Ann: GENERAL: NZX: NZX welcomes the Financial Mar

• Release Date: 03/04/14 13:43
• Summary: GENERAL: NZX: NZX welcomes the Financial Markets Conduct Act
• Price Sensitive: No
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					NZX
03/04/2014 11:43
GENERAL

REL: 1143 HRS NZX Limited

GENERAL: NZX: NZX welcomes the Financial Markets Conduct Act

NZX notes the signficant milestone in the continued development of New
Zealand's capital markets, with the Financial Markets Conduct Act coming into
effect on Tuesday.

This follows a comprehensive programme of work focussed on improving the
regulation of New Zealand's financial markets, including significant
improvements to the oversight of NZX as the operator of registered markets,
particularly through the work of the Financial Markets Authority (FMA)
established in 2011.

NZX Regulation is the frontline regulator of the markets it operates. It
conducts investigations into potential breaches of its market rules, and has
the power to take disciplinary action. NZX refers cases to FMA where it
believes breaches of financial markets legislation have occurred. Operating
well-regulated markets is core to NZX's objective of growing the capital
markets in New Zealand.

As part of FMA's oversight review process of NZX, each year FMA assesses NZX
and produces an annual report on NZX's compliance with its obligations under
the Securities Markets Act and the Authorised Futures Exchange (NZX Limited)
Notice. FMA's second assessment of NZX, published in June 2013, concluded
that by the end of the review period NZX was fully compliant with its
statutory requirements.

Improvements in NZX Regulation structure and governance in 2013

In 2013, NZX made three changes to further improve its structure and
governance to ensure that NZX's securities markets and derivatives markets
are well regulated and operate in a fair, orderly and transparent manner.

As a registered exchange NZX is required to have arrangements in place to
enforce compliance with the market rules. In November 2013 NZX Regulation
published its Enforcement Policy, which is a guide to assist those with an
interest in NZX's markets to understand the approach it takes to enforcing
the market rules. This includes internal service standards monitored by the
Board. The Enforcement Policy can be downloaded from NZX's website at:
https://www.nzx.com/regulators/NZXR

In August 2013, the NZX Board established a Regulatory Governance Committee
to assist the Board in fulfilling its governance responsibilities relating to
NZX's regulatory function. This followed a targeted review of practice in
exchanges internationally relating to conflict management.

The Committee plays an important role in supporting the Board's oversight of
the timeliness and quality of NZX's regulatory decision-making. None of NZX's
CEO, Board or the Committee is involved in regulatory decision-making, with
this function delegated to NZX's Head of Regulation, who is accountable
directly to the NZX Board. A copy of the Terms of Reference of the Committee
can be found at: http://www.nzxgroup.com/investor-centre/corporate-governance

At the end of 2013, NZX put in place further changes to the structure of the
Regulation team. This included the creation of a new Head of Compliance role,
which will reflect a split of the current Head of Regulation role in two. The
new role will report directly to NZX's Board, and will have responsibility
for NZX's regulation of its Issuers and Market Participants. Recruitment is
currently underway for this role.

Once this position has been filled, NZX's current Head of Regulation will
assume the newly created Head of Policy and Legal role (which will report to
the CEO) and will have responsibility for regulatory policy work and for
NZX's general legal function. When implemented, NZX expects this change to
further delineate the separation of the regulatory function and contribute in
a positive way to our regulation and policy work.

NZX increased resourcing of the teams that operate and oversee the markets in
2013, including NZX Regulation and NZX Surveillance. In addition, the teams'
composition has changed resulting in an increase in knowledge and experience.
Combined with the increase in resourcing, this has provided much greater
capacity across the regulated markets teams.

This addition of further capacity was timely given the increased activity in
New Zealand's capital markets, including 10 Initial Public Offerings during
the year.

Regulatory performance in 2013

NZXR conducted 145 formal investigations and enquiries into possible breaches
of NZX rules in 2013 (125 in relation to issuer compliance and 20 in relation
to participant compliance) and reviewed 44 formal complaints from third
parties in relation to issuer and participant compliance. Of those formal
complaints investigated, 31 were from retail clients, 6
wholesale/institutional investors, 1 NZX Advisor, 2 Brokers, 4 industry
associations.

In 2013, NZXR referred 9 matters to the NZ Markets Disciplinary Tribunal,
compared to 5 referred in 2012. Significantly, the median time for a matter
to be referred to the Tribunal reduced from around 8 months in 2012 to around
4 months in 2013.

NZX Regulation initiatives in 2014

NZX Regulation is introducing new investigative case management software this
year to help maintain fair, orderly and transparent markets. This software
enables the different teams to work together collaboratively and streamline
workflow by managing all information and related material from start to
finish, which will also improve effectiveness and enable better utilisation
of resources.

In addition, NZX is working on a programme to increase public understanding
of NZX's regulatory and enforcement roles, including making more information
available for the public to access through our various communications
channels such as NZX.com.

For further information please contact:
Kate McLaughlin
Corporate Communications
M: 027 533 4529
E: [email protected]
End CA:00249089 For:NZX    Type:GENERAL    Time:2014-04-03 11:43:33