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NZX compliance gets pass mark in third obligations review

NZX compliance gets pass mark in third obligations review

By Suze Metherell

June 30 (BusinessDesk) - The Financial Markets Authority's annual review has given NZX a pass mark for compliance with regulatory obligations and lists 11 moves the stock market operator will take to further improve transparency and operations.

The third annual general obligations review lists 11 actions NZX will take to improve conflict management and enforce compliance. The stock market operator has agreed to establish a conflicts committee, appoint independent members to the board's regulatory governance committee and expand the scope of the regulatory governance committee to include reviewing regulatory policy changes, boost visibility on regulatory matters, improve communications with complainants and review penalties for minor, unambiguous rule breaches.

The recommendations come after the regulator saw "evidence of growing public perception that NZX's regulatory decision-making may be vulnerable to undue influence from conflicts of interest," the report said. "A credible perception that NZX's regulatory decision-making could be influenced by NZX's commercial interests, or other affiliations of NZX, could undermine NZX's effectiveness as the market regulator and erode market confidence in the regulatory framework."

The FMA annually reviews the Wellington-based exchange's compliance with its obligations under the Securities Markets Act and the Authorised Futures Exchange notice. In part the general obligations centre around how the exchange manages the "innate conflict" between NZX's commercial and regulatory arm as the nation's only registered exchange and the front-line regulator for its markets, while also being a listed company on the market it operates.

NZX has also introduced a head of market supervision, splitting the current head of regulation rule in two to bolster its governance.


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