Annual oversight review of NZ Exchange Ltd
20 June 2008
Securities Commission publishes annual oversight review of New Zealand Exchange Limited
The Securities Commission’s third annual oversight review has found NZX’s performance as a registered exchange continues to be good.
“These annual reviews help to strengthen investor confidence in NZX’s performance of its regulatory role,” Commission Chairman Jane Diplock says.
The Commission’s overall conclusion is that NZX is satisfying its obligation to operate its markets in accordance with its conduct rules.
The Commission reviewed NZX’s performance of its regulatory functions as a registered exchange under the Securities Markets Act 1988 and focused on NZX’s arrangements in the 2007 calendar year for discharging its obligations.
The Commission reported on NZX’s performance under the following headings:
• NZX’s frontline regulation
• policies in respect of continuous disclosure
• impact of expanding commercial activities on NZX’s regulatory function
• the Special Division
• matters arising from the review of the 2006 year.
Among other things, the Commission found:
• attachments to announcements on the NZX website, particularly annual reports, should be disclosed on the website without having to be requested
• in one instance the Special Division exceeded the scope of its role under the Listing Rules
• NZX Discipline and NZX are currently working collaboratively on amendments to the NZX Discipline Rules. The Commission expects that the amended rules will be implemented by December 2008.
NZX, NZX Discipline and the Special Division have agreed to report to the Commission by 30 September 2008 in regard to matters arising from this review, and the Commission will publish such responses.
In conducting its review, the Commission followed the same procedures as it did in previous reviews, including:
• sending questionnaires to NZX, NZX Discipline and the Special Division
• requesting copies of any procedures manuals and process documents that evidenced NZX’s policies and procedures for each of the areas covered by the questionnaires
• selecting and reviewing a sample of NZX’s files across a range of regulatory activities
• conducting interviews with NZX personnel, Board members, the Chairman of NZX Discipline and the Chairman of the Special Division.
The Commission will continue to conduct an oversight review of NZX each year. The Commission considers annual reviews are valuable because they allow the Commission and the market to receive information about NZX’s performance as a regulator.
The Commission expects that future reviews of NZX will follow a similar format to the 2007 oversight review, in that they will focus on particular issues regarding NZX’s performance of its statutory functions.
The Commission’s findings recorded as a result of this review, the actions and responses to these findings by NZX, NZX Discipline and the Special Division, and relevant intervening matters, will be reviewed next year.
The commission’s report is published at www.seccom.govt.nz