Investor Day Presentation

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

www.nzx.com

www.nzx.com 1 of 1
29 April 2019

NZX Investor Day

NZX will today host its investor day where it will present an update on business activities and
execution against its five year strategy.

The presentation is attached to this market release and available in the investor centre of NZX’s
website:

https://www.nzx.com/about-nzx/investor-centre/reports-and-disclosure

There is no new material information contained within the presentation.

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

---

NZX INVESTOR DAY 29 APRIL 2019
Actively growing
New Zealand’s
capital market

Today’s agenda
Welcome 10.00am
Issuer Relationships 10.20am
Secondary Markets
10.45am
Data & Insights 11.10am

Dairy Derivatives
11.35am


Lunch
12.00pm
Smartshares 12.45pm
Wealth Technologies 1.10pm

Getting fit & reinvesting 1.35pm
for growth


Close 2.10pm
2

Welcome
2

Welcome

Customer focus. Pursue growth
and revenue diversity, facilitate
access for investors and issuers
Increased participation, creates
a broader more robust business
Liquidity grows, all related
revenue lines grow, growth
businesses bear fruit
Increased global access
provides confidence we can
compete internationally
Definitive resolution of
structural issues. Vibrant
capital market
In 2017 we began a transformation to a new business focused on
growth and value creation
1
2
3
4
5
Welcome
3

Refocus core
New Zealand’s Exchange
Growth
opportunities
Maximise
options
Get fit
In Place
Progressed
Issuer Relationships
Secondary Markets
Data & Insights
Debt
Dairy Derivatives
Energy and
Environmental
Smartshares
Wealth Technologies
Divested non-core
businesses
Capital structure
Culture and efficiency
programme
We are committed to our strategy –
and we are delivering on it
Welcome
4

This is why growing the core collaboratively matters
Secondary
Markets
TRADED FLOW
Wealth
Technologies
ADJACENT
TECHNOLOGY
Data &
Insights
INFORMATION
Smartshares
ADJACENT
PRODUCTS
Issuer
Relationships
LISTED PRODUCT
Welcome
5

Nelson Lakes National Park, South Island of New Zealand
Issuer Relationships
Head of Issuer Relationships
Joanna Lawn
6

Issuer Relationships
6

Framework
completed
Customer
engagement
transformed
Product suite
extended
We are responsible for creating a compelling listing proposition
– 2018 saw us remove some of the blockages to growth
• 100% customer engagement
• Relationship Manager for every
customer
• Transformed service offering and
operational processes
• New customer events
• Updated market structure and rule set
• Enhancements to Market
Announcements Platform
• Connectivity with global exchanges
• Website enhanced
• New listed products: green bonds
and carbon fund
Issuer Relationships
7

total capital raised
$
billion9.5
debt issuance raised
$
billion6.3
in total capital raised
%
growth
10
in new debt issuance
51
increase%
... and we are making good progress in a challenging
global environment
Statistics as at 31 December 2018. Sources: NZX December 2018 Shareholder Metrics, S&P
to have positive total return
#
in S&P Developed
Broad Market Index
1
joined the market
#
new
customers
5
8

Issuer Relationships
8

• Main Board market
capitalisation up
14.6% on Q1 2018
• S&P/NZX 50 reached
all time high of 9,845
in March 2019
• Capital Markets
2029 initial areas of
focus: IPO generation
and capital markets
pathways, investor
base (including
KiwiSaver), regulation
and market structure
Market
Under updated rules
• Five wholesale
bonds listed totalling
$1.5 billion
• Smartshares signalled
intention to list
further Exchange
Traded Funds (ETFs)
• 2 green bonds listed
($200 million) and
1 sustainability bond
($500 million)
• 7 retail debt offerings
totalling $2.1 billion
under new rules
• 533% growth in debt
issuance on Q1 2018
• Intention for Napier
Port IPO announced
• 8 further companies
publically rumoured
to list in 2019/2020
• Marketing the
market: 5 events held
• 16 prospect meetings
• Inaugural customer
survey completed:
82% of issuers saw
an improvement in
service
New ProductsDebtEquityCustomer
We are off to a good start in 2019
Sources: NZX Data & Insights, Chapman Tripp: New Zealand Equity Capital Markets Trends & Insights Report (February 2019), NZ Herald
Issuer Relationships
9

Post listing
support
Ringing
the bell
NZX
regulation
Partnering with
prospects through
the listings process
Educating the
market
• Actively growing the
prospect pipeline
• Meetings with fund
managers and
advisers
• Presentations on
new products to
market stakeholders
• Introduce to advisers
• Introduce to NZX
Regulation
• Education on life in
the public markets
• Liaison for all
commercial NZX
matters
• Regulatory review of
listing application
• Prelisting support
• Listing event
• Marketing and
communications
support in and
around the day
• Marketing the
market
• Company spotlights
• Retail investor
evenings
• On going training
and support
Feet on
the street
This is how we now support prospects coming to market
Issuer Relationships
10

Actively marketing the benefits of listing
VIDEO WITH NEW ZEALAND KING SALMON
Issuer Relationships
11

COLD LEAD
Educate and raise
awareness
Marketing
Sales
Service
EQUITY
• Local councils
• Banking sector
• Private companies
• Private equity
FUNDS
• Open ended funds/
exchange traded funds
• Closed ended funds
DEBT
• Retail bonds
• Green bonds
• Wholesale debt
POTENTIAL
REVENUE
• Initial listing fees
• Annual listing fees
• Subsequent listing
fees
• Trading fees
• Clearing fees
• Data fees
WARM LEAD
Engage and accelerate
QUALIFIED
Supply and support
LISTING
POST LISTING
SUPPORT
Active pipeline development:
where we see customers coming from
Issuer Relationships
12

