First NZ censured, fined
First NZ Capital securities has been publicly censured and fined $15,000 after trying to fix a trading error without notifying the NZX of the problem.
Wednesday, May 6th 2015, 10:12AM
The NZ Markets Disciplinary Tribunal released a statement this morning, saying the finance house had been found to have breached the rules.
First NZ offers share broking, portfolio management, investment banking, financial and economic research services.
Last July, it entered an order into the trading system in error which resulted in a market impact on the securities of an issuer. First NZ did not notify the NZX of the error and tried to restore the market itself.
Participants are required to notify the NZX immediately of an error that might affect the market. The tribunal said this was critical to ensure a false market did not exist in relation to any security and that trading was fair, orderly and transparent.
"Immediate notice of an error allows NZX to take prompt remedial action, if necessary, to minimise any impact on market participants and their clients. The tribunal is very concerned that First NZ failed to immediately notify NZX of its error. First NZ’s failure to do so meant that NZX was unable to formulate an appropriate regulatory response. This failure was further aggravated by First NZ’s subsequent actions in seeking to restore the market itself. A decision to take corrective action in relation to such a trading error rests solely with NZX. The practice of market participants taking matters into their own hands has the potential to impact on market integrity and bring both the market and NZX into disrepute," the tribunal said in a statement.
It said it was concerned the circumstances seemed to indicated First NZ did not have the systems and processes to manage errors appropriately.
It issued public censure and required First NZ to pay $15,000 to the NZX Discipline Fund. It will also have to pay all costs and expenses.
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