NZX sign Photo: RNZ / Angus Dreaver
New research shows the local stock exchange is an increasingly safe market due to the introduction of strict regulations.
The Financial Markets Authority conducted its market cleanliness report which measures the prevalence of insider trading on the NZX over the past 20 years.
Year to year the measure is volatile but over a longer period it shows the level of market abuse is decreasing.
Chief economist Stuart Johnson said that was down to a lot of work done internationally to stamp out leaks but also effective local regulatory decisions and tools.
"We see the greatest decline following the introduction of the Financial Markets Conduct Act in 2013, and if you look at 2013, you see a clear decrease in that abnormal trading following that.
"If we think about individual insider trading NZ RegCo [the regulator for the NZX] have a really complicated piece of software called Smart that focuses on individual trades and RegCo is good at spotting any anomalies or any concerns there.
"Additionally, a number of the broker dealers and a number of the banks tell us about behaviour that they're a bit worried about and all of that activity helps us keep the market clean at a macro level."
He said the report should give investors and businesses confidence in the share market.
"Kiwi investors need to know that the money that they have put on the NZX is being put on a clean market that isn't subject to any large scale manipulation.
"If we think about New Zealand businesses that are looking to raise capital, they need to know that the NZX is a safe market and it's a good place to list and it's a good place to attract investment into their business."
The FMA would continue to look at market cleanliness every year or two.
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