Recent research indicates that the local stock exchange has become increasingly secure, thanks to stringent regulatory measures. The Financial Markets Authority (FMA) released a market cleanliness report analyzing the incidence of insider trading on the NZX over the past two decades.
While annual fluctuations are noted, a longer-term analysis reveals a downward trend in market abuse levels. Chief economist Stuart Johnson attributed this positive change to extensive international efforts to curtail leaks and the effectiveness of local regulatory policies.
Following the implementation of the Financial Markets Conduct Act in 2013, there has been a noticeable decline in abnormal trading activity. Johnson highlighted the role of NZ RegCo (the regulatory body for the NZX), which employs advanced software called Smart to monitor individual trades meticulously. This technology helps to identify any irregularities or concerns in trading behavior. Additionally, broker dealers and banks actively report suspicious activities, further contributing to market integrity.
The findings of the report aim to bolster investor and business confidence in the share market. Johnson emphasized the importance of ensuring that Kiwi investors can trust their investments on the NZX, with an assurance of a market free from substantial manipulation. For New Zealand businesses seeking to raise capital, the assurance of a secure NZX environment reinforces its attractiveness as a platform for listing and investment.
The FMA plans to continue its assessment of market cleanliness on an annual or biennial basis, ensuring ongoing vigilance in maintaining market integrity.
This analysis not only reinforces the commitment to upholding a secure trading environment but also paves the way for greater investor confidence and healthier market activity, ultimately benefiting the economy as a whole.
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