment opportunities. Several years passed and in 2016 when I came into the role, it was clear that the home of the NSX needed to move to Sydney where it could engage more directly with the market, build our new brand and credibility, and attract new people to the team.
How did you come to be part of NSX a decade ago?
I joined the board of NSX Limited in 2009 as a non-executive director following my nomination by a substantial shareholder. I found my experience as part of the team who built the FEX Global Exchange and my time in capital markets advisory and assurance very helpfully, but there was still a lot to learn. To me the operation of a licensed securities exchange was incredibly fascinating, and looking around at global precedent in the context of the Australian marketplace, I became absolutely convinced of what the NSX could and should become.
What makes NSX a real alternative to the ASX?
There are many differences and similarities between the NSX and the ASX. The NSX has a spread requirement of 50 shareholders compared to the ASX, which is 300. That means companies can consider accessing a listing sooner on the NSX. We operate a two-year track record test which looks at the suitability for companies for listing. Nasdaq is the standout model in challenger markets: they commenced trading, opened up a market place for companies to list and get access to liquidity to capital where those companies couldn’t get access to the NYSE. Our market model is designed to facilitate liquidity and capital formation in small to mid-caps and our listing and trading rules are tailored to the small to mid-cap market including track record test, dual class securities,trading windows, select markets (closed markets) and faster, cheaper and easier access to listing. Specific points relevant [but not limited] to regional markets include that, with successful family owned businesses contemplating transitioning the management and ownership of the company, NSX can be core to the corporate strategy. This is via provision of liquidity platform, a mechanism to fairly and equitable transfer value, attract new management, build a track record for future trade sale and unlock value within the business for shareholders and Employee Share Schemes. Key to this is our spread requirements which require a minimum of 50 shareholders. That means companies can list via a compliance listing without needing expensive capital raising at point of IPO.
What is the average market cap of entities on the NSX; and what is the largest market cap?
Our average market cap is around $50 million; that represents what our target market as far as where we see ourselves as providing a better alternative in that $10 to $50 million market cap at IPO. Typically companies list at around market cap of $30 million and they’re raising between $1 and $3 million on average at IPO.
Why does Australia need a second stock exchange?
Competition is vital in any sector. Rewind 20 years. We all had Telstra phones and the concept of competition (Optus) was a bit ridiculous. Today you call anybody and you don’t know if it’s Optus, Telstra, Vodafone or whoever. It’s about connecting to the person on the other end and it’s the same with investing, you don’t care what market it is on you just care that the investor is there to take the other side of the trade. It’s about catering for and offering diversity and new alternatives. Alternatives that create opportunities that may never be presented to small to medium sized market caps in a one-size-fits-all monopoly.
The NSX assists startup and midsized companies that the ASX is “unable or failing to cater for”. How?
A vibrant and growing economy requires not just SMEs as employers but the ability for these companies to access the necessary finance that enables them to grow. Under ASX rules SMEs and startups cannot be part of the equation because of the barriers proposed. The NSX removes that, it gives them a voice, a place to call home and access to opportunity and the ability to be listed as a public company.
The NSX gives SMEs and startups a voice, a place to call home and access to opportunity and the ability to be listed as a public company.Ann Bowering
How can startups/mid-size companies be catered to if their capital is lacking?
By developing better market solutions for small to mid-cap companies, we are rewriting the Australian financial market landscape. Targeting companies in need of a liquidity solution, not currently considering an IPO; tailoring unique market model elements to meet needs of small to mid-cap issuers. And far more.