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

1.45pm 2.10pm 3.05pm 3.20pm 4.05pm 4.40pm NEW ZEALAND’S REFOCUS CORE BREAK GROW MAXIMISE GET FIT EXCHANGE OPPORTUNITIES OPTIONS

MARK PETERSON JOANNA LAWN KATHRYN JAGGARD AARON JENKINS MARK PETERSON Chief Executive Officer Head of Issuer Relationships Executive Consultant Head of Funds Management Chief Executive Officer

BENJAMIN PHILLIPS LISA BROCK Head of Markets Development & Clearing Head of Wealth Technologies

JEREMY ANDERSON Head of Data & Insights

3 New Zealand’s sense of self, our national identity, is shaped by a sense of inclusiveness, and by our desire to play a part. We are The markets NZX run, and the wealth and growth we all help to generate New are integral to New Zealanders’ prosperity, and New Zealand Zealand’s companies getting ahead.

We are all generating opportunities Exchange for a country we are all proud to call our own.

4 A strongly performing NZX contributes significant value to New Zealand

52.4million 24.6billion NZX’s direct GDP contribution GDP contribution of S&P/NZX 50 companies

12.5percent 61.9billion Increase in NZX’s direct GDP contribution Combined revenue of S&P/NZX 50 companies % since 2014 33,800 Jobs in closely related financial sector 96,300 Employees across S&P/NZX 50 companies

5 Source: NZIER ! Each of us have views on the opportunities and challenges for New Zealand.

! The common theme is that we all want our capital markets We all to continue to grow and be play a successful. ! NZX, as the exchange operator, role in is passionate about working with our customers and stakeholders this towards making that happen. market 6 The process so far

Your inputs ! Gained first hand understanding of solutions needed to grow our market ! More than 200 stakeholder interviews

Internal analysis Rigorous review by Five year ! Historical financials review Board and Leadership ! Business by business review strategic plan ! Capital structure review

Global analysis ! Of peers, markets and key trends, including potential disruptors

7 This process resulted in a ! NZX and New Zealand interlinked

! No business without core market RESET > 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

8 When we stood back – our future strategy was clear

New Zealand’s Exchange

Refocus core Grow opportunities Maximise options Get fit

9 Refocus our core market: issuance, secondary, data

Before … … Now

! Inward ! Outward

! Compliance ! Customers

! Order taking ! Selling

! Harvest ! Add value

! Siloed ! Functional

10 Grow opportunities aligned to New Zealand

Continue building a vibrant listed Debt debt market

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

Environment Collaborate and grow environmental and Energy and energy markets

11 Maximise options that will pay off

12 Create fitness – we’re too small to be fat

Simplicity and clarity Relentlessness and execution Efficiency and effectiveness

13 We’re already delivering

Organisation wide engagement (board, Structure and We haven’t been sitting executive team, compensation aligned to on our hands management, staff) strategy

Completed projects Created clarity New team

14 Organising principle: start from the customer

Participants Issuers and Intermediaries End users Institutions

Issuer Relationships Secondary Markets

Wealth SuperLife Data and Insights Technologies and Smartshares

Policy and Regulation

Corporate Centre (Finance, Technology, Human Resources, Communications, Strategy)

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

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

1717 Create a compelling and attractive proposition for our issuing customers

Oceania Healthcare Chief Executive Officer Earl Gasparich at the company's listing event in May 2017. Joanna Lawn, Head of Issuer Relationships

CREDIT: Jerry Yelich O’Connor 18 from National Business Review Strong foundations: S&P/NZX 50 outperforms Index has recently outperformed against main international markets

S&P/NZX 50 Index performance compared to global indices 100 = 3 January 2011 300

250 S&P/NZX 50 Index (Gross)

S&P/NZX 50 Index (Capital) 200 S&P/ASX 200 Index

S&P 500 Index 150 FTSE 100

Hang Seng 100

50

0 2011 2012 2013 2014 2015 2016 2017

19 Source: NZX Data, iRESS Strong foundations: market growth outperforms GDP

NZX listed issuance as a percentage of GDP NZX listed issuance market capitalisation and GDP

$300bn 70%

53% 56% 60% $250bn

48% 9% 10% 44% 50% $200bn 42% 6% 4% 4% 39% 6% 37% 4% 6% 40% 3% 8% 4% $150bn 7% 3% 30% 3%

