NZX Investor Day Presentation 2017

NZX Limited
Level 1, NZX Centre
11 Cable Street
PO Box 2959
Wellington 6140
New Zealand
Tel +64 4 472 7599

www.nzx.com

16 November 2017

NZX Investor Day Presentation 2017

NZX is today updating shareholders and analysts on its refreshed strategy, delivery plan, and
role within New Zealand’s capital markets. The session includes presentations from Chief
Executive Office Mark Peterson and senior leadership team members. A copy of the
presentation can be found here.

Over the past five months NZX has comprehensively reviewed its business. This included more
than 200 stakeholder interviews to gain an understanding of the solutions needed to grow the
New Zealand market, rigorous internal analysis, and an analysis of global peers and market
disruptors. This process has resulted in a fundamental reset of NZX, which the Board and
senior leadership of the organisation are committed to delivering.

The focus of today’s presentation is to share with the market the strategies and initiatives NZX
will pursue to deliver growth and increase shareholder value, while also continuing to champion
a vibrant New Zealand capital market.

The strategy is summarised below, strategic initiatives and delivery plans are outlined in the
presentation:

 Refocus our core – actively support current and prospective issuing customers, drive
secondary market development, grow existing data revenues

 Grow opportunities aligned to New Zealand – continue building a vibrant debt market,
accelerate dairy derivatives market to scale, explore opportunities to collaborate and
grow environmental and energy markets

 Maximise options that will pay off – continue growing Smartshares and SuperLife,
deliver a financial services platform that empowers the wealth management industry

 Get fit – earn the right to grow through disciplined cost management and clarity of vision

 Act with greater purpose – promote the New Zealand market internationally, put
customers at the heart of everything we do, generate sustainable returns for New
Zealand and our shareholders

NZX Chief Executive Mark Peterson commented: “As New Zealand’s Exchange we are
passionate about working with our customers and stakeholders to grow the markets NZX run,
which generate wealth integral to New Zealanders’ prosperity, and New Zealand companies
getting ahead.”

“Today’s strategy presentation demonstrates the NZX team’s increased confidence and
capability to deliver for our customers and our shareholders. We are refocused on our core
markets business, which is NZX’s fundamental growth platform, and the basis of our social
licence to operate. Our success is linked to New Zealand’s success, and we will grow

opportunities aligned to this advantage, including our debt, dairy derivatives, and environmental
and energy markets.”

“We look forward to building on the momentum created during this review as we continue to put
our strategy into action in 2018 and beyond.”

NZX will update shareholders and the market on its progress at the release of its 2017 Full Year
Results on Monday 19 February 2018.

This announcement should be read in conjunction with NZX’s Investor Day presentation which
provides further information on the organisation’s strategic priorities and delivery plans.

For further information please contact:
Hannah Lynch
Head of Communications
T: 09 308 3710
M: 021 252 8990
E: hannah.lynch@nzx.com

---

New Zealand’s
Exchange
NZX Investor Day
16 November 2017
Source: data points represent our dairy derivatives customers globally, not exhaustive

Forward-looking statement
This presentation contains forward-looking statements, which
often include words such as expects, anticipates, believes,
intends, plan, continue or other similar words in discussion of
future operating or financial performance. These forward-looking
statements are based on the Board and managements’ present
expectations, estimates and assumptions regarding its business,
performance and the current state of the markets in which it
operates. As with any forecast or projection, forward-looking
statements are inherently subject to risks, uncertainties and
changes in circumstances. NZX’s actual results may vary materially
from what is expressed or implied in its forward-looking
statements. Any forward looking statements contained in this
presentation are relevant as at the date of this presentation.
Except as required by law, NZX assumes no obligation to update
or revise the content to reflect any changes in circumstances.
2

Welcome
TODAY’S AGENDA
MARK PETERSON
Chief Executive Officer
JOANNA LAWN
Head of Issuer Relationships
BENJAMIN PHILLIPS
Head of Markets Development & Clearing
JEREMY ANDERSON
Head of Data & Insights
AARON JENKINS
Head of Funds Management
LISA BROCK
Head of Wealth Technologies
MARK PETERSON
Chief Executive Officer
1.45pm
NEW ZEALAND’S
EXCHANGE
2.10pm
REFOCUSCORE
3.05pm
BREAK
4.05pm
MAXIMISE
O
PTIONS
4.40pm
GET FIT
KATHRYN JAGGARD
Executive Consultant
3.20pm
GROW
O
PPORTUNITIES
3

4
New Zealand’s sense of self, our
national identity, is shaped by a
sense of inclusiveness, and by our
desire to play a part.
The markets NZX run, and the wealth
and growth we all help to generate
are integral to New Zealanders’
prosperity, and New Zealand
companies getting ahead.
We are all generating opportunities
for a country we are all proud to call
our own.
We are
N
ew
Z
ealand’s
E
xchange

A strongly performing NZX contributes
significant value to New Zealand
5
Source: NZIER
61.9
billion
Combined revenue of S&P/NZX 50 companies
96,300
Employees across S&P/NZX 50 companies
12.5
percent
Increase in NZX’s direct GDP contribution
since 2014
Jobs in closely related financial sector
33,800
52.4
million
NZX’s direct GDP contribution
24.6
billion
GDP contribution of S&P/NZX 50 companies
9
Jobs in closely related financial
3
A strongly performing NZX contributes
%

6
We all
p
lay a
r
ole in
t
his
m
arket
!Each of us have views on the
opportunities and challenges
for
New Zealand
.
!The common theme is that
we all want our capital markets
to continue to
grow
and be
successful
.
!NZX, as the exchange operator,
is passionate about working with
our customers
and stakeholders
towards making that happen.

