After a difficult few years, the National Stock Exchange of Australia (NSX) has much-needed momentum.

The small exchange is about to offer all NSX-listed securities on Paritech, an online trading and investment system, to boost the market's exposure in the broking community.

The NSX is also actively marketing to brokers and by mid-year will roll out a suite of investor relations services.

Big wins are needed. After a decade of hard work, Australia's second-largest capital-raising exchange is still largely unrecognised by brokers and the wider community, and ignored by the media.

Only a handful of the 116 NSX-listed securities have a market capitalisation above $50 million; most are valued at less than $5 million. Just 131 trades worth $3.9 million were made last month on the NSX.

Shares in NSX Limited, the exchange's owner and operator, have struggled: the five-year average annual total shareholder return is minus 17 per cent.

FEX Equity Markets made a successful takeover bid for NSX at 23.5 cents a share that concluded this month, giving it a 50.43 per cent stake.

FEX's parent company, Financial & Energy Exchange, also owns 50 per cent of SIM Venture Security Exchange (SIM VSE), a specialist Australian clean-tech exchange. NSX is the other main shareholder in SIM VSE.

NSX shares fell from 23 cents to 20 cents this month on low turnover.

The shares trade on the Australian Securities Exchange (ASX) because the NSX was reactivated under the Corporations Law in 2000, when the ASX was still responsible for supervision of trading on ASX's licensed financial markets.

Capitalised at just $20 million, NSX is an exchange minnow. But it has a potentially interesting market, given the obvious need for more equity capital-raising options for small companies.

Some micro-cap listed companies struggle with ASX listing rules that require a spread of 400 to 500 shareholders, each having at least $2000 of the main class of securities. Profit and/or asset tests also make it hard for some nano-cap companies to list on the ASX.
 
NSX chief executive Emlyn Scott, appointed in October 2011, has big plans. In his first speech to shareholders, Scott said: "Until now listing and trading have been joined at the hip. You listed on an exchange and it offered you a secondary market for your stock. Well, that is rapidly changing. Listing and secondary trading are becoming irreversibly split. And that is a huge opportunity for NSX.

"You no longer need to have the most liquid secondary market on your own exchange to offer a superior listing solution. The price of a stock benefits from maximum investor interest, which is, and will increasingly be, sourced from multiple transaction venues offering different trading services. Not the old one-size-fits-all solution."

Scott's strategy will work only if the NSX attracts substantially more companies. Most NSX-listed companies have a low profile and hardly any liquidity in their shares compared to companies listed on much larger exchanges in Australia and offshore.

Many micro-cap ASX-listed companies also have a low profile and liquidity, although nowhere near the scale of NSX-listed stocks.

The key is attracting more sharebroking firms who see opportunities to advise smaller companies on NSX listings.

A dearth of initial public offerings on the ASX, lower retail investor interest in this market, and less broking research of small-cap stocks generally may lead to emerging companies pursuing other capital-raising and listing options.

Tiny exploration companies that struggle to attract 400 shareholders and small private companies dealing with succession issues are obvious targets for the NSX.

The NSX's strategic partnership with Paritech will offer brokers direct online trading access for the first time and expose NSX listings and share prices to a wider broker audience.

The service is expected to go live in March or April. NSX will also encourage broking research on NSX-listed companies, and is buoyed by more interest from sharebroking firms.

The next key initiative is the rollout of investor relations services for NSX-listed companies to help lift their profile in the investment community.

The NSX's sister exchange, SIM VSE, has a similar investor relations strategy.

The clean-tech exchange had its first two listings late last year and expects to have 20 listed companies within 12 months. It believes a clean-tech specialisation, which may appeal to life sciences companies, will lift their profile and provide more capital-raising options from Asian investors.

Both exchanges have huge work ahead to attract companies and investors.

The combined market capitalisation of all companies on both exchanges would barely equal one ASX-listed top 100 company.

Yet for all the challenges, a significant problem and opportunity remains: too many Australian companies list well before they should and suffer from a low profile on large exchanges.