$100bn 20% NZX total Market Capitalisation ($bn) Market Capitalisation / GDP % $50bn 10%

29% 26% 32% 35% 38% 42% 42% $bn 0% 2011 2012 2013 2014 2015 2016 2017 YTD 2011 2012 2013 2014 2015 2016

Equity Funds Debt GDP Annual ($bn) Market Cap ($bn) % Mkt Cap/GDP (RHS)

Source: NZX Data, RBNZ 20 Multiple opportunities to grow issuance: equity, debt and funds

$12bn 18 37 9 16 14 4 4 7 3 9 17 6 8 1 Number 2 of equity listings $10bn

$8bn

$6bn

$4bn

$2bn New capital listed $bn 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 YTD

Equity Funds Debt Equity IPOs

Source: NZX Data 21 We have a great story to tell, we should share it more

8,146 7.8billion S&P/NZX 50 index hit record high Sovereign fund allocation into in October 2017 New Zealand investments

12.6 300billion % KiwiSaver CAGR growth since inception Estimated KiwiSaver by 2037

2.7billion 16 Debt issuance in 2017 Debt instrument CAGR % increase, 2015 to 2017 22 Source: NZX Data; NZIER: RBNZ: USB NZ Equity Strategy Report, October 2017; ACC; New Zealand Superannuation Fund ACT

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

Deeper Enhance equity liquidity research

23 LEAD Establish an enhanced customer ! Build a customer focused team ! Align sales resources to create dedicated team engagement for existing and prospective customers programme ! 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 ! Simplified rules and structure ! NZX Main Board Listing Rule review facilitation underway – phase one on review scope framework 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 ! Improved retention of existing issuers ! Accelerated growth in debt market, outcomes creation of a platform for global expansion for the market ! Deep awareness of the benefits of listing ! Listings maximised throughout the economic cycle

27 Go forward plan: Issuer relationships

2018 plan Five year plan

! Align the customer elements of the NZX Customer ! Focus the dedicated sales team on existing and ! Enhance and refine engagement prospective customers ! Enhance debt and funds knowledge

! Implement revised listing rules and facilitation tools ! Develop fit for purpose funds offering ! Focus on broader issuance ecosystem Framework ! Market to grow awareness (domestic, international efficiency and effectiveness and co-marketing)

! Extend debt products (wholesale, foreign Product suite ! and green bonds) ! Optimise product / market footprint ! Foreign exempt/dual listings

28 Drive secondary market development

Benjamin Phillips, Head of Markets Development & Clearing 292929 Liquidity facilitates issuance; issuance facilitates liquidity

Primary Engage and sell to grow issuance

Secondary Grow liquidity through market development

30 We have a great story to tell, we should share it more

17% 2nd S&P/NZX 50 Gross Index YTD return Second highest P/E ratio in Asia Pacific

79% YOY Leading Most liquid global dairy derivatives market World leading energy market

146 CAGR billion Debt Market Capitalisation 2015 – 2017 $13.5 % Single platform, multi-currency, multi-asset class clearing capability Source: NZX Data; World Federation of Exchanges 31 Opportunity to market the market at many levels

Co-marketing with Participants To and with customers Cross-sell/upsell

New flow

To offshore end users New Participants

Partnerships (e.g. offshore exchanges)

Government

To and with industry Trade delegations stakeholders Bilateral/multilateral relationship

32 Grow Participant Collaborate numbers Grow to build and investor grow equity participation derivatives

Grow Optimise equity pricing linked Action on multiple models products Liquidity fronts required to

Deepen Broaden develop the market stock suite of lending trading pool tools

Drive Develop customer efficient efficiencies regulation in clearing

33 Multiple opportunities to drive Grow wider participation Participant numbers Collaborate Grow to build and investor grow equity participation From a single sales proposition derivatives to a multiple market opportunity …

Debt Market Grow Optimise equity pricing linked Energy and Environmental Markets models products Liquidity Clearing and Depository

Equity Derivatives Deepen Broaden stock suite of lending trading Equity Market pool tools

Drive Dairy Derivatives Market Develop customer efficient efficiencies regulation in clearing

34 Optimise pricing models to facilitate liquidity Grow Participant Collaborate numbers Grow to build and ! Optimise NZX price architecture investor grow equity participation derivatives ! Trial currently operating to facilitate new electronic flow