• Continue to enhance
customer experience
• Deliver on listings pipeline
across all products
• Focus on sales and marketing
• Updated market structure
and listing rules being
implemented and issuers
transitioned
• Deliver benefits of global
alliances
• Engage with wider ecosystem
as part of Capital Markets
2029
• Leverage demand for debt
• Establish listed funds market
• Explore foreign exempt fund
listings
THE CUSTOMER, IT IS HEAVILY
WEIGHTED TO SALES AND MARKETING:
IMPLEMENTING OUR TRANSFORMED
FRAMEWORK:
ENHANCING THE ABILITY TO EXPAND
OUR PRODUCT SUITE:
Our 2019 plan is focused on ...
Issuer Relationships
13

Our long term goal is to become a vibrant and diverse capital
raising hub, not just an IPO centre. We will do this by:
High: $12 billion
Low: $11 billion
$9.1 billion
20192023
External dependencies
• Listing ecosystem dependent
on others
• No major market correction
• Capital Markets 2029
recommendations not
factored in
“We believe 2018 will be a
bridging year of a more vibrant
capital market in New Zealand
from 2019 onwards”
- Chapman Tripp: New Zealand Equity Capital
Markets Trends & Insights Report (February 2019)
Growing the core
collaboratively
Increasing
capital raisings
through diverse
product offerings
Delivery of global
alliance strategy
2023 aspirational average capital raise target range
14

Issuer Relationships
14

Secondary Markets

Benjamin Phillips
Executive Director, Markets Development & Clearing
Rock Pools, Maori Bay, Auckland New Zealand15


Secondary Markets
15

million
revenue
in 2018$16.7
operating
margin
in 201866%
million EBITDA
delivered
in 2018$11
participants
37
Secondary markets is a high margin business with a renewed
focus on growth
Source: NZX Data & Insights16


Secondary Markets
16

–Strong pipeline developed, new cash market trading
and clearing participant joined
–Significantly improved market access
–Marketed the market at many levels
–Created efficiency through technology
–Mutualised default fund
–Renewed focus on indices strategy
We delivered what we said we would in 2018
Liquidity
Grow
participant
numbers
Grow equity
linked products
Collaborate
to build and
grow equity
derivatives
Grow investor
participation
Drive
customer
efficiencies in
clearing
Strong
market
engagement
continues
Broaden suite
of trading
tools
Regulation
to support
growth
Secondary Markets
17

Markets development delivers record liquidity levels
• Participation has widened:
–Depository participant:
BNP Paribas Securities Services
(Australia)
–Cash trading and clearing
participants: Sharesies and
Top Capital Partners (Tiger
Brokers) signalled intentions
• Marketing the market to reach
retail investors
• Increased indices revenue
• Strong market engagement
continues
It is early days but 2019 is off to a strong start
Liquidity
Grow
participant
numbers
Grow equity
linked
products
Collaborate
to build and
grow equity
derivatives
Grow investor
participation
Drive
customer
efficiencies in
clearing
Strong
market
engagement
continues
Broaden
suite of
trading
tools
Regulation
to support
growth
0
5
10
15
20
25
30
35
40
45
50
Off-market value
On-market value
20232022202120202019201820172008
$billions
23%
40%
52%
55%
65%
to
70%
Better
pricing
Greater
participation
Increased
market quality
Increased
liquidity
Increased total
value traded
Price
transparency
Source: NZX Data & Insights18


Secondary Markets
18

Singapore business district, Singapore, Asia
“ Since 2017 NZX’s Markets Development team has been one of the most responsive and
engaged relationship management functions of any exchange I have worked with across
our global business. The NZX team has consistently demonstrated a willingness to actively
assist in navigating and removing any structural impediments to the growth of our business
in New Zealand. This proactive approach to growth and client engagement is extremely
helpful and has directly contributed to our continued engagement with the New Zealand
market.”
– Virtu, Managing Director – Asia, Brett Fairclough.
Virtu is connected to 235 exchanges and is a designated market maker on NYSE
Secondary Markets
19

Growing participation through engagement
• Bring on additional participants, prioritising impact
• Continue to reduce barriers for investment in NZX
Optimising trading tools and ensuring
efficient regulation
• Engage with market for input on trading tools and system
upgrade
• Revisit $50,000 threshold for price improved trades to
further enhance on-market activity
• Further market enhancement consultations
2019 will be heavily focused on sales
as we drive increased participation
Liquidity
Grow
participant
numbers
Grow
investor
participation
Grow equity
linked
products
Collaborate
to build and
grow equity
derivatives
Drive
customer
efficiencies in
clearing
Strong
market
engagement
continues
Broaden
suite of
trading
tools
Regulation
to support
growth
Secondary Markets
20

Driving further Clearing House efficiencies
• Stability
• Efficiency
• Scalable
Delivery of indices strategy to drive
revenue
• As passive investment rises indices will drive significant
growth
• NZX has outperformed in global index markets “the
cream of the crop’’ – there remains significant headroom
to market out market
1
• Benchmark indices with reputable product increase
underlying market liquidity
Liquidity
Grow equity
linked
products
Collaborate
to build and
grow equity
derivatives
Grow investor
participation
Strong
market
engagement
continues
Grow
participant
numbers
1
Wall Street Journal, March 2019
Drive
customer
efficiencies in
clearing
Broaden
suite of
trading
tools
Regulation
to support
growth
Our 2019 plan also includes ...
Secondary Markets
21

Initiatives Potential revenue
• $3 billion additional traded value (total: $41 billion)
• 55% trading on-market
• Trading and clearing fees
• Increased participation, targeting:
• One new trading participant
• Two active depository participants
•
• Broaden trading tools suite: design for market expanding tools
completed, trading system project on track for Q2 2020
• Indices strategy
• Targeting revenue 15% uplift
• Annual participant fees, incremental additional
trading and clearing fees
• Annual fees, depository settlement fees and
Stock Lending Borrowing revenue
• New revenue for fees relating to more sophisticated
order types and features
What further success looks like in 2019
Secondary Markets
22

