So... is this a good or bad investment.
Tough to know. First things first, it's not a price sensitive announcement to ISX. The reason? It's too small.
NSXNSX are a minnow. They are a competitor to ASX the same way that me lending $1000 to a mate is competition for CommBank. I don't think ASX are particularly concerned. Anyone linking ASX dropping 1% today to anything to do with NSX/ISX is far too biased. Hell, even NSX are listed on the ASX. I'm assuming they're also listed on the NSX, but I wouldn't know, because I've never heard of them before!
Direct InvestmentThis is reasonable. ISX has cashflow. NSX don't. If they can develop a payment system alongside NSX, it could be fine. Not sure why they needed to partner with NSX for this instead of doing it themselves- doesn't exactly give them clout - but whatever.
ISX have bought ~29m shares in NSX. NSX have doubled today. Now worth just under $6m. This isn't a cause for great excitement. If we estimate our company is worth $500m at present, a $2m gain that's hard to realise isn't exactly material.
Joint Venture and Settlement System
As an idea, I'm not sure yet. As with a lot of these tech ideas, it comes down to luck and skill. Hitting the market at the right time, getting people to sign on, and then turning that into more people signing on... A lot of luck. Will it work? Not sure. ISX haven't exactly invested their life savings though, so whatever. And in the meanwhile, it's a disruption-based fin tech idea. It seems to fit ISX's remit. So if they can build on existing facilities, great. May as well give it a shot.
Impact on suspension, and JK's holy war with ASX
This seems a little too convenient. JK has now bought himself a solid argument that he's in competition with the ASX. Will it help? Probably not. ASX already suspended them for regulatory issues. Can't just buy a stake in a teeny "competitor" and say "now you have to let us trade again!". ASX can show that it's completely unrelated given they suspended them about 5 months before the deal was announced.
Actually makes it a bit tougher for the ASX though - now any action they take will need to be absolutely above all argument, or it's seen as going too hard or too easy on a "competitor". Without any special knowledge, I'm guessing they'll probably call in ASIC to oversee, and make perfectly clear that there is no different treatment. This would actually make it harder to unfreeze, as we'd effectively have to convince ASX and ASIC.
In the end, it's a fairly small, immaterial investment that might or might not help JK in his crusade, and might or might not turn into anything at all. I'm calling it neutral.