! Average daily on-market value up 11%, Grow of which 8.9% was from trial clients equity Optimise linked pricing ! On-market trade volume up 25.4% products Liquidity models ! Review broader cost landscape of participation and seek opportunities to rationalise Deepen Broaden stock suite of lending trading pool tools

Drive Develop customer efficient efficiencies regulation in clearing

Source: NZX Data 35 We have already made progress towards improving liquidity

2010-2017 CAGR Total cash market trading $42.0 billion

37% 42% 19.4% $21.6 billion On-market 20% 63% 58% 5.1% Off-market 80%

2010 2016 2017

Source: NZX Data (annualised) 36 Broaden the suite of trading tools that customers require Grow Participant Collaborate numbers Grow to build and ! Implement known requirements and investor grow equity participation work with industry to facilitate (e.g. derivatives calendar spreads; operating hours)

! Consult with market Participants and Grow stakeholders on new tools and order Optimise equity pricing types linked models products ! Opportunity to leverage upcoming Liquidity system upgrade – consultation and stakeholder engagement to begin shortly Deepen Broaden stock suite of lending trading pool tools Drive Develop customer efficient efficiencies regulation in clearing

37 Develop efficient regulation that drives growth and continues to ensure Grow Participant Collaborate numbers market integrity Grow to build and investor grow equity participation ! Facilitate access – e.g. streamlined derivatives onboarding program supported by templates and tools Grow ! Optimise Continue to streamline compliance – equity pricing e.g. remove surplus requirements linked models products ! Seek to reduce total system cost for Liquidity Participants

! Engage industry in consideration of rule Deepen Broaden settings which facilitate transparency and stock suite of price discovery lending trading pool tools

Drive customer Develop efficiencies efficient in clearing regulation

38 Drive efficiencies for customers in post trade clearing and deepen stock lending pool Grow Participant Collaborate numbers Grow to build and ! Seek to remove cost and reduce investor grow equity participation operating complexity by extending NZX derivatives Clearing services (2 systems to 1)

! Collaborate with the market to Grow strengthen market enablers such as Optimise equity pricing stock lending linked models products ! Ensure cost savings and operational Liquidity efficiencies e.g., automation to deliver straight-through processing Deepen Broaden stock suite of lending trading pool tools

Drive Develop customer efficient efficiencies regulation in clearing

39 Collaborate with the market to develop related products to drive growth Grow Collaborate Participant numbers to build and Grow ! Develop and promote equity-linked grow equity investor products that drive liquidity derivatives participation

! Engage with equity market Participants and investors to develop a vibrant equity Grow derivatives market equity Optimise pricing linked models products Liquidity

Deepen Broaden stock suite of lending trading pool tools

Drive Develop customer efficient efficiencies regulation in clearing

40 Go forward plan: Secondary market

2018 plan Five year plan

! Collaborate with Participants and stakeholders to market Marketing ! Build out the market the market

! Seek licensing, equivalence and partnering ! Target Participants with multiple footprint Participation in international jurisdictions

! Widen the pricing/Participation trials ! Periodically review pricing Pricing ! Optimise NZX price architecture ! Engage on wider participant cost landscape

! Build out Dairy Derivatives ! Upgrade trading system Tools and ! Engage with market for input on trading tools and system ! Review tools and functionality Functionality upgrade ! Extend points of presence in other jurisdictions

! Streamline compliance, reduce total system cost Efficient ! Refine regulation ! Engage industry in consideration of rule settings

! Drive cost reduction and efficiencies of scale ! Continue to enhance and develop Post trade ! Enact stock lending and default fund in line with customer needs

41 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 Data analytics is a major opportunity

13% CAGR 90% Growth Global exchange sector data revenue Dairy derivatives data terminals, 2017 growth, 2010 – 2015

~10 billion 600,000 Global exchange groups Global data terminal clients data revenues, 2016

Source: NZX Data; Caproasia online; McKinsey Capital Markets Infrastructure Report: An Industry Reinventing Itself; Burton-Taylor International Consulting 44 Four areas for opportunity in data and insights

What we have… …how we can build

Opportunities to compare, Internal Massive data asset benchmark, upsell and cross-sell 1 (leveraging issuance engagement)

