Allied Farmers debacle prompts NZX to review index calculations
The New Zealand Exchange (NZX) is to review how it compiles its market indexes after a debacle over the place of Allied Farmers in the Top 50 list.In a limited statement, released after the market closed today, NZX defended the distribution method of its
Tue, 23 Feb 2010
The New Zealand Exchange (NZX) is to review how it compiles its market indexes after a debacle over the place of Allied Farmers in the Top 50 list.
In a limited statement, released after the market closed today, NZX defended the distribution method of its indexes but did admit their calculation methods needed attention.
"NZX is undertaking a full review of its index processes, including the distinction between monthly and quarterly index reviews. NZX will also be assessing some of the methodology of constructing those indexes," the statement said.
No timeframe was given.
The exchange operator defended its stance to only distribute the index lists to paying subscribers, saying this was normal practice globally and there was no local regulatory requirement for open distribution.
"Index products globally are subscription products. They are costly to produce - regardless of who produces them ...The revenue from subscriptions does not cover its direct costs in the index area – but NZX is willing to fund the investment to provide the right set of market benchmarks for this market," NZX said.
The statement follows news the Securities Commission is investigating the trading of Allied Farmers shares after a decision by NZX to inform only a select few that the finance company was to be included in the top 50 index.
Only paid subscribers to NZX’s Data Service were told early last week that Allied was to join the NZX-50 index from this Monday.
The company’s share price leapt more than 10% as institutional investors sought to weight their portfolios with Allied stock, before plummeting back down again when the NZX abruptly decided to reverse the decision on Friday.
Tue, 23 Feb 2010
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