The process so far
7
Your inputs
!Gained first hand understanding
of solutions needed to grow our
market
!More than 200 stakeholder interviews
Internal analysis
!Historical financials review
!Business by business review
!Capital structure review
Global analysis
!Of peers, markets and key trends,
including potential disruptors
Rigorous review by
Board and Leadership
Five year
s
trategic plan

8
This process
r
esulted in a
RESET
!NZX and New Zealand
interlinked
!No business without
core
market
> reconnect with customers
!
Growth
linked to New Zealand
> incumbent on us to capture
!
Options
for New Zealanders
> and they are working
!Get
fit
> must do better
!NZX and New Zealand
interlink
!No business without
core
market
> reconnect with customers
!
Growth
linked to New Zealand
> incumbent on us to capture
!
Options
for New Zealanders
> and they are working
!Get
fit
> must do better

New Zealand’s Exchange
Refocus
coreGrow
opportunities Maximise
options
Get
fit
When we stood back
– our future
strategy
was clear
9

Refocus our
core
market:
issuance, secondary, data
Before ... ... Now
10
!Inward
!Compliance
!Order taking
!Harvest
!Siloed
!Outward
!Customers
!Selling
!Add value
!Functional

Debt
Continue building a vibrant listed
debt market
Dairy
Accelerate our dairy derivatives market
to scale, support New Zealand’s position
as a global leader
Environment
and Energy
Collaborate and grow environmental
and energy markets
Grow
opportunities aligned to New Zealand
11

Maximise
options
that will pay off
12

Create
fitness
– we’re too small to be fat
13
Simplicity and clarity
Efficiency and effectiveness
Relentlessness and execution

We’re already delivering
Completed projects
14
We haven’t been sitting
o
n our hands
Created clarityNew team
O
rganisation wide
e
ngagement (board,
e
xecutive team,
m
anagement, staff)
Structure and
c
ompensation aligned to
s
trategy

Organising principle: start from the
customer
15
Data and Insights
Policy and Regulation
Corporate Centre (Finance, Technology, Human Resources, Communications, Strategy)
Wealth
Technologies
SuperLife
and Smartshares
Issuers
Participants
and
Institutions
Intermediaries
End users
Issuer RelationshipsSecondary Markets

Refocus our core
Joanna Lawn, Head of Issuer Relationships
Benjamin Phillips, Head of Markets Development & Clearing
Jeremy Anderson, Head of Data & Insights
16
Refocus our core
Benjamin Phillips, Head of Markets Development & Clearing
Refocus our core
Joanna Lawn, Head of Issuer Relationships
Benjamin Phillips, Head of Markets Development & Clearing
Anderson, Head of Data & InsightsJeremy
Refocus our core
Joanna Lawn, Head of Issuer Relationships
Benjamin Phillips, Head of Markets Development & Clearing

1717
Focused on
regenerating
our core markets
business, which
is our fundamental
growth platform,
and the basis of
our social licence
to operate.
!Create a compelling and
attractive proposition for
our issuing customers
!Drive secondary market
development
!Grow existing data
revenues, turn data into
insight that drives decisions
and sales

18
Create a compelling
and attractive
proposition
for our issuing
customers
Joanna Lawn,
Head of Issuer Relationships
CREDIT: Jerry YelichO’Connor
f
rom National Business Review
Oceania Healthcare
C
hief Executive Officer
E
arl Gasparichat the
c
ompany's listing
e
vent in May 2017.

Strong foundations: S&P/NZX 50 outperforms
Source: NZX Data, iRESS
Index has recently outperformed against main international markets
0
50
100
150
200
250
300
S&P/NZX 50 Index performance compared to global indices
100 = 3 January 2011
2011201220132014201520162017
S&P/NZX 50 Index (Gross)
S&P/NZX 50 Index (Capital)
S&P/ASX 200 Index
S&P 500 Index
FTSE 100
Hang Seng
19

Strong foundations:
market growth outperforms GDP
20
29% 26% 32% 35% 38% 42% 42%
3%
3%
4%
3%
4%
4%
4%
8%
7%
6%
6%
6%
9%
10%
39%
37%
42%
44%
48%
53%
56%
NZX listed issuance as a percentage of GDP
EquityFundsDebt
2012
0%
10%
20%
30%
40%
50%
60%
70%
$bn
$50bn
$100bn
$150bn
$200bn
$250bn
$300bn
Market Capitalisation / GDP %
NZX total Market Capitalisation ($bn)
NZX listed issuance market capitalisation and GDP
GDP Annual ($bn)Market Cap ($bn)% Mkt Cap/GDP
Source: NZX Data, RBNZ
201120122013201420152016
201120132014201520162017 YTD
(RHS)

Multiple opportunities to grow issuance:
equity, debt and funds
21
1837916144
2
473917681
$bn
$2bn
$4bn
$6bn
$8bn
$10bn
$12bn
200320042005200620072008200920102011201220132014201520162017 YTD
EquityFundsDebt Equity IPOs
Source: NZX Data
New
capital
listed
Number
of equity
listings

We have a great story to tell,
we should share it more
22
Source: NZX Data; NZIER: RBNZ: USB NZ Equity Strategy Report, October 2017; ACC; New Zealand Superannuation Fund
300
billion
Estimated KiwiSaverby 2037
16
Debt instrument CAGR
increase, 2015 to 2017
12.6
KiwiSaver CAGR growth since inception
8,146
S&P/NZX 50 index hit record high
in October 2017
7.8
billion
Sovereign fund allocation into
New Zealand investments
7
Sovereign fund allocation into
New
%
Debt issuance in 2017
2.7
billion
Debt issuance in 2017
2
%
3
Estimated

Action on multiple
interdependent
fronts required to
develop the market
Equity, Debt & Funds
23
Increase
issuance
Develop a
comprehensive
framework
Broaden
product
suite
Increase
domestic
investor
appetite
Increase
foreign
appetite
Deeper
equity
research
Enhance
liquidity
Institutional
support
External
regulatory
settings
Pro-actively
engage with
customers
ACT
LEAD

Establish an
enhanced customer
engagement
programme
!Build a customer focused team
!Align sales resources to create dedicated team
for existing and prospective customers
!Enhance knowledge of debt and funds
!Reallocate resources from compliance to sales
!Ensure our customers receive the right experience
every time
!Consistent service across all NZX touch points
from day one
!Move from ad-hoc engagement to proactive
pipeline management
!Deliver insightful information in a relevant and
timely manner
24

Develop a
comprehensive
facilitation
framework
!Simplified rules and structure
!NZX Main Board Listing Rule review
underway –phase one on review scope
closes tomorrow, engagement high
!Actively market our market to domestic and
international fund managers
!Enhance interest in small to mid cap stocks
25