Established model with existing Widen reach to existing and B2B 2 distributors new outlets (leverage secondary) 3 End user Strong insight pedigree and brand Develop products and commoditise

Re-platformed, centralised data Mass customisation, self service Direct distribution capability 4 warehouse underway and transacting capability

45 Internal: opportunity to compare, benchmark, 1 cross-sell and upsell, leveraging issuance engagement

Issuer A Issuer B In place Missing Listing fees

Securities data

Derivatives data

AgriHQ data Cross-sell opportunity Dairy Derivatives fees

Illustrative 46 B2B coverage: China example 2

Terminals distributing NZX data per $trillion GDP

! China poorly covered by 105 existing business to business channel partners ! Opportunity to partner for 67 coverage and other business lines (e.g. dairy) 45

1 Approx. 1,350 terminals needed for China to reach USA UK USA Japan China coverage rate

Source: IMF World Economic Outlook (April 2017); Caproasia Online; Bloomberg; NZX Data 47 Opportunity to productise 3 end user capability: Dairy example

Capabilities we have Natural extension

! Comprehensive global supply ! Local supply Sourcing the data and demand ! Global demand ! Stock levels/reserves Example price research agencies ! Automated processing and Processing and ! Bespoke reports transacting ! Argus; Platts; OPIS: analysis ! Manual processing ! Analyst talent focused on oil and gas; energy value-add and feedstock ! Informa IEG: ! Limited local milk ! Global price reference Price referencing primary; livestock price prediction ! Validation and benchmarking supply and demand and import/export ! Limited prior to Global ! Continuous, real-time Forecasting DairyTrade auctions ! Across all commodities

48 We have invested in centralised data assets 4 – processing and transacting opportunity

In place Initial data sets Progressed

Automated product Work to do Missing Operational reporting

Visualisation This enables self service, real time Integrated platform manipulation and report generation as well as Transacting automated periodic reporting

49 Go forward plan: Data and insight

2018 plan Five year plan

! Develop internal data products that enable sales ! Support core growth with data and insight Internal ! Enact CRM system and processes

! Extend reach through co-marketing campaigns B2B to grow penetration ! Extend ! Partner for market access

! Drive data insights that match customer demand ! Upsell/cross-sell End user ! and grow market ! Align insights with all growth opportunities ! Scope requirements for dairy PRA ! Piggy-back dairy growth with a PRA

! Complete and bed in centralisation ! Automate analytics for self-service Capability ! Deliver basic transactional capability ! Build out channel capability

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

51 ! Continue building a vibrant listed debt Our success is linked to market New Zealand’s success. ! Accelerate our dairy derivatives market to scale, support New Zealand’s position as a Grow opportunities global leader aligned to the New ! Collaborate and grow environmental and energy markets Zealand advantage – our debt, dairy, environmental and energy markets

52 Continue building a ! Customer engagement programme vibrant listed debt ! Specific rules to facilitate debt issuance market ! Extend debt product suite

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

54 95% revenue 74% volume 53% year on CAGR 2012 CAGR 2011 year growth in to 2017* to 2017* active traders

Successful Six of top 10 Largest dairy domestic, Our dairy global dairy derivatives global product companies market for extensions connected to globally traded journey since market our market product so far launch

Source: NZX Data; Rabobank. 55 * Based on forecast 2017 revenue and volume Derivatives markets take time to develop

Euronext 1,200,000 Milling Wheat Chicago Board of Trade: Grain 152 years Futures now trade approximately Intercontinental Exchange: Coffee 59 years 1,000,000 NZX dairy 9 million lots 37 years 310,000 lots annually Bursa Malaysia Crude: Palm Oil (forecast) 800,000 Euronext: Milling Wheat 21 years d e d

a Bursa Malaysia r 600,000 NZX: Dairy Derivatives 7 years t

s Crude Palm Oil t

o Futures now L trade 400,000 approximately 12 million lots annually

200,000

We are punching 0 1 2 3 4 5 6 7 8 9 10 11 above our weight. Years since launch

56 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 Comparables point to sustained consistent high growth potential Growth driven by inflection points driven either by volatility or market structure changes

