It concluded the lack of experience in its surveillance team meant NZX did not meet its obligation to have adequate arrangements to monitor the conduct of market participants.
However that view was not shared by the NZX which said although it had committed to hiring an additional person, it disagreed with the conclusion of the report.
"NZX disagrees that the exchange did not meet its obligation in respect of surveillance during the review period. The approach taken to staffing and engagement with the FMA on surveillance referrals was consistent with previous periods."
Still, when the regulator commands, one must jump. Especially in the current environment of increasing regulatory pressure.
The other key area in the report was conflict management. The FMA noted that during its reporting period it became aware of one instance of a perceived conflict of interest which could have been handled better.
"In this instance an employee from NZX's commercial operations questioned a market participant on matters that we believe should have been dealt with by NZX's regulatory function. While this was a discrete incident and interaction promptly ceased following intervention from the FMA, the employee seemed unaware of any potential or perceived conflict of interest."
Senior management also didn't see it as a conflict of interest and so it was not escalated to the Conflicts Committee despite the FMA's involvement.
The NZX has been told it must do better next time.
"We expect NZX to consider all potential conflicts at an appropriate level, and address all actual or potential conflicts to prevent recurrence."
Giving back
Gentrack shareholders look set to be asked to dig into their pockets as the company mulls a capital raising via a rights issue.
The utility and airports software company has been on the acquisition trail in recent years with its latest purchase, UK energy data analytics company Evolve, due to settle yesterday.
The $44.2 million purchase comes on top of acquisitions it made last year of UK billing and customer information systems firm Junifer Systems for $74.6m and European airport software developers Blip Systems and CA Plus for about $20.3m.
The latest purchase has been funded through extending its debt facility with ASB bank, adding $47m to the $50.5m it already had.
Chief executive Ian Black has signalled the company is considering a pro-rata renounceable rights issue to allow the company to reduce debt and provide further flexibility should it want to pursue further acquisitions.
Craigs Investment Partners and UBS have been appointed to manage any potential offer. But exactly how much it could look to raise is still unknown.
Black rebuffed queries from analysts about the potential raise at a recent briefing on the Evolve acquisition saying it would be "inappropriate" to be too specific at this stage.
Daniel Kieser at independent research firm ShareClarity said it would be interesting to see if the dual-ASX listed company raised the capital in New Zealand or Australia.
"On one hand, Gentrack is dual-listed, it was founded in Australia and Australian investors currently price technology companies 30 per cent higher than New Zealand investors.
"On the other hand, Gentrack has three times more liquidity on the New Zealand Stock Exchange (being the number of shares traded each day).
"This suggests it may be easier to raise capital in New Zealand, but cheaper to raise capital in Australia."
Kieser said if Gentrack raised more than $100m it would give the company a war chest big enough to make more acquisitions.
Shareholders who don't want to tip more money in will be able to sell their rights although those who have been in the stock since the initial public offer should have little to complain about.
Gentrack listed in June 2014 with an IPO price of $2.40 and is now trading more than $7.
Kieser said although Gentrack's price to earnings ratio had increased from around 15 times to 20 times in the past five years, it remained below its Australian peers who were trading around 25 times.
"So even though the share price has increased, it may not be altogether that expensive."