Rock Pools, Maori Bay, Auckland New Zealand
Paving the way for meaningful growth by 2023
• $45+ billion traded market value
• 65% to 70% trading on-market
• Deep and active retail trading base
• Global third party clearer
• New Zealand’s primary central securities depository
• Deep lending pool supporting liquidity
• Increase indices revenue by 50%
• Deep passive investment consistent with global trends
23


Secondary Markets
23

Lake Tekapo, New Zealand with Aurora Australis
Data & Insights
Executive Director, Data & Insights
Jeremy Anderson
24

Data & Insights
24

million
revenue
in 2018
1
$10.6
operating
margin
in 2018
1
85%
45%
million EBITDA
delivered
in 2018
1
$9.1
increase
in non-display
applications
licence billing
1
Revenue excludes indices and dairy conference revenues. Source: NZX Data & Insights
Data & Insights is a high margin business
with untapped growth opportunity
25

Data & Insights
25

We sell ...
To ...
... and generate revenue through
Data
Insights
Information derived primarily from issuance
and secondary trading e.g. share prices,
value traded, volumes
Value added products which provide data
with context and supplementary commentary

e.g. dairy reports
Royalties from end-
users buying data
terminals through
third party vendors
• Data vendors
• Banks
• Fund managers
• Advisers
• Brokers
• Retail investors
Share of revenue
Licence fees
from third party
vendors who on
sell our data
Subscriptions
from end-
users buying
data direct
60%25%15%
We offer essential tools for investors, traders and
commentators globally
Data & Insights
26

Execution in 2018 focused in four key areas
Divested
non-core
businesses
• Improved efficiency and
focus on high margin
business
• FundSource in the
process of being
divested
Team
restructured, now
customer led
• Actively marketing our
market across royalties,
license fees and
subscriptions
Actively
leveraging core
growth
• Leveraging adjacent
markets e.g. dairy
derivatives
• Building new products
to support all markets
e.g. dairy report,
indices
• Servicing new core
customers e.g.
algorithmic firms
Clear delivery
plan to achieve
2023 aspirations
1234
27

Data & Insights
27

• Adjacent markets driving licence, royalty and subscription
revenues e.g. derivatives
• New products and services e.g. value add insights,
indices, regulatory requirements
• New customers e.g. algorithmic traders
• New technology e.g. automation of product development
and delivery
Exchange comparisons:
Data & Insights equivalents
Data is a growth opportunity
Sources: 2018 financial results from LSE, Euronext, ASX, NASDAQ, SGX, HKEX, BME, Bursa
Malaysia, Deutsche Bourse, NZX, ICE, Tel Aviv SE, JSE, TMX Group
This is supported by a customer-led team
-15
-10
-5
0
5
10
15
20
25
30
Revenue percentage growth
TMX
Group
JSE
Tel Aviv
SE
ICE
NZX
Deutsche
Borse
Bursa
Malaysia
BME
HKEX
SGX
NASDAQ
ASX
Euronext
LSE
28

Data & Insights
28

In 2019 we will continue to grow revenue by ...
• Partner to sell more terminals in under
represented regions e.g. China
• Grow data sales through customer
acquisition e.g. algorithmic firms coming to
market
• Targeted sales approach to increase
revenue in growth areas e.g. dairy data as
derivatives market grows
• Capturing licence annuity revenues by
transforming audit process to be more
customer centric
• New products e.g. environmental, social
and governance reporting methodology
• Build foundations to become a price
reporting agency e.g. Platts of the dairy
industry
• Creation of energy insight products outside
of Electricity Authority obligations
• Data management: capture, storage,
processing and analysis
• Information distribution: Data & Insights to
end users via most appropriate channels
• Customer data management: full lifecycle
management through systems
Transforming customer engagementDeveloping our product Enhancing our platform
Q1 2019 on target: 8%
1
revenue growth
2019 target revenue growth: 4% 2019 target EBITDA growth: 5%
1 Growth rate excludes indices, dairy conference and one off licence revenues. Source: NZX Data & Insights
Data & Insights
29

2023 growth will come from licencing and subscription revenue
2018 2023
Licencing$2.9 million $3.6 million
Subscriptions
Fundamental
changes to the
way data is used
Specific growth
coming from
focused initiatives
$1.6 million $2.1 million
Trading
Business
models
Technology
Review of product
set to reduce
complexity and
broaden offering
Customer
engagement
across segments,
prioritised for core
markets
Transforming
current requirement
for compliance to
regular reporting
Positioning
technology platform
that prepares for
rapid changes
Data & Insights
30

Data & Insight revenue
1
• Revenue growth forecast between 2.0% and 4.2% 3 year
rolling average
• New products will enable issuance and trading growth
• Develop value added services for issuers (e.g. collection
of environmental, social and governance metrics)
• Support indices revenue growth
2023 growth target in line with strategic move towards
recurring revenue and less reliance on royalty revenue
1
Revenue includes indices and dairy conference revenues
Source: NZX Data & Insights. Note changes in product codes for 2019 resulted in changes
of product mix for 2018
$millions
0
5
10
15
Low targetHigh target
20232022202120202019201820172016
$millions
31

Data & Insights
31

Akaroa Harbour, New Zealand
Dairy Derivatives
Head of Derivatives
Nick Morris
32

Dairy Derivatives
32

Our dairy journey
2018/2019: records on records
Source: NZX Data & Insights. Note, dairy derivatives customers
globally, not exhaustive
1
Includes derivatives membership, data and connectivity fees
2
Futures Industry Association 2018 statistics
+57% growth in
lots traded in
Q1 2019
+29% revenue
growth in 2018
45,923 lots
traded, record
volume month,
March 2019
+45% EBITDA
growth 2018
1
Third fastest
growing
exchange for
open interest
2
Millionth
lot traded,
May 2018
Dairy Derivatives
33