12 Bursa Malaysia 13.9% Crude Palm Oil Futures 10 Euronext Milling s t 8 Wheat Futures o l f

o 22.2% s

n 6 o i l l i 9.63% M 4 34.5%

2 70.1% 0 2001 2006 2011 2016

48.2%

57 Source: Euronext; Bursa Malaysia Rapid growth towards significant end game

5x the world’s Hypothetical growth scenario: physical trade growth in the next five years 5x continues at 50% rate which is a New Zealand mid-point between Bursa Malaysia and European physical trade and Euronext peak five year 5x New Zealand ~43 million growth CAGR physical trade

1x New Zealand physical trade ~2828 million

~14 million

2.25 million*

1.5 million Lots traded 1.01 million per annum 0.67 million 0.45 million 0.2 million 0.3 million

"#$%&' "#$%&( "#$%&) "#$%&* "#$%$% "#$%$& "#$%$$

Source: Euronext; Bursa Malaysia; NZX Data; AgirHQ 58 * Excluding cheese and whey Volatility

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

59 Executing on our initiatives will accelerate us to scale

From… Volatility ! 14 hour trading window Expand Industry global ! Limited trading functionality Support access ! 5 global clearing Participants ! 1 global software vendor To… Robust Bolster settlement Liquidity sales and ! 20 hour trading window to capture Asia mechanism marketing and Europe ! Trading functionality to facilitate entry of liquidity providers (calendar spreads delivery March 2018) Large Extend physical product ! Access channels expanded through market set adding software vendors, general Capital clearing participants efficiency

60 Executing on our initiatives will accelerate us to scale

From… Volatility

! Excellent capability, customer Expand Industry engagement through derivatives and global Support access data, but limited presence in Asia and Europe ! Deep, but fragmented data offering Robust Bolster sales ! Limited online offering settlement Liquidity and mechanism To… marketing ! More feet on the street, grow awareness, boost sales particularly in Asia Large Extend physical product ! Deep, centralised data offering market set Capital ! Transform online offering efficiency

61 Executing on our initiatives will accelerate us to scale

From… Volatility

! Broad range of oceanic products Expand Industry global ! Successful launch of NZ Milk Price Support access Futures and Options ! Skim Milk Powder Options to launch in December Robust Bolster To… settlement Liquidity sales and mechanism marketing ! Continue to innovate and launch oceanic linked derivatives contracts

! Understand further global opportunities Large Extend physical product market set Capital efficiency

62 Executing on our initiatives will accelerate us to scale

From… Volatility

! Robust clearing, risk management Expand Industry infrastructure global Support access ! Well managed capital consumption To…

! Enhance capital efficiency to support Robust Bolster growth settlement Liquidity sales and mechanism marketing ! Consultation on mutualised default fund underway

Large Extend physical product market set Capital efficiency

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

64 Collaborate and grow environmental and energy markets

Environmental Carbon Energy finance Market Market 65 Long-term opportunity in environmental markets

! Government policy aligned Significant funding required to global trajectory to meet infrastructure ! Shifting investor sentiment investment. Green bonds will Environmental play a major role. around climate risk finance New Zealand context

! Paris agreement (first all-country agreement) Will be vital to meet net zero ! UN Sustainable Development Goals carbon goals by 2050. (New Zealand is signatory) Carbon Global context ! Shifting investor sentiment around Market climate risk

66 We will grow the green bond market

Environmental finance

How NZX can accelerate growth Already taking steps

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

67 NZX well positioned to explore ar on Market opportunities in Carbon Markets

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

68 Opportunity to create efficiencies in the Energy Market

Supporting market development key to growth Percentage of financial contract volume to annual ~ 635% demand, 2014

! Develop trading and capital efficiencies (collateral offsets between futures and spot) ~ 325% ! Transition from a hedging market to a trading market through expansion of ~ 100% financial trading

New Zealand Australia Germany, Austria and Luxembourg

New Zealand lags peers in development of energy financial markets

Source: Electricity Authority; AER; Economic Consulting Associates 69 Collaborate and grow: the environmental and energy opportunity

Environment Energy

Environmental Car on Energy finance Market Market

! Green bond issuance ! Auctions ! Spot Nature of the ! Secondary market ! Spot ! OTC market ! ETFs ! Futures ! Derivatives

Relative size ! Large (nascent) ! Large (uncertain) ! Medium of the market

Our opportunity ! Facilitate rapid growth ! Collaborate and position ! Centralise and create NZX efficiencies

