Annual review shows NZX meeting regulatory obligations

26 May 2015

Annual review shows NZX meeting regulatory obligations

The Financial Markets Authority (FMA) today confirmed that NZX has complied with its statutory obligations to ensure that its markets are fair, orderly, and transparent.

This year’s General Obligations Review of NZX is the FMA’s fourth annual review. It covers the period from January to December 2014 and reports on NZX’s compliance with its obligations under the Securities Markets Act 1988.

During last year’s review, NZX agreed to 11 actions relating to arrangements for managing conflicts of interest, monitoring conduct, and enforcing compliance.

The FMA is satisfied that NZX has completed all but one of the agreed actions and is carrying out its role as a frontline regulator effectively.

The final agreed action from last year’s report, to review the penalty structure within the Tribunal Rules for minor and unambiguous breaches of the market rules, is underway.

Since last year’s review, processes have been implemented to improve dialogue and co-operation between the FMA and NZX. This includes the signing of a Memorandum of Understanding (MoU) reinforcing the framework for engagement and co-operation between the two organisations. The MoU takes into account the complementary regulatory responsibilities for New Zealand’s capital markets shared by NZX and the FMA. The MoU also confirmed the structure for ongoing dialogue to ensure NZX is meetings its day-to-day regulatory functions.

“We are confident that this closer working relationship and the actions taken by NZX since the last review have further strengthened its arrangements for handling conflicts, monitoring conduct and enforcing compliance. NZX has also shown a commitment to continuous improvement in its regulatory functions and capabilities,” said the FMA’s head of markets oversight, Garth Stanish.

“We believe these improvements, along with the new framework set up between ourselves and NZX will help increase market confidence in NZX’s effectiveness.”

The FMA’s 2014 General Obligations Review was completed under the Securities Markets Act 1988 and includes reporting on the NZSX, NZDX, NZAX and FSM. The next review will be completed under the Financial Markets Conduct Act 2013, which fully came into force in December 2014, and will include the NZX’s new NXT market.

Full report here.

ENDS

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