A truly global marketplace
Location of our customers
16%
2%
9%
11%
13%
17%
32%
Source: NZX Data & Insights. Note percentage of trading accounts located in each region based off 2018 whole milk powder, skim
milk powder, anhydrous milk fat, butter known underlying customer numbers, not exhaustive
• NZX dairy derivatives are
being traded in over 50
locations globally
• On average 31% of volumes
are from Asia – 21% from
China
Dairy Derivatives
34

Mature derivatives markets trade at a multiple of underlying
0.15×*
of New Zealand
physical trade
1×*
New Zealand
physical trade
5×*
New Zealand
physical trade
5×*
New Zealand
and European
physical trade
5×*
the world’s
physical trade
0.31 million
0.35 million
0.45 million
0.61 million
0.81 million
1.08 million
1.44 million
2.23 million
~11.17 million
~27.64 million
~39.18 million
Sources: Euronext; Bursa Malaysia; NZX Data & Insights
*Excludes cheese and whey
Hypothetical growth scenario: growth at 33%
Lots traded per annum
2017201820192020202120222023
35

Dairy Derivatives
35

Our customers think we are doing great
ROB CHESLER, EXECUTIVE DIRECTOR - GLOBAL DAIRY & FOOD GROUP AT INTL FCSTONE
Dairy Derivatives
36

Every lot counts
Dairy derivatives revenue line distribution
• Trading and clearing per lot fees
revenue range from $3.64 to
$4.21
1

• Additional revenue generated
from:
–Annual membership fees
–Data license and subscriptions
• Market data is a growing revenue
stream, up 43% in 2018 –
significant growth potential ahead
Source: NZX Data & Insights
1
Based off revenue earned: 2016 to 2018. Excludes
derivatives membership, data and connectivity fees
0.0
0.2
0.4
0.6
0.8
1.0
1.2
2018201720162015
Clearing feesTrading fees
$millions
Revenue line
37

Dairy Derivatives
37

Delivery of key initiatives has enhanced
the market’s scalability
Liquidity
Volatility
Robust
settlement
mechanism
Capital
efficiency
Bolster
sales &
marketing
Volatility
FOCUS NOW ON:
Expanding global
access
Robust
settlement
mechanism
Industry
support
Capital
efficiency
Large
physical
market
Bolster
sales &
marketing
Extend
product set
E
x
i
s
t
i
n
g

p
r
e
c
o
n
d
i
t
i
o
n
s
Dairy Derivatives
38

• NZX launched liquid milk futures
and options contracts in 2016
• These have grown four times faster
than Whole Milk Powder
1
Open interest in New Zealand milk price futures & options
since launch
Scalability means new products achieve positive EBITDA quickly
Source: NZX Data & Insights
1
Measured in metric tonnes
0
2,000
4,000
6,000
8,000
10,000
12,000
Number of contracts
Mar 19
Feb 19
Jan 19
Dec 18
Nov 18
Oct 18
Sep 18
Aug 18
Jul 18
Jun 18
May 18
Apr 18
Mar 18
Feb 18
Jan 18
Dec 17
Nov 17
Oct 17
Sep 17
Aug 17
Jul 17
Jun 17
May 17
Apr 17
Mar 17
Feb 17
Jan 17
Dec 16
Nov 16
Oct 16
Sep 16
Aug 16
Jul 16
Jun 16
May 16
0
10,000,000
20,000,000
30,000,000
40,000,000
50,000,000
60,000,000
70,000,000
kg MS (RHS)
Open interest (# of contracts)
Kilograms of milk solids (kg MS)
0
2,000
4,000
6,000
8,000
10,000
12,000
Number of contracts
Mar 19
Feb 19
Jan 19
Dec 18
Nov 18
Oct 18
Sep 18
Aug 18
Jul 18
Jun 18
May 18
Apr 18
Mar 18
Feb 18
Jan 18
Dec 17
Nov 17
Oct 17
Sep 17
Aug 17
Jul 17
Jun 17
May 17
Apr 17
Mar 17
Feb 17
Jan 17
Dec 16
Nov 16
Oct 16
Sep 16
Aug 16
Jul 16
Jun 16
May 16
0
10,000,000
20,000,000
30,000,000
40,000,000
50,000,000
60,000,000
70,000,000
kg MS (RHS)
Open interest (# of contracts)
Kilograms of milk solids (kg MS)
March
February
January
December
November
October
September
August
July
June
May
April
March
February
January
December
November
October
September
August
July
June
May
April
March
February
January
December
November
October
September
August
July
June
May
2016201720182019
39

Dairy Derivatives
39

2019 targets
• Target volume ~450,000 lots
• Increase end user base through
persistent sales and education
• On screen liquidity improvement
• 2023 aspirational target lots +33%
Growth is happening now – and continues to 2023
Sensitivity analysis of markets growth potential
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
Volume 70%Volume 50%Volume 33%
202320222021202020192018
Volume (lots)
0
2
4
6
8
10
12
14
16
Revenue 70%Revenue 50%Revenue 33%
Volume (lots)
$millions
Source: NZX Data & Insights
40

Dairy Derivatives
40

Smartshares
Head of Funds Management
Hugh Stevens
Aoraki Mt.Cook National Park New Zealand41

Smartshares
41

New management team and governance structure
Smartshares excelled against its 2018 targets
Exceptional earnings growth
New Chair, CEO and CIO
Operating earnings up 29%
Tight expense control
Improved margin
Costs held to 5.4%
Operating margin 49.4% (2017: 44.3%)
Strong funds under management (FUM) growth
FUM $2.9 billion (up 8%)
FUM at 31 March 2019 $3.2 billion
Positive cash flow
2023 strategy launched
Net new cash flows $292 million (up 21.8%)
Target: $5 to $5.75 billion funds under management
(14% 3 year rolling average growth)
Sources: NZX Data & Insights. Statistics are as at 31 December 2018 adjusted to net fund expenses against revenue
Smartshares
42

