NZX Proposes to Structurally Separate Regulatory Function

The exchange is aiming to adopt a new regulatory operating and governance model.

New Zealand’s Exchange (NZX), which operates the country’s capital, risk, and commodity markets, announced a proposal this Tuesday, which will see the exchange separate its commercial and regulatory roles.

Under the proposal, the NZX Board is planning to adopt a new regulatory operating and governance model. In fact, it will be similar to models used by other exchanges, such as the Singapore Exchange (SGX).

Namely, a wholly-owned operating subsidiary of the Kiwi exchange will execute all frontline regulatory functions, as part of its obligations as a market operator and operator of the designated settlement system, NZX Chairman James Miller said in the statement.

The proposed entity will be structurally separate from the exchange’s commercial and operational activities, governed by a separate board with an independent chair, and will target to operate on a cost-neutral basis.

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According to the chairman of the NZX, this proposal is ground-breaking for the exchange and also the 150-year history of New Zealand’s capital markets. The proposal aims to bring the exchange into alignment with global best practice.

“Regulation is a central tenet of a healthy and well-functioning capital market. We believe this proposal and the calibre of the Establishment Board will give a good sense of the significance of this change, as a positive evolution of NZX and our role in New Zealand’s capital markets,” Miller said in the statement.

As part of today’s announcement, NZX has named an establishment board chaired by Trevor Janes, along with Elaine Campbell and Mike Heron QC. A fourth member is still to be confirmed to the board. The entity will be led by Joost van Amelsfort as CEO, who has served as NZX head of market supervision since 2014.

Implementation may be delayed due to COVID-19

While the new structural changes were planned within the 2020 calendar year, Miller highlighted in the statement that consideration would be given to a delay of several months, given the current market volatility surrounding the COVID-19 pandemic.

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