National Stock Exchange of Australia (NSX) - Comprehensive Analysis Report

Summary

The National Stock Exchange of Australia (NSX) is a fully operational and regulated main board stock exchange, positioned as Australia's second stock exchange approved under the Corporations Act. Owned and operated by NSX Limited (ASX: NSX), its core mission is to provide a vital market platform for growing companies across diverse sectors and industries. NSX facilitates access to capital for equity, debt, and managed investment scheme securities, enabling these companies to raise further capital and offering a mechanism for share transferability. The exchange emphasizes empowering smaller enterprises through efficient market access, thereby contributing significantly to the diversification and dynamism of Australia's financial markets. It aims to offer a transparent, cost-efficient, and tailored capital-raising process that meets modern requirements.

1. Strategic Focus & Objectives

Core Objectives

The primary objectives of NSX are centered on supporting small-to-medium enterprises and emerging companies by:

Providing Access to Capital: Facilitating a market where growing companies can raise necessary funds.

Objective Market Valuation: Establishing an objective market value for listed companies.

Employee Commitment: Encouraging employee loyalty through opportunities for share ownership.

Enhanced Acquisition Capability: Increasing a company's ability to undertake acquisitions.

Profile and Status Enhancement: Boosting a company's profile and status with customers and suppliers.

Redefining Capital Process: Innovating capital raising to be more proximate, real-time, tailored, cost-efficient, and transparent.

Growth and Profitability: Increasing listing applications and strengthening the quality of its new business pipeline to achieve cash flow positive results.

Specialization Areas

NSX specializes in serving as an alternative market platform for small-to-medium enterprises and emerging companies seeking public exposure in Australia. This includes facilitating listings for a diverse range of entities across various sectors and industries. Its expertise lies in offering specialist capital markets for equity, debt, and managed investment scheme securities, complementing larger national exchanges. The exchange is designed to provide unique investment opportunities and enable portfolio diversification, particularly for companies valued from half a million to several billion dollars.

Target Markets

NSX primarily targets small-to-medium enterprises (SMEs) and emerging companies across all sectors and industries in Australia that are seeking public exposure and capital. This includes businesses looking for seed capital, expansion capital, or a platform for liquidity for existing shareholders. The exchange also caters to investors seeking diversified portfolios, including those interested in unique investment opportunities presented by growing companies.

2. Financial Overview

Funding History

NSX Limited's shares are traded on the Australian Securities Exchange (ASX: NSX).

In March and June 2024, the company raised $2.8 million (before costs) through an entitlement offer and placement.

The company holds two convertible loans with ISXFEU totaling $2.7 million.

In December 2022, a placement of shortfall shares from a September 2022 entitlement offer raised an additional $1.7 million in working capital.

Financial Performance (Selected Data)

Total Revenue (2025): $1,548,000 (including sales and other revenue).

Annual Revenue (FY ending June 30, 2025): AUD 2.06 million, representing 37.46% growth.

Half-year Revenue (FY ending June 30, 2025): AUD 825.38K, with 3.46% growth.

Financial Year Ended June 30, 2024: Revenues were down by 24% due to decreased application fees and a reduction in once-off revenue. Revenues from annual listing fees decreased by 15%, application fees by 26%, while revenue from subsequent quotation of securities fees increased by 24%. Expenses increased by 8%, primarily due to marketing, business development, IT, and occupancy costs.

3. Product Pipeline

Key Products/Services

Equity Listings: Providing a platform for companies to list their ordinary shares.

Corporate Debt Listings: Facilitating the listing and trading of corporate debt instruments.

Managed Investment Scheme Securities: Offering a market for units in managed investment schemes.

Electronic Trading Environment: An all-electronic trading system based on time and price priority.

Electronic Settlement: T+2 settlement of securities using ASX Settlement and Transfer Corporation's (ASTC) CHESS system.

NETS Trader Workstation: Proprietary terminal for traders.

Electronic Feeds: Services for users with their own terminals or for information vendors.

