Sam Stanley: NZX head of exchange products
The NZX could expand its exchange-traded product menu to include an option over the index, according to Sam Stanley, head of exchange products.
Last week the NZX rolled out its first tranche of exchange-traded equity options over three single stocks – Fletcher, Spark and TradeMe.
Stanley said while more single-stock options were in the pipeline, an index-based product could prove successful.
“The index option is the most popular [derivative] product on the ASX,” he said
However, while single-stock options generally have a small contract minimum – 100 shares in the case of the new NZX products (equating to about $350-400 for Spark, for example) – index derivatives require exposure to a higher nominal asset value.
For instance, the NZX20 index futures product, launched last year, has a minimum nominal underlying asset value of about $100,000.
“That’s more of an institutional tool rather than for retail investors,” Stanley said.
He said the single-stock options would probably appeal to “sophisticated retail investors” looking to “enhance income or hedge positions”.
The NZX also launched three new SmartShares exchange-traded funds (ETFs) last week – targeting NZ dividend shares, Australian resources and Australian financial stocks – bringing its total product offering in this market to 10.
According to the new SmartShares prospectus, ongoing fees have been set at 0.54 per cent. However, the new funds charge a small application fee while the NZX also takes a cut from securities lending and keeps interest earned on client cash held prior to distribution or subscription “between the date which they are received and the date of the issue of Units”.
The new ETFs, due to start trading on April 7, will likely be seeded by the NZX-owned funds management firm Superlife.
Meanwhile, the search for a new chief executive for the NZX combined funds management business continues. It is understood the Wellington branch of global recruitment firm, Korn Ferry, has been managing the process with a short-list of candidates now completed.