70 Go forward plan: Growth opportunities

2018 plan Five year plan

! Market to attract foreign investors and issuers Continue to ! Create adjacent investable products e.g. ! Leverage listing rules review to facilitate debt listings ETFs, indices etc.) build a vibrant ! Extend debt products (wholesale, foreign and green ! Grow secondary market transparency debt market bonds)

! Drive for clearing partner/software vendor ! Extend trading hours, add clearing partners and scale Grow dairy extend functionality ! Lead growth with market/demand ! Add feet on the street, transform website, build out to scale coverage data and reports ! Extend products to cover global demand

Collaborate ! Foster green bond growth to grow ! Engage with stakeholders to create a liquid, efficient and transparent carbon market ! Build out environmental and ! Establish the value of combining electricity wholesale energy markets spot with other exchange traded products

71 Maximising options

Aaron Jenkins, Head of Funds Management Lisa Brock, Head of Wealth Technologies

72 Aaron Jenkins, Head of Funds Management 73 An unmet need amongst New Zealand investors

Investors covered by ~200,000 some form of financial advice

~3.5 million New Zealanders of age to invest

New Zealanders missing out; NZX is a trusted brand that low participation in our markets can enable New Zealanders

Source: Financial Markets Authority; Statistics New Zealand 74 * Population above 15 years of age NZX met that need by launching and growing New Zealand’s ETF suite

NZX ETF funds NZX ETF funds Number of funds Funds Under Management

+460% 23 +540% ~$2.0 billion

5 ~370 million

2014 2017 2014 2017 Growth enabled largely by SuperLife acquisition

Source: Smartshares Limited 75 ETFs available through direct and indirect channels

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

76 Attracting new end users to the market

Smartshares ETFs total unitholders

22,000 Direct unitholders 20,000 up 78% over last Online three years 18,000 applications launch Latest ETF 16,000 launch 50% of applications getting a CSN for 14,000 the first time 12,000

10,000 Investment from adviser groups up 8,000 21% YoY

Source: Smartshares Limited 77 ETF building blocks enabling a new suite of Fintech entrepreneurs

! Millennial, up and coming investors unsure where to start ! Typically small investment contributions

! DIY investors, unadvised ! Using combination of managers and passive/active ! Comfortable selecting from large investment pools

78 This growth is driven by powerful demographic shifts

Home ownership declining among younger Very strong growth in awareness and acquisition population Smartshares unitholder applications Home ownership among 20 to 39 year olds thousands

368,000 –27%

270,000 ~233% CAGR

2001 2013 2014 2015 2016 2017 Growing demographic with available Reflected in rapidly growing uptake (if relatively modest) investment funds

Source: Statistics NZ; Smartshares Limited 79 We have grown SuperLife ahead of the market

SuperLife KiwiSaver SuperLife Superannuation Funds Under Management ($ millions) Funds Under Management ($ millions)

11% CAGR 1180 1019 871 899 25% CAGR 697 588 434 361

Sep-14! Sep-15! Sep-16! Sep-17! Sep-14! Sep-15! Sep-16! Sep-17!

1.4% 1.4% 1.6% 1.6% 3.5% 3.7% 3.9% 4.5%

Growing share of industry Funds Under Management Source: Smartshares Limited; RBNZ 80 SuperLife benefits from the KiwiSaver ‘escalator’

Allocation of KiwiSaver funds NZ$ billion

45 Potential growth to $300 billion 40 FUM next 20 years

35

30

25 At ~15% Funds Under

20 Management CAGR, the holding cost of the business not onerous 15

10

5 Continues to power up the 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 critically important ETF construct New Zealand equities New Zealand debt and other Foreign equities Foreign debt and other

Source: RBNZ; UBS NZ Equity Strategy October 2017 81 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

82 Source: Financial Markets Authority Go forward plan: Smartshares and SuperLife

2018 plan Beyond

Grow ! Build out distribution partners ! Grow scale Smartshares ! Continue a customer experience ! Share the benefits ETF end users ! Continue marketing/PR ! Cement low-cost passive leadership

Cross-sell and ! Bolster experience e.g. investment tools innovatively ! Ride the growth escalator ! Grow profile e.g. PR ! Participate in industry rationalisation market ! Open up third party distribution KiwiSaver

