FMA report on NZX General Obligations Review

News release
29 June 2012

FMA report on NZX General Obligations Review

The Financial Markets Authority has today released its first assessment of compliance by NZX with its obligations under the Securities Markets Act 1988 and the Authorised Futures Exchange (NZX Limited) Notice 2010.

FMA has concluded that NZX is compliant with its obligations and has met its statutory requirements, with the exception of three specific areas:

1. Potential conflicts of interest as a result of appointing the Corporate Counsel to also act as Head of Market Supervision (HOMS).
2. Enforcing compliance: absence of documented criteria for consistent decision making; low number of referrals to the NZ Markets Disciplinary Tribunal – an independent body charged with hearing and determining matters referred to it in relation to the conduct of parties regulated by NZX’s market rules and the Clearing and Settlement Rules; slow progress of investigations.
3. Insufficient resources in the area of Market Supervision set against a significant workload.

FMA CEO Sean Hughes said NZX had been notified of the changes that need to be made to ensure it can fully comply with its obligations in the future.

“FMA has set out a number of expected actions which NZX is already implementing,” Mr Hughes said. “NZX is also actively considering our recommendations to improve its compliance arrangements.”

“The changes will create an even better environment for all stakeholders in New Zealand’s listed markets, or people thinking about entering the market.”

NZX has advised that it will implement all of FMA’s expected actions and will work with FMA to address its recommendations by the end of 2012.

A copy of the report can be found here

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