McDouall Stuart switches status at NZX, quits trading role

Sharebroker McDouall Stuart Securities says it wants to drop its status as a participant in trading and settlement on the NZ stock exchange (NZX) and instead has applied to become an NZX advisory firm, surrendering its right to trade.

The NZX accredits trading and advice firms, and advisers within those businesses.

An NZX advising firm cannot trade, but can advise clients, hold client assets, and underwrite and distribute new issues of securities.

The firm's managing director Andrew McDouall said the proposed introduction of a central clearing system will likely reduce the number of clearing participants operating and will "commoditise" the back office operations.

"We are seeing this as an opportunity to focus on the front office and benefit from a competitive environment which we expect to develop in back office provision," he said in a statement.

"Even in large markets like the US, some of the world's largest sharebroking firms outsource their back office to ensure that there are economies of scale."