By Tina Morrison
NZX, which is New Zealand's only registered stock market operator, strongly opposes a bid by share trading platform Unlisted to be exempted from new licensing requirements, saying its lack of basic shareholder protections could tarnish the reputation of the country's capital markets.
Unlisted is petitioning Commerce Minister Paul Goldsmith for an exemption from being licensed by the Financial Markets Authority, as required by the Financial Markets Conduct Act which came into force in December, arguing it offers a lower cost alternative for smaller companies than NZX.
However, NZX rejects Unlisted's bid for an exemption, saying the new law is an opportunity to reconsider whether Unlisted should continue operating outside of the regulatory framework.
"NZX considers that the granting of such an exemption would result in significant and unnecessary risks to the confidence, integrity and reputation of New Zealand's capital markets," the Wellington-based company says in a submission to the Ministry of Business, Innovation and Employment.
The Financial Markets Conduct Act arose out of the Capital Markets Development Taskforce in 2009, which looked to deepen New Zealand's capital markets while beefing up investor protection and regulatory oversight after the collapse of finance companies.
The legislation overhauled the country's decades-old securities law with a goal of improving public confidence in New Zealand's capital markets.
NZX said a broad exemption would be inconsistent with the policy rationale underpinning the entire new act, and outlined its concerns regarding insider trading, market manipulation and the lack of other rules around disclosures and regulations.
The lack of disclosure and market supervision for Unlisted meant it was "effectively impossible" to highlight cases of insider dealing or market manipulation, it said.