GLOBAL DRIVER HOW SMARTSHARES IS WELL POSITIONED
Emerging Asia
• Asia Region Funds Passport
• NZX Memoranda of Understanding with regional exchanges
• Pacific Island opportunities
Technology and automation
• Developing a new generation of digital tools to provide efficiency self-service and advice
• Strong relationships with new self-directed investment platforms
Regulatory change
• Fee-for-service advice driving shift to ETF and passive products
– and we are New Zealand’s only provider
• Improved disclosure driving fee transparency and margin compression
– and we are already low cost
Retirement and
demographic shift
• Increased public engagement in savings
• Retirement income, insurance and investment products,
packaged as financial wellbeing solutions
We are well positioned in a fast changing world
Smartshares
43

We have created strong competitive advantages
What we do
Only ETF issuer.
Scale in passive
investing
In-house member
admin and IT
Licenced fund
manager
Broad product
coverage
Diverse sales
channels
Benefits
Fastest growing
market segment.
New Zealand in
catch up
We have full
control over
customer
service and cost
High barriers
to competitor
market entry
Benefiting from
high-growth
KiwiSaver and
retail markets
Direct and indirect
channels including
high-growth
platforms and
large adviser pools
Smartshares
44

We are driven by our customer needs ...
Retail
Direct online
Platforms
Advisors
Institutional
Charities
Trusts
Insurance
Crown
Corporate and
sponsored schemes
Employers
Other
Smartshares
45

Retail
• KiwiSaver
• Retail unlisted funds
• ETF catch up
Institutional
• New Zealand institutional investors
are still to catch up to global
average
• 3% of New Zealand FUM is
passive, global average is 20%
Corporate
• Three accessible pools of legacy
superannuation
• Total FUM $19 billion
... and are making the most of the opportunity
Sources: Smartshares, NZX Data & InsightsSources: Smartshares, NZX Data & InsightsSources: BIS, S&P DJI
Annual funds under management
June 2014 – June 2018: 5 year projected growth
Corporate superannuation opportunities Global assets under management by fund type
2014
20152016201720182019202020212022
2023
KiwiSaver projected growth
Projected retail unit trusts
KiwiSaver 5 year growth
Retail unit trusts
$millions
20,000
40,000
60,000
80,000
100,000
120,000
Legacy employer
schemes
Legacy retail
superannuation
Master trustsCurrent size
SuperLife schemes
Total FUM ($billions)
8
10
4
2
6
12
Percentage
8
10
4
2
6
18
14
12
16
20
200620082010201220142016
46

Smartshares
46

SuperLife
UK Pension
We have pricing flexibility
Financial
solutions
SuperLife
KiwiSaver
SuperLife
Workplace Savings
Pricing flexibility
SuperLife Invest
Unlisted
funds
Smartshares ETFs
Listed
funds
Smartshares
47

This is what success looks like in 2023 ...
TARGET2023 TARGETSMARTSHARES’ CAPABILITIES ARE WELL-POSITIONED
Funds under management
$5.75 billion
• Targeting high-value retail flows, multiple products and long-term
relationships
• Launching institutional investor segment to grow scale and realise
operating leverage
Investor cash flows
$450 million
per annum by 2023
• 2018 net cashflow more than 10% of FUM
• Supported by enhanced brands, strong distribution channels,
marketing and sales capability
Operating margin
Greater than 50% of
total revenue (net
of fund expenses)
• Improved margins through controlled introduction of a more
efficient operating model, tight cost control, and increased
investor self-service
Sources: NZX Data & Insights
Smartshares
48

... Our 2023 strategy builds off existing strengths.
This is where we will play
Our five strategic priorities for 2023
Ambition
Actions
First in systematic
investment
management
Leading financial
wellbeing
solutions,
including KiwiSaver
First in sponsored
and corporate
superannuation
Launched
institutional
investor offering
Implemented low
cost operating model
that supports great
customer outcomes
• In-house investment
management expertise
• Front-office operating
model
• Partnerships with global
systematic investment
managers
• Smartshares brand
• Financial adviser
relationships
• Simplify on-boarding
• Product packaging and
pricing plans
• Cross-sell
• Improve brand
• Sustainable solutions
• Digital tools
• Financial advice
• Fintech collaboration
• Sales team and plan
• Member education and
advice
• Selected active equity
managers on platform
• Pacific Islands and Iwi
investment plans
• Sales team and plan
• Product innovation
• Client service and
reporting
• Outsourced fund admin
• Project delivery and
customer onboarding
capability
• Unitise SuperLife Invest to
broaden distribution and
reduce cost and risk
• Digital tools for robo advice
and investor self-service
• Continuous improvement
programme for operational
efficiency
• Focus on cost, headcount,
customer outcomes
Smartshares
49

Aoraki Mt.Cook National Park New Zealand
These are the steps we will take in 2019
• Build relationships with financial advisers, fund distribution
platforms, institutional investors, consultants and employers
• Build investment management team and leadership in
systematic investment management
• Build a brand recognised and trusted by our customers
• Finalise operating model for Smartshares ETFs and SuperLife
Invest schemes
• Deliver first digital tools for improved self service and
customer outcomes
50

Smartshares
50

Wealth Technologies
Head of Wealth Technologies
Lisa Brock
Taitomo Island, Piha Beach, Auckland, New Zealand51

Wealth Technologies
51

• Until the entry of NZX Wealth
Technologies New Zealand’s
wealth management platform
landscape was stagnant
• Systems were outdated and not
keeping up with customer needs
• Barriers to market entry are high
due to New Zealand specific tax
legislation
• We have entered the market with
comprehensive functionality and a
first class service offering
The current landscape offers growth opportunities for
Wealth Technologies
NZX Wealth Technologies platform: compliance monitoring
Wealth Technologies
52