Create a compelling
product suite
!Leverage New Zealand’s demand for debt
!Wholesale
!Foreign exempt
!Green bonds
!Pursue equity dual and foreign exempt
listings
!Create fit for purpose funds offering
!Explore new product sets and markets
26

These actions will
result in better
outcomes
for the market
!Improved retention of existing issuers
!Accelerated growth in debt market,
creation of a platform for global expansion
!Deep awareness of the benefits of listing
!Listings maximised throughout the
economic cycle
27

!Optimiseproduct / market footprint
!Focus on broader issuance ecosystem
efficiency and effectiveness
!Enhance and refine
!
Align the customer elements of the NZX
!
Focus the dedicated sales team on existing and
p
rospective customers
!
Enhance debt and funds knowledge
!
Implement revised listing rules and facilitation tools
!
Develop fit for purpose funds offering
!
Market to grow awareness (domestic, international
a
nd co-marketing)
!
Extend debt products (wholesale, foreign
!
and green bonds)
!
Foreign exempt/dual listings
Issuer relationships
28
Go forward plan:
Customer
engagement
2018 plan
Five year plan
Framework
Product suite

2929
Drive secondary market
development
Benjamin Phillips,
Head of Markets Development & Clearing
29

Liquidity facilitates issuance;
issuance facilitates liquidity
30
Engage and sell
to grow issuance
Grow liquidity through
market development
Primary
Secondary
Engage and sell

Leading
World leading energy market
$13.5 billion
Single platform, multi-currency,
multi-asset class clearing capability
79%YOY
Most liquid global dairy derivatives market
Debt Market Capitalisation 2015 – 2017
146 CAGR
17%
S&P/NZX 50 Gross Index YTD return
2
nd
Second highest P/E ratio in Asia Pacific
We have a great story to tell,
we should share it more
31
Source: NZX Data; World Federation of Exchanges
%

Opportunity to market the market at many levels
32
To
offshore end users
To
and
with
industry
stakeholders
To
and
with
customers
Co-marketing with Participants
Cross-sell/upsell
New flow
New Participants
Partnerships (e.g. offshore exchanges)
Government
Trade delegations
Bilateral/multilateral relationship
Opportunity to market the market at many levels

33
Action on multiple
fronts required to
develop the market
Liquidity
Grow
Participant
numbers
Grow
investor
participation
Optimise
pricing
models
Broaden
suite of
trading
tools
Develop
efficient
regulation
Drive
customer
efficiencies
in clearing
Deepen
stock
lending
pool
Grow
equity
linked
products
Collaborate
to build and
grow equity
derivatives

Multiple opportunities to drive
wider participation
From a single sales proposition
t
o a multiple market opportunity ...
Debt Market
Energy and Environmental Markets
Clearing and Depository
Equity Derivatives
Equity Market
Dairy Derivatives Market
M
roo
dd
De
ddd
e
My
ati
34
Liquidity
Grow
Participant
numbers
Grow
investor
participation
Optimise
pricing
models
Broaden
suite of
trading
tools
Develop
efficient
regulation
Drive
customer
efficiencies
in clearing
Deepen
stock
lending
pool
Grow
equity
linked
products
Collaborate
to build and
grow equity
derivatives

Optimise pricing models
to facilitate liquidity
!OptimiseNZX price architecture
!Trial currently operating to facilitate new
electronic flow
!Average daily on-market value up 11%,
of which 8.9% was from trial clients
!On-market trade volume up 25.4%
!Review broader cost landscape of
participation and seek opportunities to
rationalise
35
Source: NZX Data
Grow
Participant
numbers
Grow
investor
participation
Optimise
pricing
models
Broaden
suite of
trading
tools
Develop
efficient
regulation
Drive
customer
efficiencies
in clearing
Deepen
stock
lending
pool
Grow
equity
linked
products
Collaborate
to build and
grow equity
derivatives
Liquidity

201020162017
(annualised)
$21.6
billion
$42.0
billion
We have already made progress
towards improving liquidity
36
Total cash market trading
2010-2017
C
AGR
19.4%
5.1%
20%
37%42%
80%
63%
58%
Source: NZX Data
Off-market
On-market

Broaden the suite of trading
tools that customers require
!Implement known requirements and
work with industry to facilitate (e.g.
calendar spreads; operating hours)
!Consult with market Participants and
stakeholders on new tools and order
types
!Opportunity to leverage upcoming
system upgrade – consultation and
stakeholder engagement to begin
shortly
37
Grow
Participant
numbers
Grow
investor
participation
Optimise
pricing
models
Broaden
suite of
trading
tools
Develop
efficient
regulation
Drive
customer
efficiencies
in clearing
Deepen
stock
lending
pool
Grow
equity
linked
products
Collaborate
to build and
grow equity
derivatives
Liquidity

Develop efficient regulation that drives
growth and continues to ensure
market integrity
!Facilitate access – e.g. streamlined
onboarding program supported by
templates and tools
!Continue to streamline compliance –
e.g. remove surplus requirements
!Seek to reduce total system cost for
Participants
!Engage industry in consideration of rule
settings which facilitate transparency and
price discovery
38
Grow
Participant
numbers
Grow
investor
participation
Optimise
pricing
models
Broaden
suite of
trading
tools
Develop
efficient
regulation
Drive
customer
efficiencies
in clearing
Deepen
stock
lending
pool
Grow
equity
linked
products
Collaborate
to build and
grow equity
derivatives
Liquidity

Drive efficiencies for customers in post trade
clearing and deepen stock lending pool
!Seek to remove cost and reduce
operating complexity by extending NZX
Clearing services (2 systems to 1)
!Collaborate with the market to
strengthen market enablers such as
stock lending
!Ensure cost savings and operational
efficiencies e.g., automation to deliver
straight-through processing
39
Grow
Participant
numbers
Grow
investor
participation
Optimise
pricing
models
Broaden
suite of
trading
tools
Develop
efficient
regulation
Drive
customer
efficiencies
in clearing
Deepen
stock
lending
pool
Grow
equity
linked
products
Collaborate
to build and
grow equity
derivatives
Liquidity

