NZX wins a technology check from the Autorité des marchés financiers

Credit: provided

The New Zealand Stock Exchange has significantly improved its technology since being hit by denial of service attacks in 2020.

This was one of the key findings of the Financial Markets Authority (FMA) – Te Mana Tātai Hokohoko’s annual review of NZX market operator obligations for 2021.

Following a targeted review in January 2021, the regulator said it had been closely monitoring NZX’s progress.

The market operator has significantly improved its technology readiness, system sustainability, resilience and ability to take risks, according to the report.

In March 2022, the FMA verified that NZX had fully implemented the agreed actions and developed a plan for continuous improvement and maintenance to address previous concerns.

The establishment of a technology working group, more open dialogue and a downward trend in “market impacting” incidents were also noted.

“NZX has fully committed to FMA reviews, made significant investments in systems and resources, and has seen improved performance against FMA annual review requirements,” Paul said. Gregory, Acting Director of Financial Markets at the FMA.

Technological resources and risk management had been strengthened, with conflict management systems maturing and performing well during the year.

“It is reassuring to see NZX making progress in several areas in a challenging environment dominated by the pandemic,” Gregory said.

Although NZX has improved the overall performance and reliability of its systems, a major incident occurred on August 5 that caused the market to halt after several participants were disconnected.

This was caused by an NZX operator logging into the wrong environment to test a solution to an issue raised by a participant. NZX recognized that further improvements were needed to its controls and provided a plan to the FMA containing 13 improvement actions.

Given the broader work on technology upgrades, the FMA felt the plan for this incident would sufficiently address the core issue.

“We were encouraged to see NZX quickly recognize the need for further improvements to its controls following the August 2021 outage,” Gregory said.

The FMA made four recommendations to NZX and NZ RegCo for further improvements. These related to risk management, technology, preparedness for significant market events and the timeliness of referrals to the New Zealand Markets Disciplinary Tribunal.

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TagsregulationNZXNew Zealand Stock ExchangeregulatorFinancial Markets AuthorityFMA