Target corporate ! Target schemes unable to replicate SuperLife offering superannuation ! Educate employers on differentiator to ! Consolidate with cross-sell ! Cross-sell to issuer base

83 NZX Wealth Technologies

Lisa Brock, Head of Wealth Technologies 84 Objective: deliver a financial services platform that supports and empowers the wealth management industry

Where does What we have Where we are at it take us

Learnings from Focus on the build to date delivery outcomes Deep industry understanding Relatively high barriers to Opportunity competitive entry to build pipeline Strong team with operational experience Supporting foundation customer (Craigs Investment Partners). Broaden reach Hobson Wealth paused project due to a competing priority

85 The potential opportunity

Unknown value potentially significant $54 billion opportunity Funds Under Administration

$2 billion Funds Under Administration

2018 2018 to 2021 2021 +

Pool opens up when Future pool Confirmed pool ! Reference site is live ! Innovation ! Broker capability ! White label extension complete ! Direct

86 Project progress

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

87 Go forward plan: Wealth Technologies

2018 plan Five year plan

! Complete development for foundation clients Go live with ! Continual improvement ! Complete history migration ! Regulatory changes platform ! Operational readiness, UAT and migration

! Craigs Investment Partners go live Q2 2018 ! Old platform clients transitioned ! Extend pipeline New clients ! Another small adviser on-boarded ! Target medium large adviser groups ! A large adviser group signed on and project ! Target Broker trading models commenced

Extend ! Complete development for broker trading ! Extend capability for the new innovative capability to functionality business models widen offering

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

89 Earning the Remove wastage right to grow through Creating a Fund Lift lean and growth efficiency disciplined fit NZX management

Create of costs and clarity and clarity of vision alignment

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

Create clarity and alignment

91 Earning the right to grow through disciplined management of costs and clarity of vision. Remove wastage

! Simplified business ! Redeployed resources to high value areas, increased delivery speed Creating a ! Fund Lift Now streamlining and automating lean and growth core processes to free additional fit NZX efficiency resource ! Consolidating support systems to reduce costs, increase delivery speed Create clarity and alignment

92 Earning the right to grow through disciplined management of costs and clarity of vision. Remove wastage

! Clear strategy has enabled improved delivery ! Organising principles now start from Creating a customers Fund Lift lean and ! Programme office created growth fit NZX efficiency ! Remuneration structure aligned to delivery ! Cross-leveraging resources to enable efficiencies Create clarity and alignment

93 Earning the right to grow through disciplined management of costs and clarity of vision. Remove wastage

! Disciplined capital management – no expenditure bubble associated with strategy execution

! Major lifecycle investment into Creating a Fund Lift clearing and energy systems on track lean and efficiency for 2018 completion growth fit NZX ! Growth initiatives will leverage existing capability ! Clearing House mutualised default fund consultation designed to Create advance NZX’s Derivatives Market clarity and ! Capital Review well underway. Board alignment expected to update the market at Full Year 2017 results

94 New Zealand’s Exchange

Refocus core

Grow opportunities

Maximise options

Get fit

Summary

Summary

95 It struck us that our strategic direction was naturally grounded in a purpose that extended beyond our own business

New Zealand’s Exchange

Refocus core Grow opportunities Maximise options Get fit

Act with greater purpose

Promoting overall market Putting our customers at the Driving economic, social and Driving greater returns for our growth based on principles of heart of everything we do environmental sustainability for shareholders open access and equivalence our nation

96 Wide range of value creation potential and a diversified risk profile

Wide range of potential outcomes driven by a diverse opportunity set

Refocus Grow Maximise Get fit core opportunities options

Diversified Market Execution Market Execution risk profile Structural Competitive Execution

97 Source: NZX Data Culture change required to deliver

From……to

Orientation Inward Outward

Sales Order-taking Selling, facilitation

Market coverage Organic Deliberate

Portfolio Silos Cross-leverage

Local/BAU-level Global/portfolio-level Resource allocation optimisation optimisation

98 We are on a journey

In place Strategic clarity Progressed, work to do 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 Joint leadership Broader industry alignment challenge

99 New Zealand’s Exchange

Refocus core

Grow opportunities

Maximise options

Get fit

Summary

Questions

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

103 Meet the team

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

104 Meet the team

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

105 Meet the team

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

106