Call for sharemarket regulator review

ROB STOCK
Last updated 05:00 02/03/2014

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Labour MP Damien O'Connor is calling for an independent review of the way the stockmarket is regulated following a Fonterra insider trading complaint.

Commerce Minister Craig Foss declined to comment on O'Connor's call but in a written statement said under National's leadership there had been big steps forward in ensuring New Zealand had fair, efficient and transparent financial markets.

O'Connor made the call after a Fonterra insider-trading probe by the NZX was closed this month despite ongoing concerns from shareholders.

Wellington-born, Toronto-based portfolio manager Darren Sissons, who invests money for rich Canadians, complained to the NZX on December 19 after noticing unusually high volumes of trading in Fonterra Shareholders Fund units in the three trading days before the dairy giant's surprise dividend cut announcement on December 11 last year.

Sissons had clients invested in the Fonterra fund, which was set up in 2012 to allow institutions to invest in the co-operative, but was angered when the unit price, just over $6.40 on December 6, fell to $5.64 on December 12.

NZX responded that it had reviewed trading in the fund and found nothing suspicious.

But Sissons felt his complaint was initially treated too lightly, and remains unconvinced NZX, which is a private company operating New Zealand's share

and bond markets, thoroughly investigated the trading volumes and price movements.

O'Connor's involvement with Sissons has led him to conclude that with the government's partial sale of assets drawing in new sharemarket investors, it's time for a fresh look at how well the rules to tackle insider trading and market manipulation are being policed. And he's calling for an independent review to do it.

He will seek to raise the issue in Parliament, and says Sissons' concern should not be lightly dismissed. "There's no sense of malice in him. He's loyal and loves New Zealand. If individuals like him can't be convinced we have a well-run market, it will become irrelevant."

The Labour MP said he also had an email from a senior bank economist in New Zealand expressing concerns over other unusual trading patterns in Fonterra securities.

Foss said people who had concerns about the NZX had a number of avenues to use. "The NZX is by no means the sole regulator of its market," he said.

It is overseen by the Financial Markets Authority (FMA), he said, adding: "If I was to receive any information that made me question the operation of NZX, I would request that the FMA investigates."

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In a statement, NZX said the past five years had seen a comprehensive review of the operation and regulation of the financial markets and NZX's role as front line regulator was confirmed, but with oversight from the FMA.

- Sunday Star Times

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