Flexible Listing Models: Including conventional standard market trading, closed markets for restricted investor groups, and trading windows.

Development Stage

NSX is actively strengthening its new business pipeline, evidenced by four new listings during the financial year ending June 30, 2023.

In the financial year post June 2024, NSXA has listed two issuers with a third in progress.

The company continues to engage with ASIC regarding changes to Market Integrity rules and the introduction of open-ended Exchange Traded Product rules, which could expand its product offerings.

4. Technology & Innovation

Technology Stack

Trading Platform: NASDAQ OMX X-stream trading platform.

Market Surveillance System: SMARTS Market Surveillance system.

Infrastructure: State-of-the-art market infrastructure ensuring an all-electronic trading environment.

Settlement System: Utilizes ASX Settlement and Transfer Corporation's (ASTC) CHESS for electronic T+2 settlement.

Proprietary Developments: NSX operates its own trader workstation terminal, NETS.

Technical Capabilities: Offers electronic feeds for external terminals and information vendors, emphasizing rapid, efficient, and transparent trade execution and settlement.

NSX is committed to continuous innovation, aiming to redefine the capital-raising process to meet modern demands for proximity, real-time engagement, tailorability, cost-efficiency, and transparency.

5. Leadership & Management

Executive Team

Mr. Timothy J. Hart: Non-Executive Chair.

Mr. Max Cunningham: Managing Director and Chief Executive Officer (appointed June 2024). He is currently conducting a strategic review of the company.

Mr. Tod McGrouther: Acting Managing Director (appointed March 15, 2022) and Non-Executive Director (appointed February 18, 2020). He holds a Bachelor of Law (First Class Honours and University Medal) from the University of Sydney and a Bachelor of Commerce (First Class Honours) and University Medal from the University of New South Wales, along with a Diploma of Finance Securities Institute of Australia. He has been active in the Australian corporate advisory industry and equity capital markets since 1986.

Mr. Tony (Weiguo) Shen: Director. Holds a Bachelor of Arts degree from the University of International Business and Economics (China). Formerly an Executive Director and controlling shareholder of SHKL Group Limited, and an Executive Director of KSTV (Hong Kong) Limited and Shanghai Kunlun Cultural Media Co., Limited. As of June 30, 2023, he held interests in 14,000,000 fully paid ordinary shares.

Recent Leadership Changes

Mr. Max Cunningham was appointed Managing Director and Chief Executive Officer in June 2024. This appointment has initiated a strategic review of the company's direction.

6. Talent and Growth Indicators

As of the fiscal year ending June 30, 2025, NSX Limited had 6 employees, with a revenue per employee of AUD 344.15K. The company faces a challenging global economic environment, particularly impacting Initial Public Offering (IPO) markets, leading to fewer applications than initially projected. Despite this, an increase in application fees in the financial year ending June 30, 2023, indicated a growing new business pipeline. NSX has successfully listed new issuers in the current financial year, demonstrating continued growth in its core business amidst a difficult capital-raising environment.

7. Social Media Presence and Engagement

NSX maintains a digital footprint primarily through its official website, nsx.com.au. This platform serves as a central hub for investor relations, providing access to annual reports, financial documents, and corporate information. The website is crucial for transparency and engagement with existing and prospective investors and listed companies.

8. Competitive Analysis

Major Competitors

NSX operates within the competitive Custody, Trustee, and Stock Exchange Services industry in Australia. Its key competitors include:

ASX Limited: The primary and larger incumbent stock exchange in Australia.

Computershare Limited: A global market leader in transfer agency and share registration, employee equity plans, proxy solicitation, and stakeholder communications.

American Express Australia Limited: A major financial services company.

Tyro Payments Limited: A fintech company specializing in EFTPOS and business banking solutions.

MasterCard Australia Holding Pty Ltd: A global payment technology company.

OFX Group Limited: A provider of online international money transfers.

EQT Holdings Limited: A trustee and wealth management company.