Collaborate with the market to develop
related products to drive growth
!Develop and promote equity-linked
products that drive liquidity
!Engage with equity market Participants
and investors to develop a vibrant equity
derivatives market
40
Grow
Participant
numbers
Grow
investor
participation
Optimise
pricing
models
Broaden
suite of
trading
tools
Develop
efficient
regulation
Drive
customer
efficiencies
in clearing
Grow
equity
linked
products
Collaborate
to build and
grow equity
derivatives
Liquidity
Deepen
stock
lending
pool

Secondary market
41
Go forward plan:
!Seek licensing, equivalence and partnering
in international jurisdictions
!
Target Participants with multiple footprint
Participation
2018 plan
Five year plan
!Periodically review pricing
!Engage on wider participant cost landscape
!
Widen the pricing/Participation trials
!
OptimiseNZX price architecture
Pricing
!Upgrade trading system
!Review tools and functionality
!Extend points of presence in other jurisdictions
!
Build out Dairy Derivatives
!
Engage with market for input on trading tools and system
u
pgrade
Tools and
Functionality
!Refine
!
Streamline compliance, reduce total system cost
!
Engage industry in consideration of rule settings
Efficient
regulation
!Continue to enhance and develop
in line with customer needs
!
Drive cost reduction and efficiencies of scale
!
Enact stock lending and default fund
Post trade
!Build out
!
Collaborate with Participants and stakeholders to market
t
he market
Marketing
the market

42
Grow existing data
revenues, turn data into
insights that drive
decisions and sales
Jeremy Anderson,
Head of Data & Insights
42

“Data is the new oil. It’s valuable, but if
unrefined it cannot really be used. It
has to be changed into gas, plastic,
chemicals, etc. to create a valuable
entity that drives profitable activity”
Clive Humby
43

90 % Growth
Dairy derivatives data terminals, 2017
Data analytics is a major
opportunity
44
Source: NZXData; Caproasiaonline; McKinsey Capital Markets Infrastructure Report: An Industry Reinventing Itself; Burton-Taylor International Consulting
~10
billion
Global exchange groups
data revenues, 2016
~
Global exchange groups
data revenues, 2016
Global exchange sector data revenue
growth, 2010 – 2015
13%CAGR
Global exchange sector data revenue
growth, 2010
13%
600,000
Global data terminal clients

Four areas for opportunity in data and insights
45
What we have......howwe can build
InternalMassive data asset
Opportunities to compare,
benchmark, upsell and cross-sell
(leveraging issuance engagement)
B2B
Established model with existing
distributors
Widen reach to existing and
new outlets (leverage secondary)
End userStrong insight pedigree and brandDevelop products and commoditise
Direct distribution capability
Re-platformed, centralised data
warehouse underway
Mass customisation, self service
and transacting capability
1
2
3
4

Issuer AIssuer B
Listing fees
Securities data
Derivatives data
AgriHQ data
Dairy Derivatives fees
Internal: opportunity to compare, benchmark,
cross-sell and upsell, leveraging issuance engagement
46
1
In place
Missing
Cross-sell
opportunity
Illustrative

B2B coverage: China example
47
Terminals distributing NZX data per $trillion GDP
!China poorly covered by
existing business to business
channel partners
!Opportunity to partner for
coverage and other business
lines (e.g. dairy)
Approx.
1,350
terminals needed for
C
hina to reach USA
c
overage rate
105
67
45
1
UKUSAJapanChina
2
Source: IMF World Economic Outlook (April 2017); CaproasiaOnline; Bloomberg; NZX Data

Opportunity to productise
end user capability: Dairy example
48
3
Capabilities we haveNatural extension
Sourcing the data
!Local supply
!Global demand
!Comprehensive global supply
and demand
!Stock levels/reserves
Processing and
analysis
!Bespoke reports
!Manual processing
!Automated processing and
transacting
!Analyst talent focused on
value-add
Price referencing
!Limited local milk
price prediction
!Global price reference
!Validation and benchmarking
Forecasting
!Limited prior to Global
DairyTrade auctions
!Continuous, real-time
!Across all commodities
Example price
r
esearch agencies
!Argus; Platts; OPIS:
oil and gas; energy
and feedstock
!InformaIEG:
primary; livestock
supply and demand
and import/export

We have invested in centralised data assets
– processing and transacting opportunity
49
This enables self
service, real time
manipulation and report
generation as well as
automated periodic
reporting
4
Initial data sets
Automated product
Operational reporting
Visualisation
Integrated platform
Transacting
In place
Progressed
Work to do
Missing

!Support core growth with data and insight
!
Develop internal data products that enable sales
!
Enact CRM system and processes
!Extend
!
Extend reach through co-marketing campaigns
t
o grow penetration
!
Partner for market access
!Upsell/cross-sell
!Align insights with all growth opportunities
!Piggy-back dairy growth with a PRA
!
Drive data insights that match customer demand
!
and grow market
!
Scope requirements for dairy PRA
Data and insight
50
Go forward plan:
Internal
2018 plan
Five year plan
B2B
End user
!Automate analytics for self-service
!Build out channel capability
!
Complete and bed in centralisation
!
Deliver basic transactional capability
Capability

Grow opportunities
aligned to New Zealand
Kathryn Jaggard, Head of Strategy
51

52
Our success is linked to
N
ew Zealand’s success.
G
row opportunities
a
ligned to the New
Z
ealand advantage –
our debt, dairy,
e
nvironmental
a
nd energy markets
!Continue building a vibrant listed
debt
market
!Accelerate our
dairyderivatives
market to
scale, support New Zealand’s position as a
global leader
!Collaborate and grow
environmental
and
energy
markets

53
Continue building a
v
ibrant listed debt
m
arket
!Customer engagement programme
!Specific rules to facilitate debt issuance
!Extend debt product suite

Accelerate our dairy derivatives
market to scale, support
New Zealand’s
position as a global leader
54

55
74% volume
C
AGR 2011
t
o 2017*
95% revenue
C
AGR 2012
t
o 2017*
53% year on
y
ear growth in
a
ctive traders
Successful
d
omestic,
g
lobal product
e
xtensions
s
ince market
l
aunch
Largest dairy
d
erivatives
m
arket for
g
lobally traded
p
roduct
Six of top 10
g
lobal dairy
c
ompanies
c
onnected to
o
ur market
Our dairy
journey
so far
Source: NZX Data; Rabobank.
* Based on forecast 2017 revenue and volume

