Trading Information

Order Types

NZX supports a number of order types to allow greater precision for investors while trading securities. Each NZX Participant decides what services they offer their clients, therefore, the list of order types available to an investor will differ depending on the Participant used. For a full list of NZX Participants click here.

Limit Orders

When placing a limit order the Participant specifies both the total quantity and the maximum (buy) or minimum (sell) price at which they seek to execute a trade. In addition to the quantity and price the Participant will be asked to specify the order duration, options include:

• Good for Day - Any portion of the order that can be immediately matched is traded as soon as the order is placed. The rest of the unfilled order stays in the order book at the limit price until it is filled or cancelled, and then removed at the end of the trading day.
• Good til Date - Any portion of the order that can be immediately matched is traded as soon as the order is placed. The rest of the unfilled order stays in the order book until it is filled or cancelled. At the end of the trading day specified, the order is removed from the order book.
• Good til Cancel - Any portion of the order that can be immediately matched is traded as soon as the order is placed. The rest of the unfilled order stays in the order book until it is completely filled or cancelled.

More sophisticated variations to traditional limit orders exist that determine how partial executions may be handled. Most NZX Participants only offer these order types to sophisticated or institutional investors, these order types include:

• Fill-and-kill - Any portion of the order that can be immediately matched is traded as soon as the order is placed. The rest of the unfilled order is cancelled. E.g. a fill-and-kill limit order to buy 100 ABC shares at $2 will have a partial match of 40 shares if there is only 40 shares available at the best offer price of $2.
• All or Nothing (Fill-or-kill) - The order will only be traded if the entirety can be matched immediately at the limit price. If not, the order will be cancelled. E.g. a fill-or-kill limit order to buy 100 ABC shares at $2 will only trade if there are 100 ABC shares on the order book at or below $2.

Market Orders

A market order is an order in which the quantity is specified but not the price. The order is immediately executed at the best possible price. E.g. if an investor places a market buy order (bid) for 100 ABC shares and the order book contains limit orders is as below, this is what will happen:

The order will be partially completed at $1.90, for 80 shares, and then the remaining 20 will be completed at $2.00. Because there weren’t enough shares offered to fill the order at $1.90, the remaining shares had to be traded at the next best offer, $2. This is commonly called “walking up the order book”. Conversely, this is called “walking down the order book” when a market offer (sell) order is placed at a higher quantity than what is available at the best available price.

NZX Trading Participants are required to adhere to the NZX Participant Rules and Good Broking Practice, these obligations enable NZX to operate a fair, transparent and orderly market. As part of this, NZX Participants may refuse a market order from a client as they have a requirement to maintain an orderly market. See the NZX Participant Guidance Notes for more information.

Price Steps

NZX Main Board

All securities on the NZX Main Board may be traded through orders placed at either whole cent, half cent, or tenth cent increments, depending on the price at which the order is placed. These are the minimum price multiples at which an order can be placed. See table below for NZX’s price steps:

There are however some specific securities where order price steps may be different from the regular price step rules. See below for details.

Half Cent: Certain securities specified by NZX have a $0.005 price step unless the order is under $0.20, in which case the price step is $0.001.

Tenth Cent: Certain securities specified by NZX have a permanent price step of $0.001, regardless of the price of the order.

For rights, options, warrants, index fund units or other Securities that are dependent on the price of another Security, at the complete discretion of NZX, the minimum price change will be one tenth of a cent ($0.001).

NZX Debt Market

Debt securities have a minimum yield change of 0.005%. Hybrid securities listed on the NZX Debt Market are traded in price per $100 rather than yield and follow the standard price step rules.

Fonterra Shareholders Market

Unless otherwise determined from time to time by NZX, minimum price changes for a Security Quoted on the FSM shall be one cent ($0.01) except:

For rights, options, warrants, index fund units or other Securites that are dependent on the price of another Security, at the complete discretion of NZX, the minimum price change will be one tenth of a cent ($0.001).

On Market vs Off Market Trades

There are two types of trades that occur within NZX’s markets. These are on market and off market trades.

An on market trade is an equity or debt trade in which both buy and sell orders are placed into the central limit order book.

An off market trade is defined as the transfer of securities between parties without going through the central limit order book. These are reported to NZX and are still reflected in volume and value traded statistics.

Dual-Listed Securities

Some issuers decide to list securities on more than one exchange. This increases liquidity for the owners of these securities and lets them choose which exchange to trade on. These are commonly known as Dual-Listed securities.

