UPDATE: FMA gives NZX clean bill of health on oversight   26 May 2015

UPDATE: FMA gives NZX clean bill of health on overseeing markets

(Adds FMA comment, fixes Garth Stanish's name in 4th graph)

By Fiona Rotherham

May 26 (BusinessDesk) - For the first time in four years the Financial Markets Authority has given New Zealand’s markets operator, NZX, a clean bill of health in the way it has met its statutory obligations to run the markets in a fair, orderly and transparent way.

In the fourth annual review of NZX’s obligations, the FMA said it was satisfied the stock market operator was now carrying out its role as a frontline regulator effectively and for the first time made no recommendations for change.

Of the 11 agreed actions from last year related to managing conflicts of interest, monitoring conduct, and enforcing compliance, all but one had been completed. That one – reviewing the penalty structure within the Tribunal rules for minor breaches of market rules – is underway.

FMA head of markets oversight Garth Stanish said he’d expect there to be less need for changes required in the annual review as time went on and that the Memorandum of Understanding signed last year between the two regulators means problems can be dealt with as they arise rather than waiting for the annual review.

Stanish said investors can now have more confidence in the way the markets were being overseen and that the biggest difference over the past four years has been the NZX now has far better frameworks for both detecting non-compliance by market participants and dealing with it.

He points to an increased number of referrals by the NZX to the Markets Disciplinary Tribunal – some 18 in 2014 which was double the number the previous year, including three relating to continuous disclosure rules.

Changes made in the last year to NZX’s internal processes include introducing a case management system for market services and regulation which enables information-sharing, internal referrals and managerial oversight and reporting. The market participant inspection programme has also been revised and updated and more work has also been done on ensuring accurate identification and labelling of price-sensitive announcements, the review said.

There was a higher workload in the regulation and policy teams during 2014, largely due to more listings and the development of the NXT market.

Technological problems that saw five disruptions to the trading system in the first half of last year were investigated and permanent solutions introduced, the review said.

The annual review covers the 2014 calendar year and reporting on the NZSX, NZDX, NZAX and FSM markets. The next will be completed under the Financial Markets Conduct Act which fully came into force in December and will include the NZX’s new NXT market.

(BusinessDesk)

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