NZX recently published its second annual NZX Regulatory Agenda (Agenda), outlining its objectives and focuses for 2017, as well as some of the key trends that have influenced the Agenda.
NZX's five main areas of focus for 2017 are:
- Market infrastructure: NZX wishes to balance efficiency with informed and confident participation in its markets, through:
- its expected publication of its corporate governance best practice code for issuers in Q2 2017;
- implementing its revised administrative halts regime;
- furthering its review of the NZX Participant Rules (Participant Rules Review) – feedback on an exposure draft of proposed amendments to these Rules was received in February 2017;
- commencing its review of the NZX Main Board/Debt Market Listing Rules (Main Board Rules Review); and
- creating a disclosure and compliance portal for NZX Participants – the 'Participant Portal'.
- Orderly markets: NZX intends to deliver comprehensive monitoring and enforcement of trading on its markets, as well as clarify its expectations on the trading, self-monitoring and risk management activities of market participants, through:
- its recent consultation on a draft trading conduct guidance note;
- continuing its annual risk assessments and inspections of accredited market participants, in collaboration with the Financial Markets Authority;
- embedding enhanced market surveillance tools; and
- seeking certification from Australian Securities and Investments Commission as a foreign regulator for the purposes of the Mutual Assistance in Business Regulation Act 1992 (Australia).
- Market engagement: NZX plans to clarify its expectations for issuer and accredited market participant compliance, and is committed to supporting and facilitating such compliance, through:
- enhancing public visibility of its investigations and enforcement activities, principally through its recently released Oversight and Engagement Report;
- maintaining its engagement with issuers through its series of practice notes;
- increasing its engagement with brokers, which will include hosting workshops for brokers' compliance and trading teams as part of its implementation strategy for the Participant Rules Review.
- Risk-based regulation: NZX proposes to enhance its risk-based regulatory approach, and prioritise higher risk issuers, market participants and financial products, through:
- thematic reviews of its issuers, with an initial emphasis on market disclosure; and
- evaluating how it reviews issuers' offer documents.
- Market development: NZX intends to review its policy framework in order to facilitate the listing and quotation of new issuers and financial products, through:
- enriching its support for new issuers, new board members and senior managers, and small to medium-sized issuers; and
- reviewing its policy settings, as part of the Main Board Rules Review, in relation to the quotation of equity, debt and managed investment scheme products, the listing of issuers with different corporate structures, and overseas listed issuers.
The Agenda concluded with NZX's assessment of important risks and trends. Of note, NZX continues to identify technological innovation, particularly in the areas of algorithmic and high frequency trading, and dark pool arrangements, as having a significant impact on its markets.
To read our recent publication on the regulation of dark pools, please click here. This assessment is in line with our views of the global regulatory pointers for FinTech in New Zealand.