Waikato businesses could benefit from new arrangement with Australia


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17 May 2007

News release

Waikato businesses could benefit from new arrangement with Australia

Waikato firms could benefit from a new regime enabling businesses to raise capital in Australia, Chairman of the Securities Commission Jane Diplock told business leaders in Hamilton last night.

The regime will allow New Zealand firms to raise capital in Australia using their New Zealand offer documents. Australian business will also be able to raise capital in New Zealand.

"This mutual recognition regime is a world first," Jane Diplock said. "No other countries have lowered their borders in this way. As well as benefits to business, investors will benefit from a wider choice of opportunities."

The regime will come into effect later this year.

The Securities Commission and the Australian Securities and Investments Commission have put in place arrangements for regulating the new regime.

The Commission is New Zealand's main regulator of investments. Recent years have seen significant changes to New Zealand's regulatory framework.

"We have moved from an extremely light-handed regime to one which is approaching international best practice," Jane Diplock said. "This is important because capital markets have become global. More and more businesses raise capital across national boundaries and investors are placing their money in other jurisdictions."

"If New Zealand is to attract capital investment from overseas it is imperative that it has a internationally acceptable regulatory framework."

Three "waves" of new law in the last few years have developed that framework. The Takeovers Code in 2001, and then the Securities Markets Act in 2002, which gave the NZX and the Commission co-regulatory roles for the exchange. It also brought in continuous disclosure by issuers and tougher laws on insider trading.

The third major reform, coming into force this year, revamps insider trading law and adds new law on market manipulation, that is behaviour that spreads false or misleading information which might affect a share price or creates false appearance of securities trading.

The third reform also significantly increases the disclosure that will be required by investment advisers and makes it a crime to promote an illegal offer of securities.

"Our regulatory framework is shaping up and more in line with similar jurisdictions overseas," Jane Diplock said. "But there is still one outstanding matter, the regulation of financial intermediaries. Government is addressing this issue and has been consulting widely on it."

"I must stress that this new law is not 'regulation for regulation's sake'. The thrust of regulation continues to be disclosure-based and aims to have well-informed markets in which investors can have confidence."

The Commission is well aware of the need for regulation to be cost-effective. We focus our work on areas of current market practices where our actions will clarify the standards of behaviour expected in the markets. We have a range of powers that enable breaches of the law to be addressed without the costs and delays of going to court. However, we can also take court actions in the most egregious cases.

Global markets offer opportunities for business and investors, but they also provide opportunity for fraud. It is vital that regulators can be in a position to combat international financial fraud.

The Commission is a member of the International Organisation of Securities Commissions (IOSCO) and for the last three years Jane Diplock has chaired IOSCO's executive committee, the decision-making body.

IOSCO members regulate more than 90% of the world's securities markets, and it is the international standard setter for securities regulation. It has a MOU among member jurisdictions which enables them to share information to counter cross border fraud.

"As well as the benefits for us of being able to gather information from our counterparts overseas, our IOSCO involvement enables New Zealand's securities markets and their regulatory structure to be promoted at the highest levels internationally," Jane Diplock said. "We take every opportunity to promote New Zealand as a well-regulated market suitable for overseas investment."

Ends

Contact: Catherine Chapman ph 04 471 7659

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