Nqxt Port Pty Ltd: (Contextually, likely another financial service provider).

Swyftx Pty Ltd: A cryptocurrency exchange.

ABN AMRO Clearing Sydney Pty Limited: A global clearing and execution firm.

NSX strategically positions itself as a distinct alternative market for small and emerging companies, differentiating its offerings from the larger, more established exchanges and financial service providers.

9. Market Analysis

Market Overview

The Australian stock market was valued at USD 72.9 million in 2024 and is projected to grow to USD 114.4 million by 2033, exhibiting a Compound Annual Growth Rate (CAGR) of 5.13% from 2025 to 2033. This robust growth trajectory is underpinned by strong economic fundamentals, increasing global demand for commodities, continuous technological innovation, significant superannuation funds, robust domestic investment, and expanding international trade relations.

Key market trends driving growth include digital transformation, advancements in data analytics, the rise of financial technology (fintech), and the increasing prominence of sustainable investing. Australia's stock market performance is intricately linked to its international trade relations, with major trading partners significantly influencing industry dynamics. Earnings for the broader Australian market are anticipated to increase by 13% per annum over the next few years, with the technology sector showing particularly strong prospects, analysts forecasting 22% annual earnings growth over the next five years. This favorable market environment presents significant opportunities for exchanges like NSX that cater to innovative and growing companies.

10. Strategic Partnerships

Ajlan & Bros Holding Group (ABM) (Kingdom of Saudi Arabia): NSX Limited has been engaged in a proposed joint venture with ABM to establish the Kingdom of Saudi Arabia Metal and Mining Exchange. A Term Sheet for this Joint Venture Agreement was signed on October 13, 2022. The core objective is to establish a second regulated exchange for trading financial products in Saudi Arabia. Progress has been slower than anticipated due to additional reviews by Saudi Arabia regarding market competition. NSXA anticipates receiving consulting fees for tasks related to the exchange establishment once completed.

CNSX Markets Inc. (CNSX) / Canadian Securities Exchange (CSE): On May 19, 2025, NSX Limited entered into a Scheme Implementation Deed (SID) with CNSX Markets Inc., the operator of the Canadian Securities Exchange (CSE), for the acquisition of all ordinary shares in NSX that CNSX does not already own. CNSX has been an investor in NSX since May 7, 2025. This acquisition, subject to shareholder and ASIC approval, aims to enhance Australia's market competitiveness and expand opportunities for companies seeking capital and investors seeking diversity. The acquisition is expected to provide NSX with financial strength, operational stability, and global expertise, enabling it to expand product offerings and enhance customer focus. Upon completion, NSX intends to apply to delist its securities from the ASX.

11. Operational Insights

NSX operates as a Tier 1 holder of an Australian Market Licensee, under the regulation of the Australian Securities and Investments Commission (ASIC) and accountable to the Federal Minister and Treasury. It offers a stock exchange facility for listing equity securities, corporate debt, and investment scheme units. The exchange differentiates itself by creating a specialized market for growing companies, particularly those valued from half a million to several billion dollars, thereby providing unique investment opportunities and aiding portfolio diversification for investors. NSX maintains a transparent listing process, actively partnering with its listed companies, and offering effective capital-raising solutions, with an average of $8.6 million raised per offer. Its technological foundation, leveraging NASDAQ OMX X-stream for trading and SMARTS Market Surveillance, provides a sophisticated and reliable trading platform. NSX also offers flexible listing models, including conventional standard market trading, closed markets for restricted investor groups, and trading windows, catering to diverse issuer needs.

12. Future Outlook

Strategic Roadmap

NSX's strategic roadmap is focused on several key initiatives to drive growth and enhance its market position:

Growth in Listings: Continued emphasis on increasing the number of listing applications and improving the quality of its new business pipeline to achieve cash flow positive results.

Financial Strengthening: Moving towards a stronger equity position by retiring convertible loans through forthcoming Annual General Meeting resolutions