A number of companies listed on NZX are also listed on overseas exchanges.

Short Selling Requirements

Short-selling is the act of borrowing a security, selling it, and then buying it back to repay the debt.

The NZX Participant Rules specify the requirements that must be met to undertake short selling on NZX’s securities markets. NZX can restrict/limit short-selling and an issuer can also place a short selling restriction on its securities.

Currently, there are two securities with short-selling restrictions:

• Fonterra Co-operative Group Limited (“FCG”). No short selling available.
• Livestock Improvement Corporation Limited (“LIC”). No short selling available.

Each NZX Participant decides whether it offers short-selling services to its clients, contact details for all NZX Participants can be found here.

Market Makers

Market makers provide liquidity by ensuring there is always a buy and sell order for the security at a reasonable price. Section 16 of the NZX Participant Rules describes the obligations that apply to market makers.

Foreign Ownership

The NZX Listing Rules (the Rules) do not have specific restrictions in relation to foreign ownership. NZX itself also does not impose limits on foreign ownership. However, the Rules allow for, with the prior approval of NZX, the inclusion in the Issuer’s Company Constitution/Articles of Association of restrictions on the transfer (i.e. sale and purchase) of relevant interests in financial products (Rule 8.1.6(b)). As such, some NZX Issuers may have specific requirements or restrictions as to who can hold their securities, and how much. Any ownership restriction at an Issuer level, whether it be foreign ownership or local, will usually result in an Issuer having a non-standard designation (NS), and investors can see these designations when looking at Issuers on nzx.com.

Please also note:

• NZX does not maintain a list of Issuers with foreign shareholders or those who have an NS designation.
• NZX Issuers will note in their annual report why they have a NS designation.
• Some of these foreign ownership restrictions also come from New Zealand statute and will depend on the type of issuer or potentially transaction.

NZX Trading Fees

The NZX Fee schedules for trading and clearing can be found here. These outline the fees paid by Participants for the trading and clearing conducted on NZX’s markets. Note, NZX does not charge investors directly, nor does it impose any fixed or minimum fee to trade, all transactions are charged on a value basis.

1. Trading Fee 0.45bps of the total on market trade value, per side, capped at $225
2. Trading Fee 0.45bps of the total on market trade value, per side plus Off Market Premium 0.30bps of the total trade value, per side, capped at $225
3. Trading Fee 0.45bps of the total on market trade value, per side plus Auction Premium 0.15bps of the total trade value, per side, capped at $225
4. Trading Fee 0.45bps of the total on market trade value, per side plus NZX Dark Premium 0.15bps of the total trade value, per side, capped at $225

Trade Fee Example

On Market Trade

The table below outlines the trading and clearing fees NZX would charge on trades of different values, during a normal trading session. There are also other fees that NZX charges Participants that relate to trading and clearing, this table only describes the direct fees associated with a trade.

Auction Trade

The table below outlines the trading and clearing fees NZX would charge on trades of different values, during the opening & closing auction sessions. There are also other fees that NZX charges Participants that relate to trading and clearing, this table only describes the direct fees associated with a trade.

Off Market Trade

The table below outlines the trading and clearing fees NZX would charge on trades of different values when an Off Market trade occurs. There are also other fees that NZX charges Participants that relate to trading and clearing, this table only describes the direct fees associated with a trade.

NZX Dark Trade

The table below outlines the trading and clearing fees NZX would charge when a NZX Dark trade occurs, during a normal trading session. There are also other fees that NZX charges Participants that relate to trading and clearing, this table only describes the direct fees associated with a trade.

ESMA Third Country Trading Venue Assessment

The European Securities and Markets Authority (ESMA), recognizes New Zealand Clearing Limited as a third-country CCP for the purposes of Article 25 of EMIR.

On 3 October 2020, the European MiFiDII/MIFIR requirements introduced a new position limit regime and post trade transparency reporting regime. On 4 June 2020, ESMA published its assessment of NZX as a trading venue for the purposes of these requirements. ESMA’s assessment is available here.

Position Limits

ESMA has not included NZX on the list of third country trading venues for the purposes of the new position limit requirements. This means that trades of commodity derivatives on NZX should be treated as OTC trades for the purposes of the position limit regime.

Post Trade Transparency

ESMA has included NZX in the list of third country trading venues which have a suitable post trade transparency regime, for all products traded on our markets. This means that EU investment firms will not be required to republish information in the EU about transactions on NZX under the new trade reporting requirements that took effect in October 2020.