• Launched a scalable platform with
a highly skilled team
• Built strong capability to execute
new customer projects
• Grown funds under administration
by 70.2%
• Created an opportunity pipeline of
$40 billion
In 2018 we have ...
NZX Wealth Technologies platform: portfolio dashboard
Wealth Technologies
53

We have a strong competitive advantage, with a
scalable platform for an industry ready for new solutions
• Fully integrated New Zealand tax
and sole wrap provider offering
KiwiSaver
• Solution flexibility caters to
different business models
• Technology allows agile
development
• Strong integrated reporting
functionality allows customisation
of look and feel for brand
consistency
• New Zealand opportunity is
significant: we enable capital
markets
NZX Wealth Technologies platform: valuation and performance history
Wealth Technologies
54

Funds under administration opportunity
• Strong pipeline in play:
–Pitching for: $32 billion
–Discussions underway:
$8 billion
• Core development work will be
driven by new customers
2019 pipeline of $40 billion paves way for 2023 target
0
10
20
30
40
50
60
2023 target
Active pipeline
2019 FUA
High scenario 2023Low scenario 20232019 Existing and pipeline
35
42
50
$billions
55

Wealth Technologies
55

“ Part of our longer term growth strategy is to provide a flexible, yet seamless online
experience for clients. Finding an Australasian based infrastructure provider with the
capability to tailor a solution for us was difficult. This was due to the broad range of
investment options we will continue to grow over time, coupled with the flexibility required
for our self-managed investment products, ‘out of the box’ solutions were not suitable. This
led us to partner with NZX Wealth Technologies.”
– Craigs Investment Partners, Head of Client Services, Stephen Jonas
What our customers are already saying about us ...
Wellington, New Zealand
Wealth Technologies
56

• Our platform allows wealth
managers to efficiently maintain
and report on their customers’
investment portfolios
• Our platform can be utilised in two
different ways:
–Custody and operations
services: we operate the
platform for our customers
–Technology services: our
customers operate the
platform, we support it
We have delivered a modern and scalable piece of
capital market’s infrastructure
NZX Wealth Technologies platform: order entry
Wealth Technologies
57

• 2019 FTEs: 36
• Staff costs account for
approximately 80% of total
operating costs
• Resources will be appropriately
managed
Growth aspirations: where we hope to be in 2023
1 Variables:
• Mix of custody and operations versus technology services
• Complexity and speed of on-boarding projects
• Mix of customer size will impact average revenue bps
CUSTODY &
OPERATIONS
TECHNOLOGY
SERVICE
TOTAL
RangeLowHighLowHighLowHigh
FUA target ($ billion)4631443550
Revenue
1

Standard bps range
dependant on
individual customer
FUM
5 bps – 25 bps1 bps – 15 bps1 bps – 25 bps
Wealth Technologies
58

Getting fit & reinvesting
for long-term growth
Chief Financial Officer
Graham Law
Mount Taranaki, New Zealand59
Getting fit & reinvesting

for long-term growth

59
Getting fit & reinvesting

for long-term growth

We have come a long way in the last two years
1
1 Mark Peterson Interim CEO, effective 1 January 2017
2 Finance Technology Partners (February 2019) EBITDA
Margins (median) information for regional/country
based exchanges
Note: divisional results (revenues, expenses and
operating margins) discussed in 2018 full year financial
results investor presentation (appendix one)
2016
$’000
2018
$’000
Revenue77,54467,493
Expenses
Personnel (net)29,85322,945
Information
technology
7,3037,357
Other17,8719,908
Total expenses55,02740,210
Operating
result
22,51727,283
• Non-core businesses divested
(2018), Ralec legal action
completed (2016)
• Now focused on improving
operating margin:
–Our exchange peers targeting
55% in 2019 (2020: 52%)
2
–Our 2023 aspirational target
is to be at or above our peers
operating margin
Operating margin
2016
20172018
Percentage
27
29
33
31
35
37
39
41
43
45
25
Operating margin (continuing and Smartshares operating model)
Total operating margin % (continuing and discontinued operations)

60
Getting fit & reinvesting

for long-term growth

To achieve our 2023 aspirations,
in 2018 we removed barriers to growth
PROJECTS TO REMOVE MARKET BLOCKAGES
TO DRIVE FUTURE REVENUE GROWTH INCLUDED:
• New trading and clearing fees
• Updated market structure and rule set
• Extended trading hours in derivatives market
• Mutualised default fund implemented
• SWIFT upgrade
• Australian point of presence established
• Participants portal established
• Market Announcement Platform enhancements
• Cyber security upgrades
Funded
by savings
(approx.
$700,000)
generated
from ...
• Consolidation of data
centres, racks and networks
• Modernisation and
consolidation of Internet
services and data circuits
• Introduction of shared
compute platform

61
Getting fit & reinvesting

for long-term growth

Our growth opportunities are driving value
Smartshares FUM

Macro drivers:
• ETFs penetration rate compared to US/
Europe
• KiwiSaver long-term growth profile
FUM growth at 14%:
• Net FUM inflow 2018: $292 million is
approximately 10% of FUM
• Portfolio mix long run average market
return is 5.4%
• Sales activities: new resources and focus
Wealth Technologies FUM