Derivatives markets take time to develop
Chicago Board of Trade: Grain
152 years
Intercontinental Exchange: Coffee
59 years
Bursa Malaysia Crude: Palm Oil
37 years
Euronext: Milling Wheat
21 years
NZX: Dairy Derivatives
7 years
Source: Euronext; Bursa Malaysia; CPOT; CME Institute; International Trade Centre, The Coffee Guide; Futures and Options, A Guide For Traders And Investors, Donald Spencer, 1999
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1234567891011
L
o
t
s
t
r
a
d
e
d
Years since launch
Euronext
M
illing Wheat
F
utures now
t
rade
a
pproximately
9
million lots
a
nnually
Bursa Malaysia
C
rude Palm Oil
F
utures now
t
rade
a
pproximately
1
2 million lots
a
nnually
We are punching
above our weight.
NZX dairy
310,000 lots
(
forecast)
56

2001200620112016
Comparablespoint to sustained consistent
high growth potential
57
Source: Euronext; Bursa Malaysia
9.63%
70.1%
48.2%
13.9%
22.2%
34.5%
Growth driven by inflection points driven either by volatility or market structure changes
Euronext Milling
Wheat Futures
Bursa Malaysia
Crude Palm Oil Futures
M
i
l
l
i
o
n
s
o
f
l
o
t
s
0
2
4
6
8
10
12

0.2 million
0.3 million
0.45 million
0.67 million
1.01 million
1.5 million
2.25 million*
~14 million
~28 million
~43 million
"#$%&' "#$%&( "#$%&) "#$%&* "#$%$% "#$%$& "#$%$$
Rapid growth towards significant end game
Source: Euronext; Bursa Malaysia; NZX Data; AgirHQ
* Excluding cheese and whey
58
1x
New Zealand
p
hysical trade
Lots traded
p
er annum
Hypothetical growth scenario:
growth in the next five years
continues at 50% rate which is a
mid-point between BursaMalaysia
and Euronext peak five year
growth CAGR
28 million28 million
5x
New Zealand
p
hysical trade
5x
New Zealand
a
nd European
p
hysical trade
5x
t
he world’s
p
hysical trade

Liquidity
Volatility
Expand
global
access
Bolster
sales and
marketing
Extend
product
set
Capital
efficiency
Large
physical
market
Robust
settlement
mechanism
Industry
Support
59
Executing on
our initiatives
will accelerate
us to
scale

Executing on our initiatives
w
ill accelerate us to scale
From...
!14 hour trading window
!Limited trading functionality
!5 global clearing Participants
!1 global software vendor
To...
!20 hour trading window to capture Asia
and Europe
!Trading functionality to facilitate entry of
liquidity providers (calendar spreads
delivery March 2018)
!Access channels expanded through
adding software vendors, general
clearing participants
60
Liquidity
Volatility
Expand
g
lobal
a
ccess
Bolster
sales and
marketing
Extend
product
set
Capital
efficiency
Large
physical
market
Robust
settlement
mechanism
Industry
Support

Executing on our initiatives
w
ill accelerate us to scale
From...
!Excellent capability, customer
engagement through derivatives and
data, but limited presence in Asia and
Europe
!Deep, but fragmented data offering
!Limited online offering
To...
!More feet on the street, grow
awareness, boost sales particularly in
Asia
!Deep, centraliseddata offering
!Transform online offering
61
Liquidity
Volatility
Expand
global
access
Bolster sales
a
nd
m
arketing
Extend
product
set
Capital
efficiency
Large
physical
market
Robust
settlement
mechanism
Industry
Support

Executing on our initiatives
w
ill accelerate us to scale
From...
!Broad range of oceanic products
!Successful launch of NZ Milk Price
Futures and Options
!Skim Milk Powder Options to launch in
December
To...
!Continue to innovate and launch
oceanic linked derivatives contracts
!Understand further global opportunities
62
Liquidity
Volatility
Expand
global
access
Bolster
sales and
marketing
Extend
p
roduct
s
et
Capital
efficiency
Large
physical
market
Robust
settlement
mechanism
Industry
Support

Executing on our initiatives
w
ill accelerate us to scale
From...
!Robust clearing, risk management
infrastructure
!Well managed capital consumption
To...
!Enhance capital efficiency to support
growth
!Consultation on mutualised default fund
underway
63
Liquidity
Volatility
Expand
global
access
Bolster
sales and
marketing
Extend
product
set
Capital
e
fficiency
Large
physical
market
Robust
settlement
mechanism
Industry
Support

We are well
on our way
!Already a vibrant market, potential is
significant
!Punching above our weight, have the unique
preconditions, foundation to accelerate to
maturity
!Know what to do to deliver
64

Collaborateandgrow
environmental and energy markets
Environmental
finance
Carbon
Market
Energy
Market
65

Long-term opportunity in environmental
markets
66
New Zealand
context
!Government policy aligned
to global trajectory
!Shifting investor sentiment
around climate risk
Global context
!Paris agreement (first all-country
agreement)
!UN Sustainable Development Goals
(New Zealand is signatory)
!Shifting investor sentiment around
climate risk
Significant funding required
to meet infrastructure
investment. Green bonds will
play a major role.
Environmental
f
inance
Will be vital to meet net zero
carbon goals by 2050.
Carbon
M
arket

We will grow the green bond market
!Educate the market and foster dialogue
!Offer a distribution platform
!Develop and provide custody of green
bond guidelines
!Promote green bond transparency
!Establish lists, segments, indices and
ETFs
67
How NZX can accelerate growth Already taking steps
Environmental
f
inance
!Preparing guidelines on green bond
issuance to be released this year
!Engaging with the market as part of
NZX Listing Rules Review
!Connecting globally via United
Nations Sustainable Stock Exchange
Initiative and World Federation of
Exchanges Sustainability Group for
Derivatives Exchanges
!Opening dialogue with early market
movers

