FMA, NZX sign MOU for market oversight, public statements

Wednesday 28th January 2015 1 Comment

The Financial Markets Authority and NZX, the two regulators of New Zealand’s capital markets, have signed a memorandum of understanding that sets out how they will work together, including what is said in public.

In addition to the FMA’s statutory requirement to publish an annual review of the stock exchange operator’s performance, the memorandum of understanding confirms a structure for monitoring NZX’s day to day regulatory functions.

The non-binding MOU is focused on four key areas, relationship governance, the oversight review process, operational interaction between the FMA and NZX, and public statements.

The two bodies will also set up two new committees for oversight and operations. The oversight committee, which will include the two chief executives, will provide six monthly feedback and monitor progress on proposed NZX regulation, structure and processes. It will also develop a joint agenda for developing New Zealand’s capital markets and agree the scope of the annual review of NZX.

Business leaders and staff from NZX and FMA will form the operating committee which will meet once a quarter to manage the MOU or any other issues that arise in relation to the market.

To help the FMA assess how well NZX is complying with its oversight of the markets, the MOU states it will be sent all reports from the head of market supervision to the NZX board, along with relevant minutes from board meetings and reports to NZX Regulation and the regulatory governance committee.

The two regulators will also develop a series of protocols covering areas in which they both engage such as live market issues, continuous disclosure, insider trading and market manipulation surveillance and investigation, complaints and investigations into market participants, market rules approval, reviews of offer documents, and data requests.

The MOU also covers off what the two parties say to the media and complainants, and that all information provided under the agreement will be kept confidential. Exceptions to that include whether it has come into the public domain already and has been disclosed beforehand to either of them by someone else.

The FMA’s annual reviews of NZX have gradually found less to take it to task on, with the most recent, in June last year covering the period January-December 2013, saying it had seen substantial improvements from its previous report.

Nonetheless, the 2014 report listed 11 actions that NZX was to take to improve managing conflicts, monitoring conduct and enforcing compliance.

BusinessDesk.co.nz

Comments from our readers

On 29 January 2015 at 11:15 am Graeme said:

Should have retail investors or the NZ Shareholders Assoc. involved in the agreement. Typically secretive agreement and doesn't engender confidence or encourage participation by the public in the stock exchange.