The stock exchange is worried tax changes could discourage direct investment and complicate the system.

The Tax Working Group appointed by the Government is considering a capital gains tax on share gains - but only for shares bought directly, and not indirect, managed funds, such as Kiwisaver.

NZX general counsel, Hamish McDonald, told Mike Hosking treating investors differently will create an uneven playing field.

He says this would essentially result in advantageous treatment for managed funds.

McDonald says it'll create distortions between the two and will make compliance an issue.

LISTEN ABOVE AS HAMISH MCDONALD SPEAKS WITH MIKE HOSKING