NZX notes the announcement today by the Financial Markets Authority regarding the settlement between the FMA and Milford Asset Management Limited (Milford). The FMA’s investigation followed a referral by NZX to the FMA.
NZX welcomes resolution of this aspect of the investigation. NZX CEO Tim Bennett commented: “Fair and transparent pricing is fundamental to the operation of public securities markets and trading on those markets. This matter has highlighted the importance of effective monitoring of trading conduct by – and standards that are expected of – brokers and fund managers participating in the markets.”
NZX notes this settlement relates only to Milford as fund manager. The FMA is regulator of fund managers in New Zealand while NZX’s role is to undertake frontline monitoring of trading on its markets.
In the past three years NZX has made significant investments in its surveillance, regulatory and enforcement resources and processes that underpin NZX’s obligation to operate fair, orderly and transparent markets. NZX’s surveillance activities and referrals to the FMA demonstrate the effectiveness of NZX’s frontline monitoring systems and processes.
NZX refers a range of matters to the FMA following routine market monitoring which may result in follow on investigations and, where appropriate, regulatory action by the FMA. In 2014, NZX referred various matters to the FMA relating to secondary market conduct. None of those matters referred by NZX that are yet to be resolved by the FMA involve circumstances similar to this Milford investigation.
NZX and the FMA are establishing a working group that will engage with the securities industry on setting expectations and providing further guidance on broking practices and conduct.
NZX does not intend to make any further public comment today on this matter beyond this statement