Recent research indicates that the local stock exchange has become an increasingly secure market, thanks to the implementation of stringent regulations. The Financial Markets Authority (FMA) has conducted a comprehensive market cleanliness report, assessing the rate of insider trading on the NZX over the past two decades.
Fluctuations in the measure are noted from year to year, yet over a longer timeline, a downward trend in market abuse has emerged. Chief economist Stuart Johnson attributes this positive shift to extensive international efforts aimed at eliminating leaks, coupled with effective local regulatory measures and tools.
Johnson highlighted that the most significant decline in insider trading cases occurred after the Financial Markets Conduct Act was introduced in 2013. A noticeable decrease in irregular trading patterns was observed that same year. He explained that the NZ RegCo, which oversees the NZX, utilizes a sophisticated software system called Smart to scrutinize individual trades, enhancing their ability to identify any anomalies or concerns.
Furthermore, broker dealers and various banks contribute by reporting any suspicious behavior, which collectively helps maintain a clean market at a macro level. According to Johnson, the findings of the report should instill confidence in both investors and businesses regarding the integrity of the share market.
He emphasized the importance for Kiwi investors to trust that their investments in the NZX are secured in a clean market, free from significant manipulation. For New Zealand companies seeking to raise capital, it is critical to recognize that the NZX presents a safe environment both for listing and for attracting investments.
To uphold market integrity, the FMA plans to continue monitoring market cleanliness every year or two.
In conclusion, this report provides optimism for both investors and businesses, reinforcing that a commitment to stringent regulations is fostering a transparent and secure environment for trading and investment in New Zealand.
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