Self-Match Prevention (SMP)

The self-match prevention (SMP) functionality allows NZX Trading Participants to prevent matching of orders placed by their firm for accounts with common underlying ownership. The benefits of SMP include:

• NZX Trading Participants are assisted through exchange technology to manage their obligations with relation to NCBO trades
• Increased market integrity
• Reduction in Surveillance/Participant Compliance inquiries of Participants
• Resolves technical challenges faced by market makers
• Only approved BPOT clients can utilise BPOT functionality and all BPOT Applications can be submitted to the Participant Compliance Portal for assessment by NZ RegCo

SMP Documentation

• SMP Functionality Overview
• SMP Fees
• SMP Practice Note and BPOT Approved Client Request Form are available under the Practice Notes section here

Approved BPOT Client Jurisdictions:

The recognised Approved BPOT Client jurisdictions are specified below:

• Australia
• Canada
• Hong Kong
• New Zealand
• Singapore
• United Kingdom
• United States of America

SMP Functionality

There are two types of SMP available to NZX Trading Participants:

• Cancel-Passive SMP, and
• Booking Purposes Only Transaction (BPOT).

Cancel-Passive SMP

Where Cancel-Passive SMP has been chosen for two opposing Orders belonging to the same entity that would otherwise match in the Trading System, the following occurs:

• The passive (older) order is withdrawn from the order book
• The aggressor (new) order remains in the order book and may match against other passive orders.

Booking Purpose Only Transactions (BPOT)

Where BPOT has been chosen for an Approved BPOT Client for two opposing Orders belonging to the same entity that would otherwise match in the Trading System, both the passive and aggressing Order will match and then immediately be withdrawn from the Trading System and a BPOT will arise.

• A BPOT will only be visible to the Participant who placed the relevant Orders and will not be published down any public market data feeds.
• The executing broker will receive a transaction report via the NZX Trading System that the Participant can use to identify a BPOT and manage any additional requirements.
• BPOT are not eligible to be novated and cleared and settled through the Clearing House, and a ‘non-settled’ trade notification will be displayed in the BaNCS system.
• BPOT behaviour is the same across both NZX Central and NZX Dark.

How does the SMP service operate?

SMP Key

• The Participant will be able to enable SMP through the addition of a unique SMP Key on each order that will identify the ‘entity’ to which SMP should apply.

SMP Action

• Participants will then need to specify the SMP Action that is to apply to an Order, being either Cancel-Passive or BPOT.

For SMP to come into effect a match must be made on all three of the following:

• Same Trading Participant on both orders
• Same SMP Key on both orders
• Same SMP Action on both orders (Cancel-Passive or BPOT)

How to enable SMP

SMP is optional functionality available for NZX Trading Participants with Nasdaq ME Trading System.

Cancel-Passive SMP

Cancel passive SMP can be used by any NZX Trading Participant and there are no additional approval processes.

Booking Purpose Only Transactions (BPOT)

The use of BPOT is approved on a client by client bases by NZ RegCo Participants Compliance. Trading Participants that want to utilise BPOT functionality must complete the BPOT Approved Client Request Form and submitting this via the NZX Participant Portal.

Approved BPOT Client Jurisdictions

The recognised Approved BPOT Client jurisdictions are specified below:

• Australia
• Canada
• Hong Kong
• New Zealand
• Singapore
• United Kingdom
• United States of America

Frequently Asked Questions

Q: What is self-match prevention?

A: Functionality for NZX Trading Participants to identify and restrict orders which result in no change in beneficial ownership.

Q: What are the benefits of self-match prevention?

A: The benefits of self-match prevention include:

• Trading Participants are enabled to manage their risk with relation to wash trades
• Removes technical challenges faced by market makers
• Increases market integrity

Q: Is self-match prevention compulsory?

A: No, self-match prevention is an optional, opt-in service for NZX Trading Participants.

Q: How do I enable SMP?

A: SMP is enabled by NZX Trading Participants via the Participant Portal. Access to the Participant Portal is restricted to compliance managers and officers of each NZX Participant.

Q: Do I still need a whitelist to manage my client references?

A: No, with the enhancements to SMP the need for a whitelist has been removed. NZX Participants have the ability to utilise standardized FIX messaging to pass key broker information and the preferred SMP Action (Cancel Passive or BPOT) for each client.

Q: Will cancel-passive self-match prevention be available in both the cash (equity and debt) market and derivatives market?

A: Yes, cancel passive self-match prevention is available to both markets.

Q: Will BPOT be available in both the cash (equity and debt) market and derivatives market?

A: BPOT is available to only the cash (equity and debt) markets not the derivatives market.

Q: What fees apply for SMP?

A: All fees relating to SMP are set out in the NZX Fee schedule.

Q: Do I get to determine my own SMP Key?

A: Yes, Participants can determine the SMP Keys that they wish to use. Please note all SMP Keys are maximum 10 alphanumeric characters