NZX well positioned to explore
opportunities in Carbon Markets
68
NZX is
naturally
positioned
to add
value
Past success
(development
of ETS with
Labour
Government
and TZ1 sale)
Common
customers
across energy
and
environmental
markets
Neutral,
credible, and
offers
regulatory
capability
Ability to
consolidate
with energy
Operates
auction-capable
trading
platform,
clearing and
settlement
infrastructure
Offers time
zone and
national scale
advantages
ar on
M
arket
NZX can help create a
transparent and efficient
Carbon Market to support
net zero carbon goals

!Develop trading and capital
efficiencies (collateral offsets
between futures and spot)
!Transition from a hedging
market to a trading market
through expansion of
financial trading
Opportunity to create efficiencies in the
Energy Market
69
Supporting market development key to growth
Percentage of financial contract volume to annual
demand, 2014
~ 100%
New Zealand
Germany, Austria
and Luxembourg
Australia
~ 635%
~ 325%
New Zealand lags peers in development of energy financial markets
Source: Electricity Authority; AER; Economic Consulting Associates

Collaborate and grow: the environmental
and energy opportunity
70
Our opportunity
Energy
Environment
Nature of the
market
!Spot
!OTC
!Derivatives
!Auctions
!Spot
!Futures
!Green bond issuance
!Secondary market
!ETFs
Relative size
of the market
!Medium
!Large (uncertain)
!Large (nascent)
!Centralise and create
efficiencies
!Collaborate and position
NZX
!Facilitate rapid growth
Energy
M
arket
Environmental
f
inance
Car on
M
arket

!Build out
!Drive for clearing partner/software vendor
scale
!Lead growth with market/demand
coverage
!Extend products to cover global demand
!Create adjacent investable products e.g.
ETFs, indices etc.)
!Grow secondary market transparency
!
Market to attract foreign investors and issuers
!
Leverage listing rules review to facilitate debt listings
!
Extend debt products (wholesale, foreign and green
b
onds)
!
Extend trading hours, add clearing partners and
e
xtend functionality
!
Add feet on the street, transform website, build out
d
ata and reports
!
Foster green bond growth
!
Engage with stakeholders to create a liquid, efficient
a
nd transparent carbon market
!
Establish the value of combining electricity wholesale
s
pot with other exchange traded products
Growth opportunities
71
Go forward plan:
Continue to
build a vibrant
debt market
2018 plan
Five year plan
Grow dairy
to scale
Collaborate
to grow
environmental and
energy markets

Maximising options
72
Aaron Jenkins, Head of Funds Management
Lisa Brock, Head of Wealth Technologies

Aaron Jenkins,
Head of Funds Management
73

An unmet need amongst New Zealand investors
74
Investors covered by
some form of financial advice
~200,000
~3.5 million
New Zealanders of age to invest
New Zealanders missing out;
l
ow participation in our markets
NZX is a trusted brand that
c
an enable New Zealanders
Source: Financial Markets Authority; Statistics New Zealand
* Population above 15 years of age
An unmet need amongst New Zealand investors

NZX met that need by launching and growing
New Zealand’s ETF suite
75
NZX ETF funds
Number of funds
5
23
20142017
+460%
NZX ETF funds
Funds Under Management
~370 million
~$2.0 billion
20142017
+540%
Growth enabled largely by SuperLife acquisition
Source: Smartshares Limited

ETFs available through direct
and indirect channels
76
Principles of
open access
and equivalence
as applied to
NZX ETFs
Available through all traditional channels
e
.g. financial advisers and brokers
Available to all New Zealanders through
d
irect channels e.g. Smartshares.co.nz
Available as ‘building blocks’ through
c
hannel innovators e.g. Sharesies

Attracting new end users to the market
77
8,000
10,000
12,000
14,000
16,000
18,000
20,000
22,000
Latest ETF
launch
Online
applications
launch
Smartshares ETFs total unitholders
Direct unitholders
u
p 78% over last
t
hree years
50% of applications
g
etting a CSN for
t
he first time
Investment from
a
dviser groups up
2
1% YoY
Source: Smartshares Limited

ETF building blocks enabling a new suite
of Fintech entrepreneurs
78
!DIY investors, unadvised
!Using combination of
managers and passive/active
!Comfortable selecting from
large investment pools
!Millennial, up and coming
investors unsure where to start
!Typically small investment
contributions

This growth is driven by powerful
demographic shifts
79
Source: Statistics NZ; Smartshares Limited
Growing demographic with available
(
if relatively modest) investment funds
Reflected in rapidly growing uptake
368,000
270,000
20012013
2014201520162017
~233%
C
AGR
–27%
Home ownership declining among younger
p
opulation
Home ownership among 20 to 39 year olds
thousands
Very strong growth in awareness and acquisition
Smartsharesunitholder applications

We have grown SuperLifeahead of the market
80
361
434
588
697
Sep-14
!Sep-15!Sep-16!Sep-17!
SuperLifeKiwiSaver
Funds Under Management ($ millions)
25%
C
AGR
1.4%1.4%1.6%1.6%
871
899
1019
1180
Sep-14
!Sep-15!Sep-16!Sep-17!
SuperLifeSuperannuation
Funds Under Management ($ millions)
11%
C
AGR
3.5%3.7%3.9%4.5%
Growing share of industry Funds Under Management
Source: Smartshares Limited; RBNZ

SuperLifebenefits from the KiwiSaver ‘escalator’
81
Source: RBNZ; UBS NZ Equity Strategy October 2017
New Zealand equitiesNew Zealand debt and other
Foreign equitiesForeign debt and other
Allocation of KiwiSaver funds
NZ$ billion
Potential growth to $300 billion
F
UM next 20 years
At ~15% Funds Under
M
anagement CAGR, the holding
c
ost of the business not onerous
Continues to power up the
c
ritically important ETF construct
2008201220132014201520162017200920102011
5
10
15
20
25
30
35
40
45

Superannuation also provides
a growth opportunity
!Total superannuation market estimated to
be ~$26 billion
!We consider the addressable market to be
~$9 billion and ~100 entities
!Additional sales resource recruited mid-2017
!A sector we are experts in, with limited
competitors
Source: Financial Markets Authority
82

