FMA - pass mark for NZX but room to improve

Photo / NZ Herald

The Financial Markets Authority said the stock exchange operator, NZX, had fallen short of fulfilling some of its obligations under securities law.

The FMA, in releasing 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, said NZX had met its obligations, but with the exception of three specific areas.

The areas were:

- Potential conflicts of interest as a result of appointing NZX's corporate counsel to also act as head of market supervision.

- A low number of referrals to the NZ Markets Disciplinary Tribunal and slow progress with investigations.

- Insufficient resources set aside for market supervision.

See the full report here.

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

"FMA has set out a number of expected actions which NZX is already implementing," Hughes said.

"NZX is also actively considering our recommendations to improve its compliance arrangements," he said in a statement.

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, Hughes said.