Spindle encoder wiring check

Not sure if I understand it correctly. But would I need an encoder to my z axis?

I am saying that you can add extra hardware to supply an index pulse entirely separately from the existing encoder.

I have an index and 360ppr.
What do you recommend to use rigid tapping?
Sorry my knowledge about electronics is limited.

Can you re-state the current question? I have rather lost the thread here, even after reading back from the beginning.

I'm using the starter encoder that was installed on my lathe
This is a encoder with an index and 150ppr.
This should be enough for threading.

But I want to do rigid tapping.
So I will need a quadrature encoder.

The current encoder is connected with a toothed belt to the spindle.

This should work I guess?

A and B channel
And Z for Index
5-24V
www.aliexpress.com/item/Incremental-Rota...b04&rmStoreLevelAB=0