FSF’s ASX Delisting Raises Questions on Liquidity and Broker Readiness
Fonterra Shareholders' Fund has secured conditional approval to delist from the ASX, aiming to consolidate its trading on the NZX by late February 2025. This move is expected to streamline operations and reduce costs for unitholders.
- Conditional ASX approval granted for FSF delisting
- Delisting scheduled for 27 February 2025
- Trading to continue on NZX exclusively post-delisting
- Unitholders advised to sell ASX units before 25 February
- Delisting aims to improve liquidity and reduce compliance costs
Background and Rationale
Fonterra Shareholders' Fund (FSF) has announced it will delist from the Australian Securities Exchange (ASX) following conditional approval from the exchange. The decision to consolidate FSF's listing solely on the New Zealand Stock Exchange (NZX) reflects a strategic effort to enhance liquidity and reduce the administrative and compliance burdens associated with maintaining dual listings.
With the majority of FSF's unitholders based in New Zealand, the move is designed to better align trading venues with the investor base, potentially improving market efficiency and cost-effectiveness.
Delisting Process and Timeline
The ASX has stipulated several conditions for the delisting, including a mandatory unitholder communication and a minimum one-month notice period before removal from the official list. FSF plans to comply fully with these requirements, with the key dates outlined as follows:
- 15 January 2025: Unitholder communication dispatched and market update released
- 25 February 2025: Last day for trading FSF units on ASX before suspension at market close
- 27 February 2025: Official removal of FSF from ASX at market close
- 28 February 2025: FSF units begin trading exclusively on NZX
Unitholders wishing to trade on the ASX are advised to complete transactions by 25 February 2025. After this date, trading on the ASX will cease, and units will be automatically transferred to the NZX without any required action from investors.
Implications for Unitholders
Post-delisting, FSF units will only be tradable on the NZX or via off-market private transactions compliant with New Zealand law. Australian unitholders will need to engage brokers capable of trading on the NZX to facilitate sales. FSF has highlighted that setting up such arrangements may take several days, urging investors to plan accordingly.
For unitholders already holding units on the NZX, no changes will occur, and no action is necessary.
Strategic and Market Considerations
The delisting is expected to reduce FSF's financial and administrative costs, a benefit that could translate into improved returns or operational flexibility. By focusing on a single exchange, FSF may also enhance liquidity in its units, addressing one of the challenges often faced by securities with dual listings.
However, the transition requires careful coordination to ensure unitholders are fully informed and prepared for the change in trading venue, particularly Australian investors who may face additional brokerage arrangements.
Bottom Line?
FSF’s ASX exit marks a pivotal step toward streamlined operations, but unitholders must navigate the shift to NZX trading carefully.
Questions in the middle?
- How will the delisting affect FSF unit liquidity in the short term on the NZX?
- Are Australian brokers prepared to support seamless trading for FSF units post-delisting?
- Could this move signal a broader trend of dual-listed entities consolidating on home exchanges?
