NZX questions Unlisted's rule exemption bid

[NZX], New Zealand's only registered stock market operator, fears that exempting the unregulated Unlisted share-trading platform from new market rules risks undermining their aim to strengthen confidence in New Zealand's financial markets.

Unlisted is seeking an exemption from Commerce Minister Paul Goldsmith from the Financial Markets Conduct Act, which came into force in December and requires that it apply for a licence from the Financial Markets Authority, saying the costs would be too onerous for its market servicing smaller companies.

"Unlisted currently operates without disclosure requirements and is not subject to insider trading or market manipulation restrictions," said NZX spokeswoman Kate McLaughlin. "The proposal by Unlisted creates significant risks because unless alternative measures are put in place, fundamental investor protections will not apply within that market, including against insider trading and market manipulation.

"Great care needs to be taken to ensure that the hard fought gains in building investor confidence in New Zealand's financial markets are not placed at risk."

NZX was granted an exemption for its NXT market, allowing less onerous disclosure obligations and reduced costs for issuers in a bid to attract small to medium sized businesses to list.

Still, McLaughlin said its exemption related specifically to an aspect of the disclosure regime applying to that market, and NXT companies still need to disclose on a quarterly basis, are required to comply with the listing rules applicable to the market and investors receive the fundamental protections provided under the Act relating to insider dealing and market manipulation.

Unlisted should be required to undertake a public consultation, similar to that undertaken by the NZX for its NXT market, particularly given Unlisted may be seeking an exemption that could sweep across its entire market, not just a single feature of it, she said.

Unlisted made its application for exemption late February and expects a decision to take three to four months.

(BusinessDesk)