In 2000 the New Zealand Stock Exchange explored an option to merge with the Australian Stock Exchange. Consultants had recommended that it go ahead but members strongly objected to the proposal, arguing that it was akin to a takeover with the loss of local jobs.
However, the debate stimulated the exchange to transform itself. At the time there was minimum growth, with few companies listing and little expansion. To grow the exchange principals restructured the board, increasing the number of independent members from two to five and halving the broker representation from 10 to five.
Also in 2000 the exchange went through a demutualisation process whereby major brokers and their firms grabbed ownership by way of shares. More radically, the next year the exchange floated itself as a public company. Shares initially listed at $3.60 were worth close to $6 in 2008. This bold move gave many New Zealanders a stake in its growth, with considerable rewards.
In 2002 a new chief executive was appointed: Mark Weldon, a young corporate lawyer who had worked for a large New York law firm. Just prior to the public listing, the organisation rebranded from NZSE to NZX. In 2009 there were 76 staff members, compared to 28 in 2002, when the organisation was struggling, though still fewer than the 90 people employed in 1986–87.
By 2009 NZX was, along with the Australian exchange, the most proactive stock exchange in the world: it floated companies, monitored their progress, traded shares, settled sales, and sold data to companies. The exchange also ran a listed debt market, which raised debt rather than equity, and was a market for fixed interests.
It also ran a system, Smartshares, which invested clients’ money automatically in the 10 biggest companies that comprised the NZSE-10 index. Smartshares had five different trading funds, which collectively managed some $650 million.
Despite this, in 2009 NZX had a market value that was no higher than the level of the 1980s heyday. New Zealanders invested the bulk of their cash in fixed-interest accounts or property. The share market was a distant third.
After 1987 the broking industry changed dramatically. Most surviving firms had substantial research departments and dealt with international shares. The few small boutique firms, mostly in smaller centres, generally had a formal arrangement with a large metropolitan firm. The country’s two largest firms, Craigs and Forsyth Barr, had 12 and 13 offices respectively throughout New Zealand.
The exchange also became a recognised player in the finance industry. More than any previous chief executive, Weldon was an in-demand public commentator and trusted adviser to politicians. The exchange gained a higher profile and investors had more confidence in share market investment. Weldon had a dual mandate of turning a profit for the organisation while serving as custodian of the country’s capital markets.