Scalable platform launched with highly skilled
operational team
• Inaugural client increased FUA by approx.
$1 billion
• Built strong capability and capacity to
execute new customer projects
• Created $40 billion FUA pipeline
Dairy Derivatives number
of lots
Expanding global access
• Enhancing scalability and access e.g.
extended trading hours
• Multalised default fund attracts new
international participants
2014
201520162017201820192020202120222023
High targetLow target
$billions
1
2
3
4
5
6
2014
201520162017201820192020202120222023
High targetLow target
$billions
10
20
30
40
50
60
2014
201520162017
2010
20112012201320182019202020212022
2023
High targetLow target
$billions
400
200
600
800
1,000
1,200
1,400
62
Getting fit & reinvesting

for long-term growth

62
Getting fit & reinvesting

for long-term growth

And their growth is inextricably linked to a strong core market,
which now has the right platform to succeed
Capital raised
• New processes for supporting
prospects
• Strong debt market
• Rules updated to facilitate growth in
wholesale debt and funds
• Capital Markets 2029 impact
not included
Value traded
(ex international crossings)
• Significantly improved
market access
• Strong participant pipeline
developed
• Participation is widening:
depository participant added
Data & Insights revenue
• Sales team in place
• Enhancing platform – data
management and dissemination of
data and insights to end users
• Building new products
• Vendor partnering to reach
end users
2012
2014
2013
201520162017201820192020202120222023
High targetLow target
$billions
5
10
15
20
25
2008
2012
2010
2014
2009
2013
2011
201520162017201820192020202120222023
High targetLow target
$billions
10
20
30
40
50
2016
2017201820192020202120222023
High targetLow target
$millions
5
10
15
63
Getting fit & reinvesting

for long-term growth

63
Getting fit & reinvesting

for long-term growth

Breakdown of 2018 cost base
• Total cost base (excluding fund
expenses, gross of capitalised
personnel and overheads costs) is
analysed in the opposite graph and
discussed on the following slides
• For core markets and corporate
services we aim to keep the cost
base static in 2019 (absorbing
inflation), with inflationary
increases factored into our
aspirational targets
• For our growth opportunities
(Smartshares and Wealth
Technologies) we will continue
to invest for growth in 2019
and beyond
Note: non-personnel costs include rent costs ($1.4 million),
which are subject to IFRS 16 Leases adjustment in 2019
We aim to keep core market costs static, while investing in our
growth opportunities
Other expenses Travel
Directors fees / external audit / insurance Rent / utilities and office supplies Marketing
Professional fees Information technology costs Personnel costs
64%
36%
17%
3%
5%
3%
1%
5%
2%
64
Getting fit & reinvesting

for long-term growth

64
Getting fit & reinvesting

for long-term growth

Cost drivers explained – people are our main investment
• Aspirational targets reflect inflationary increases from
2020 to 2023:
–Core Markets and Corporate Services FTEs remaining
static. Exception, derivatives sales team (1-2 FTEs to
be added)
–Smartshares and Wealth Technologies FTEs potentially
increasing dependant on service requirements of new
investors/customers reflected in FUM/FUA growth
ISSUER
RELATIONSHIPS
SECONDARY
MARKETS
DATA & INSIGHTSSMARTSHARESWEALTH
TECHNOLOGIES
TOTAL
FTES
Core
Markets
Issuer Relations:
5.0 FTEs
Markets:
3.0 FTEs
Data & Insights:
8.0 FTEs
29.8
Clearing House:
10.9 FTEs
Dairy
Derivatives:
2.9 FTEs
Regulation
Regulation (IC):
9.0 FTEs
Regulation (PC/
Surv.): 11.8 FTEs
20.8
Energy
Energy (incl. IT):
23.6 FTEs
23.6
Maximise
Options
Smartshares
(incl. IT):
44.5 FTEs
Wealth &
Technologies
(incl. IT):
33.7 FTEs
78.2
Sub total
37.628.68.044.533.7
1
152.4
Corporate
Services
Information Technology Development: 8.0 FTEs
61.7
Information Technology Securities Market
Technologies: 7.8 FTEs
Information Technology Operations: 16.0 FTEs
Project Management Office: 5.0 FTEs
Legal & Policy: 5.4 FTEs
Finance (9), Strategy (1), HR (3) & Communications & Marketing (3): 16.0 FTEs
CEO and admin (including office managers / reception): 3.5 FTEs
Total FTEs
Ż
214.1
2
200
210
220
230
240
250
201820172016
FTEs
1
Additionally there are 2.8 full time equivalent contractors
2
FTEs as at 31 December 2018

65
Getting fit & reinvesting

for long-term growth

Technology is required to run the
exchange. It has been rationalised
• Platform costs represent 50% of technology cost base
• IT costs recharged to market participants (27%) include systems
connectivity charges, with revenue recognised in the Secondary
Markets and Issuer Relationships (Energy)
• Costs expected to remain flat in 2019, with savings off set by
cyber security capabilities and inflationary increases
Professional fees driven by revenue,
regulatory obligations and contractual
requirements
• Regulatory obligations or contractual requirements (usually
assurance in nature), include the internal audit program, energy
audits contractually requirements (priced into revenue), Clearing
House annual operations audit, and conflicts annual audit
• Royalties and other costs relating to core markets revenue
include, audit fees 30% of royalty revenue, stock lending and
borrowing costs, and external data input costs for Data &
Insight reports
Cost drivers explained ...
Cyber security and communications services
Software and hardware support
Infrastructure
Other platforms (Energy, Wealth Technologies
and BU systems)
Trading and clearing platform
Costs recharged to participants
27%
28%
22%
9%
8%
6%
Royalties (and other costs directly related
to revenue)
22%
20%
48%
10%
Legal and tax advice
Internal audit and other audits / reviews
/ consulting
Other professional fees

