Supervision is an important aspect of any market in the world today. Imagine life without supervision in the market place, prices would not reflect real values, lack of order in the market, no liquidity and generally no rules. Places like this are commonly termed as “black market”.
Here at PNGX Markets (PNGX or the Stock Exchange), we greatly value supervision, we believe that it significantly enhances transparency and increases the level of integrity in the market place. These are important components that promote an internationally competitive and fair market that essentially contribute to investor confidence. Supervision is performed under three headings;
A. Supervision of Companies
B. Supervision of Members and Stockbrokers
C. Supervision of Market Activities
A) Supervision of Companies
Entities admitted to the Official list of the PNGX Markets Ltd (PNGX) are required to maintain continuous compliance with the Listing Rules of the Stock Exchange at all times. PNGX ensures that listed companies meet and submit timely disclosures as part of maintaining an informed market.
PNGX applies supervision in a number of ways to ensure listed companies abide by the Listing Rules at all times in conducting their business operations. In terms of supervision, PNGX ensures that the following requirements are strictly enforced and met in a timely manner;
Companies are required to disclose material information in a timely manner as soon as it becomes aware of it.
Companies are required to lodge periodic reports regarding their operations over a specific time frame. For example – Half Year Reports, Full Year Reports, Quarterly Reports for mining and exploration companies.
Any major corporate action must be backed and be approved by shareholders
Periodic reports must be submitted within the given timeframe
Timetables for different corporate actions must be adhered to at all times.
Company announcements must be lodged in an efficient manner to enable easy dissemination to the market.
Close working relationship with listed companies through constant consultations on market and corporate matters
PNGX has been in operation for a number of years now and is considered to be a small and developing market. A key aspect of our approach to supervision and surveillance is flexibility. As a growing market, we encourage companies to discuss complex issues with us to get it right the first time in an effort to promote and enhance companies´ understanding of the rules and its application in the market place.
PNGX provides guidance services to listed companies that request such service in an effort to assist companies’ accelerate their familiarization of the rules to improve compliance and disclosures requirements.
B) Supervision of Members and Stockbrokers
Supervision of stockbrokers and market participants is an important aspect of maintaining the integrity of the market. Stockbrokers and Market Participants use the market on a daily basis to transact business as principals or as agents on behalf of investors.
The PNGX Business Rules provides a set of guidelines that stockbrokers must comply with in the discharge of their duties to the exchange and their responsibilities to clients (investors). Basically it guides the behavior and operations of a stockbroker in the normal course of using the market for trading purposes. The business rules cover four major aspects of a brokers operation, financial requirements, membership and admission criteria, trading standards and conduct of market users.
PNGX monitors and supervises the operation and conduct of stockbrokers under these four divisions. The business rules cover a number of aspects regarding the relationship of a stockbroker to the Stock Exchange and its relationship to investors (clients).
Under the Business Rules, Stockbrokers are required to conform to the provisions of the rules in the discharge of their duties and responsibilities in a manner that;
- Promotes fair and transparent trading activities;
- Promotes efficient transactions;
- Meet statutory requirements in a timely manner;
- Promotes and protect Investors and their funds;
- Provide unbiased reports and research materials to the market;
- Encourages and promotes are fully informed market.
Maintenance of highest market integrity is the single most important component for growth and development. A major part of our effort is to deepen the market structure through initiatives to encourage and attract investors both locally and internationally and to maintain investor confidence.
The continuous disclosure and periodic disclosure requirements are designed to promote a fair and informed and orderly market at all times. PNGX will endeavor to continuously assess and upgrade the rules to meet market demand and technological advances. Continuous and timely disclosure of information forms a cornerstone of promoting a fully informed and vibrant market for use by all market participants and stakeholders.
C) Supervision of Market Activities
Supervision of trading activities in the market place is vital task PNGX undertakes to ensure an orderly market is maintained at all times. PNGX performs this task through regulation and covers the following aspects;
- Standard and specific trading times must be adhered to at all times (eg: Normal trading time is from 10am to 4pm daily.)
- Non Trading and non settlement days on Public holidays
- Only recognized Trader/Representatives are allowed to use and input trading messages via remote terminals.
- Only duly recognized Members and Participating Organizations are permitted to have access to trading on the market.
- Normal settlement period is strictly T + 2.
- Timetables for corporate actions must be strictly complied with and
- Price monitoring
The above points are just some of the activities performed by the relevant divisions of the Stock Exchange in ensuring that the market promotes fair and transparent environment for trading of securities.
PNGX promotes fair trading by collecting and supplying information to market participants and investors in an effort to encourage informed investor decisions. One of our key aims is to make sure that the market is fully informed at all times. When there are unusual price movements, we pursue a “please explain strategy” to concern companies. If for some reason, the explanation is not adequate to the full satisfaction of the Stock Exchange, we move to the next stage of the process.
This stage involves referrals to the listing division for any possible breaches of the rules or a referral to the Securities Commission of PNG for a full investigation.