!Consolidate
!Ride the growth escalator
!Participate in industry rationalisation
!Grow scale
!Share the benefits
!Cement low-cost passive leadership
!
Build out distribution partners
!
Continue a customer experience
!
Continue marketing/PR
!
Bolster experience e.g. investment tools
!
Grow profile e.g. PR
!
Open up third party distribution
!
Target schemes unable to replicate SuperLifeoffering
!
Educate employers on differentiator to
!
Cross-sell to issuer base
Smartsharesand SuperLife
83
Go forward plan:
Grow
Smartshares
ETF end users
2018 plan
Beyond
Cross-sell and
innovatively
market
KiwiSaver
Target corporate
superannuation
with cross-sell

NZX Wealth
Technologies
Lisa Brock,
Head of Wealth Technologies
84

Objective: deliver a financial services platform that
supports and empowers the wealth management industry
Deep industry
understanding
Strong team with
operational experience
Supporting foundation customer
(Craigs Investment Partners).
Hobson Wealth paused project
due to a competing priority
Relatively high barriers to
competitive entry
Learnings from
the build to date
Where does
it take us
Broaden reach
Opportunity
to build pipeline
Focus on
delivery outcomes
Where we are atWhat we have
85

The potential opportunity
Confirmed pool
Pool opens up when
!
Reference site is live
!
Broker capability
e
xtension complete
Future pool
!
Innovation
!
White label
!
Direct
20182018 to 20212021 +
$2 billion
Funds Under Administration
$54 billion
Funds Under Administration
Unknown value
potentially
significant
opportunity
86

Project progress
87
Go live
Investor portal and IRD messaging in production
Infrastructure established
Core functional development
Resourcing
Testing and repair
Data migration automationand reconciliation
Foundation client specific development
Operational readiness
UAT andmigration dry runs
Broker trading functionality
Transition existing clients ontonew platform
In place
Progressed
Work to do
Missing

!Extend capability for the new innovative
business models
!Extend pipeline
!Target medium large adviser groups
!Target Broker trading models
!Continual improvement
!Regulatory changes
!
Complete development for foundation clients
!
Complete history migration
!
Operational readiness, UAT and migration
!
Craigs Investment Partners go live Q2 2018
!
Old platform clients transitioned
!
Another small adviser on-boarded
!
A large adviser group signed on and project
c
ommenced
!
Complete development for broker trading
f
unctionality
Wealth Technologies
88
Go forward plan:
Go live with
platform
2018 plan
Five year plan
New clients
Extend
capability to
widen offering

Creating a lean
and fit NZX
Mark Peterson, Chief Executive Officer
89

Earning the
right to
grow
through
disciplined
management
of costs and
clarity of vision
90
Creating a
lean and
fit NZX
Remove
wastage
Lift
efficiency
Create
clarity and
alignment
Fund
growth

Earning the right to growthrough
d
isciplined management of costs
a
nd clarity of vision.
!Our business is too small to be fat
!Turned over every rock – wastage
removed, immediate efficiencies
identified and implemented
!Maintaining a tight lid on costs
91
Creating a
lean and
fit NZX
Remove
wastage
Lift
efficiency
Create
clarity and
alignment
Fund
growth

Earning the right to growthrough
d
isciplined management of costs
a
nd clarity of vision.
!Simplified business
!Redeployed resources to high value
areas, increased delivery speed
!Now streamlining and automating
core processes to free additional
resource
!Consolidating support systems to
reduce costs, increase delivery speed
92
Creating a
lean and
fit NZX
Remove
wastage
Lift
efficiency
Create
clarity and
alignment
Fund
growth

Earning the right to growthrough
d
isciplined management of costs
a
nd clarity of vision.
!Clear strategy has enabled improved
delivery
!Organising principles now start from
customers
!Programmeoffice created
!Remuneration structure aligned to
delivery
!Cross-leveraging resources to enable
efficiencies
93
Creating a
lean and
fit NZX
Remove
wastage
Lift
efficiency
Create
clarity and
alignment
Fund
growth

Earning the right to growthrough
d
isciplined management of costs
a
nd clarity of vision.
!Disciplined capital management – no
expenditure bubble associated with
strategy execution
!Major lifecycle investment into
clearing and energy systems on track
for 2018 completion
!Growth initiatives will leverage existing
capability
!Clearing House mutualiseddefault
fund consultation designed to
advance NZX’s Derivatives Market
!Capital Review well underway. Board
expected to update the market at Full
Year 2017 results
94
Creating a
lean and
fit NZX
Remove
wastage
Lift
efficiency
Create
clarity and
alignment
Fund
growth

Summary
95
NewZealand’s Exchange
R
efocuscore
Grow opportunities
Maximiseoptions
Get fit
Summary

It struck us that our strategic direction was naturally
grounded in a
purpose
that extended beyond our own business
96
New Zealand’s Exchange
Refocus
coreGrow
opportunities Maximise
options
Get
fit
Act with greater purpose
Promoting overall market
growth based on principles of
open access and equivalence
Putting our customers at the
heart of everything we do
Driving economic, social and
environmental sustainability for
our nation
Driving greater returns for our
shareholders

Wide range of value creation
potential and a diversified risk profile
97
Wide range
of potential
outcomes
driven by a
diverse
opportunity
set
Diversified
risk profile
Market
Structural
Execution
Competitive
Market
Execution
Execution
Source: NZX Data
Refocus
core
Grow
o
pportunities
Maximise
o
ptions
Get fit

98
Culture change required to deliver
From......to
Orientation
InwardOutward
Sales
Order-takingSelling, facilitation
Market coverage
OrganicDeliberate
Portfolio
SilosCross-leverage
Resource allocation
Local/BAU-level
o
ptimisation
Global/portfolio-level
o
ptimisation

We are on a journey
99
Strategic clarity
Organising principles to support execution
Some good ‘runs on the board’ to provide confidence in execution
Diversified initiatives/risk profile to bolster confidence in the outturn
Resourcing
Culture
Broader industry alignment
In place
Progressed, work to
do
Joint
leadership
challenge

Questions
100
NewZealand’s Exchange
R
efocuscore
Grow opportunities
Maximiseoptions
Get fit
Summary