66
Getting fit & reinvesting

for long-term growth

• Short term CAPEX driven by large
multi-year projects for Wealth
Technologies and trading system
• CAPEX for normal life cycle
IT equipment replacements
and software expected to be
comparable to prior years
• CAPEX beyond mid-2020 will
revert to lower levels reflecting
normal life cycle replacements for
IT equipment and software, plus
Wealth Technologies customisation
requirements
CAPEX explained, we will revert to lower levels in 2020
2006
1
2
3
4
5
6
7
8
9
PP&E
Energy
Other software
Smartshares
Trading systemClearing House
Wealth technologies
200720082009201020112012201320142015201620172018
$millions
67
Getting fit & reinvesting

for long-term growth

67
Getting fit & reinvesting

for long-term growth

Capital Structure successfully changed
to help ensure NZX has a balance sheet
risk profile appropriate for a business
critical to New Zealand’s capital markets
infrastructure
• Subordinated notes issued 20 June 2018 replacing
term loans
• Mutualised default fund implemented, October 2018
Dividend
• Policy is to pay between 80% to 110% of adjusted
Net Profit After Tax overtime, subject to maintaining a
prudent level of capital to meet regulatory requirements
• Excess capital arising on the disposal of non core
businesses was returned to shareholders as a
special dividend of 1.5 cents per share
Note: cash (and cash equivalents) include regulatory risk capital ($20.0 million) and working
capital requirements (Clearing House $3.0 million and Smartshares $2.5 million) which are
not available for general use
2018 saw us implement a revised capital structure
Mount Taranaki, New Zealand68
Getting fit & reinvesting

for long-term growth

68
Getting fit & reinvesting

for long-term growth

We released a series of targets at our full year 2018 result ...
Impact from Capital Markets 2029 has not yet been factored
into our core markets aspirational targets
EXTERNAL DEPENDENCIES2019 DELIVERABLESFIVE-YEAR ASPIRATIONAL TARGET RANGES (2023)**
LOWHIGH
NZX Group
Total shareholder return
(percentage)*
• Dependant on external factors
outlined below
TSR average of 9.29% p.a. to 11.29% p.a. by December 2022
Earnings per share*
• Dependant on external factors
outlined below
EPS average of 8% p.a. to 16% p.a. by December 2022
Operating earnings• See earnings guidance$28 – $31 million$42 million$54 million
Core Markets
Issuer
Relationships
Capital raised (total primary and
secondary capital issued or raised
for equity, funds and debt)
• Listing ecosystem dependent
on others
• No major market correction
$9.1 billion (average of two prior
years)
Three year rolling average:
$11 billion
Three year rolling average:
$12 billion
Secondary
Markets
Total value traded
• Participant activity levels drive
value traded
• No major market correction
$41.0 billion$42.5 billion$45.0 billion
Dairy derivatives lots traded
• Participant activity levels drive
lots traded
0.45 million lots0.85 million lots1.4 million lots
Data &
Insights
Revenue growth (in subscriptions,
licenses and dairy subscriptions
changing revenue mix)
• Dependent on core markets
growth
• License growth: 10%
• Dairy subscription product
growth: 24%
Three year rolling average
revenue growth: 2.0% p.a.
Three year rolling average
revenue growth: 4.2% p.a.
SmartsharesTotal FUM
• Investment market returns
impacts FUM (all asset classes)
• No major market correction
Continue three year rolling average
growth: 14%
2023 average
FUM: $5.0 billion
2023 average
FUM: $5.75 billion
Wealth
Technologies
Total FUA
• Investment market returns
impacts FUA (all asset classes)
• No major market correction
Prepare for new client phase two
migration and transition of current
clients
2023 average
FUA: $35 billion
2023 average
FUA: $50 billion
* Consistent with CEO long term incentive programme, see share based
payments note in 2018 financial statements for more information
** These are not financial forecasts

69
Getting fit & reinvesting

for long-term growth

Progress to date – progress against
aspirational metrics in Q1 2019
• Capital raised: $3.0 billion (primary and secondary):
above target
• Total value traded: $9.3 billion (cash market): below target
• Dairy derivative lots traded: 95,487: above target
• Data & Insights revenue: +8% (excludes indices, dairy
conference and one off license revenues): above target
• Total FUM: $3.2 billion: above target
• Total FUA: $2.0 billion: on target
Progress towards 2019 deliverables can be monitored by
monthly shareholder metrics
... and we are on the right track to achieve them
Earnings guidance remains unchanged
• NZX reaffirms that it expects full year 2019 EBITDA to be
in the range of $28.0 million to $31.0 million
• Expects 2019 expenses to be in the range of $37.0 million
to $38.0 million
Mount Taranaki, New Zealand70
Getting fit & reinvesting

for long-term growth

70
Getting fit & reinvesting

for long-term growth

Christchurch, New Zealand
Close
Chief Executive Officer
Mark Peterson
71

Close
71

The green shoots of success and optionality
we are witnessing are no accident
Deliver a truly vibrant
capital market
and improved
shareholder returns.
Overlay Capital
Markets 2029
outcomes
Deliver on
alliance strategy
Options being
maximised
Growth opportunities
progressed
Focus back on
Core Markets
Strategy
refresh
Removed barriers
to growth
T
A
N
G
I
B
L
E

G
R
O
W
T
H

I
S

H
A
P
P
E
N
I
N
G

B
E
C
A
U
S
E

O
F

W
O
R
K

O
V
E
R

T
H
E

L
A
S
T

T
W
O

Y
E
A
R
S
...
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72

NZX is now a changed business, with strong value proposition and
unique growth opportunities
Global growth NZX growth
Capital raising diversification e.g. SGX debt
contributes 20% of revenue
Retail debt issuance contributes 4.5% of revenue
Derivatives average contribution to revenue
is 29%
1
Derivatives still just 2.1% of total revenue, significant
growth to come
Data is driving growth, indices are a big part
of this e.g. ASX growth in information services
revenue is 9.3%
Refocused on driving data revenue up 8% in Q1
2019
2

Passive 20% CAGR over last decade in the US
market
Passive fund manager providing 21% share of total
revenue and more to come
Technology
Wealth Technologies providing green shoots for the
future with 70.2% growth in FUA last year
Sources: SGX annual report, ASX annual report, HKEX annual report, Bloomberg, NZX Shareholder Metrics 31 December 2018, NZX Data & Insights
1
Average of ASX, HKEX and SGX
2
Excludes indices, dairy conference, and of licence revenues
Traditional exchange
model
Traditional exchange
model
Adjacent opportunities
Growth opportunities
unique to NZX
Close
73

We look forward to continuing to update you
on our progress.
Our half year 2019 financial results will be
released on Tuesday 13 August.
74

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74