We have a clear strategy and
look forward to updating you on our
progress at our 2017 full year results.
101

Meet the team
102

Meet the team
Mark Peterson
Chief Executive Office
Mark joined NZX in May 2015 as
Head of Markets, and was appointed
CEO in April 2017. He has more than
25 years’ experience in the financial
services sector covering capital
markets, share broking, private
wealth, and institutional and retail
banking. Prior to joining NZX, Mark
was the Managing Director of ANZ
Securities, and has held executive
roles with FNZC and The National
Bank of New Zealand.
103
Joanna Lawn
Head of Issuer Relationships
Joanna joined NZX in September
2017. She has extensive banking and
corporate finance experience
previously working at ANZ, in the
Institutional Banking Division, with
responsibilities in New Zealand and
overseas, as Head of Client Insights &
Solutions, and Head of Business
Management. Prior to this Joanna
worked for Deutsche Bank and
Lazard Brothers & Co. Limited, in
their M&A and markets divisions.
Graham Law
Chief Financial Officer
Benjamin Phillips
Head of Markets Development & Clearing
Benjamin joined NZX in September
2014. He has extensive experience
across New Zealand and Australia’s
financial markets, and previously
worked for Citi Australia as Senior
Operations Manager within its retail
investments division. Prior to this
Benjamin served 10 years at ANZ
E*TradeAustralia where he held
several senior positions, including
Head of Broking Services.
Graham will join NZX on Monday 27
November. He has considerable
experience working across the
financial and professional service
sectors in New Zealand and the
United Kingdom. Graham is currently
Head of Finance at ACC, and prior to
this was Managing Director and Chief
Financial Officer at AMP Capital
Limited. Graham will bring to NZX
expertise in strategic leadership,
corporate governance, and risk and
financial management.

Meet the team
104
Aaron Jenkins
Head of Fund Management
Aaron joined NZX in January 2014. He
has substantial experience across the
financial markets and agricultural
sectors. Prior to NZX, Aaron was
Fonterra’s General Manager Trading
Among Farmers. Before this, he held
senior technology and business roles
with E*Tradein Australia, and spent
more than 13 years with ANZ Bank in
Australia, New Zealand, Asia, and the
United Kingdom.
Jeremy Anderson
Head of Data & Insights
Jeremy joined NZX in March 2017.
He has extensive experience working
in agribusiness sectors across
Australia and New Zealand. Prior to
joining NZX, Jeremy led and
executed Vodafone New Zealand's
agribusiness strategy and has had
experience working in a number of
senior sales management roles for
fertiliserand rural merchandise
businesses.
Lisa Brock
Head of Wealth Technologies
Lisa joined NZX in November 2016.
She has more than 25 years
experience in financial services
covering investments, insurance and
banking. Lisa previously worked for
the ASB Bank and Sovereign
Insurance holding leadership roles
across finance, investments and
operations. Prior to that Lisa started
her career as an auditor with PwC.
Lisa is a Chartered Accountant.
Hamish Macdonald
General Counsel & Head of Policy
Hamish joined NZX in July 2013. He
has extensive experience in financial
regulation and policy development
work, including five years at the UK
Listing Authority, the body that
regulates issuers listed on the London
Stock Exchange. Before joining NZX,
Hamish held legal roles in New
Zealand, Australia and the United
Kingdom, most recently as legal
counsel with a superannuation fund in
Melbourne.

Meet the team
105
Joostvan Amelsfort
Head of Market Supervision
Joostjoined NZX in August 2014. He
has considerable experience
providing legal advice to capital
markets participants, operating in
New Zealand and overseas. Joost
previously worked at Simpson
Grierson and prior to that he was at
LinklatersLLP, London and Dubai.
Joost’sareas of expertise include
corporate governance, equity and
debt capital markets, mergers and
acquisitions, corporate and
commercial contracts, and public
private partnerships.
David Godfrey
Chief Information Officer
David joined NZX in 2009. He has
more than 25 years of management
experience in IT development -
including product based, enterprise
level business critical in house and
consumer based -and "24x7"
operations for a FTSE 100 Property
company, a major UK newspaper, and
in telecommunications, IT Consulting
and software houses.
Katherine Birch
Head of Human Resources
Katherine joined NZX in 2013. She
has more than 14 years of generalist
human resources experience
including employment relations,
consulting, performance
management, employee
engagement, remuneration and
recruitment. Prior to joining NZX,
Katherine worked several private and
multinational companies in London
and New Zealand, most at recently
Aurecon Group.
Hannah Lynch
Head of Communications
Hannah joined NZX in 2012. She has
a background in political, currency
and financial markets reporting. Prior
to joining the communications team
at NZX, Hannah was a political
reporter for newroom.co.nzin the
Parliamentary Press Gallery, and
before that was a currency and
financial markets reporter at
BusinessDesk.

Meet the team
106
Kristin Brandon
Head of Compliance
Kristin joined NZX in 2007. Kristin has
significant legal experience working
at Chapman Tripp Wellington and
DechertLLP London where she
specialisedin company and securities
law. Prior to joining NZX, Kristin was
Assistant Company Secretary at
Telecom New Zealand Limited (now
Spark).
Kathryn Jaggard
Head of Strategy
Kathryn joined NZX in 2008. This
followed 10 years in London where
she held several senior business
development roles in the global
exchange traded derivatives market.
She also worked in Singapore where
she helped drive derivatives growth
from this region. Over the past 18
years Kathryn has developed an
intimate knowledge of the global
derivatives markets, a multitude of
new products, and assisted in driving
liquidity to these products.
Nick Morris
Head of Derivatives
Nick joined NZX in 2016. He has a
strong background in currency
markets having worked at BNZ for
more than four years in a variety of FX
related roles, including as an
Institutional Foreign Exchange dealer.
Nick is also a director of the
GlobalDairyTrade Oversight board.
Shane Dinnan
Head of Energy
Shane joined NZX in February 2014.
He has a strong background in
energy market design, operations
and policy in New Zealand, Asia,
Europe and Africa. Prior to this, he
was a co-owner and senior executive
at electricity market operator M-co,
which NZX acquired in 2009. Shane
has also led several market
development projects internationally.