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Statement of Intent 2007-2010

Outputs

The Commission has adopted the six functions listed on page 10 as its outputs under the Crown Entities Act. These define our work. Each output is described below together with the outcome it contributes to, the objectives to be achieved and the measures of achievement. These are the Commission's main non-financial measures for the period of this statement of intent.

Output 1 Enforcement

Inquiring into suspected breaches of securities law and intervening in the interests of investors in accordance with its statutory powers

Outcome

Objectives

Measures

High standards of conduct are expected in the markets and the law is complied with

Enforcement work is targeted at those issues most likely to deter bad practice in key areas
Our enforcement actions achieve the desired regulatory results

The Commission will have achieved its enforcement objectives when

resources are applied in accordance with its enforcement priorities
and
the Commission achieves the desired regulatory result in at least 80% of cases

Output 2 Monitoring and market oversight

Maintaining oversight of securities market activity and taking actions in accordance with its statutory powers

Outcome

Objectives

Measures

High standards of conduct are expected in the markets and the law is complied with

Monitoring and market oversight work corrects identified deficiencies and communicates the Commission's expectations of standards of conduct in the market and the requirements of the law
Monitoring and market oversight work is targeted at those issues most likely to deter bad practices in key areas
NZX properly fulfils its regulatory role in the market

The Commission will have achieved its Monitoring and Market Oversight Objectives when

in 90% of cases where deficiencies are identified the desired regulatory result is achieved
and
its resources are applied in accordance with its monitoring and market oversight priorities
and
it has published a report of its annual oversight review of NZX

Output 3 Law and practice reform

Reviewing securities law and practice and making recommendations for reform

Outcome

Objectives

Measures

The regulatory environment is relevant and effective

Provide robust advice to Government to give priority to reforms needed to address shortcomings in the law identified through the Commission's work
High quality advice and assistance is given to the Government's financial services policy development

The Commission will have achieved its Law and Practice Reform Objectives when

advice given seeks priority for reforms to address identified shortcomings in regulation of financial intermediaries, disclosure about investment products, issues identified by FSAP which will bring our law up to the standards required by the IOSCO Principles, Securities Regulations, and auditor oversight
and
the quality, quantity, and timeliness of the Commission's advice and assistance to the Ministry of Economic Development's reform programmes satisfy the MED

Output 4 Exemptions and authorisations

Considering and deciding on applications for exemption from the Securities Act 1978, Securities Markets Act 1988 and the Securities Regulations 1983
Considering and deciding on applications for authorisation of market participants,
e.g. futures exchanges and dealers, trustees and statutory supervisors
Reviewing existing exemptions and authorisations

Outcome

Objectives

Measures

Securities law regimes are tailored to the needs of the markets

All exemptions and authorisations are completed within the agreed time
An effective regime is in place to authorise futures dealers

The Commission will have achieved its Exemptions and Authorisations Objectives when it has

dealt with all applications for exemptions and authorisations within the time agreed with the applicants
and
introduced and communicated a new policy for authorisation of futures dealers

Output 5 International cooperation and recognition

Promoting New Zealand as a well-regulated country, keeping abreast of developments in global standard-setting and contributing the Commission's views to this process

Outcome

Objectives

Measures

New Zealand's markets and regulatory environment are respected internationally, creating a climate for increased investment and good relationships with overseas regulators

The Commission's contribution to the work and development of IOSCO and other relevant international bodies promotes New Zealand's markets and regulatory environment
The Commission has a strong relationship with ASIC
The Commission fulfils its obligations under the IOSCO Multilateral MOU and bi-lateral MOUs with overseas regulators

The Commission will have achieved its International Cooperation and Recognition Objectives when it has

taken part in all relevant IOSCO meetings and made a presentation which includes promoting New Zealand's markets and/or regulatory environment at 60% or more IOSCO regional meetings
and
met regularly with ASIC and cooperative work is completed to agreed standards and time frames
and
obligations under IOSCO and bi-lateral MOUs are fulfilled within agreed time frames

Output 6 Public understanding

Promoting public understanding of the law and practice of securities

Outcome

Objectives

Measures

People understand the law and practice of securities

The Commission's education projects, websites, publications and presentations provide investors and potential investors with information to help them understand the law and practice of securities
A Guide to New Securities Law is published

The Commission will have achieved its Public Understanding Objectives when

its education projects are completed and meet the measures of success set for each project (90%)
and
the Guide to New Securities Law is published before the law comes into force in 2007

Delivering outputs for the 3 years to 30 June 2010
The Commission has a planning process which culminates in a three year strategic plan. The planning process aims to enable the Commission to efficiently allocate its resources and set its work priorities.

The strategic plan is kept under review during the year and formally reviewed when a new statement of intent is prepared. The plan for the three years to 30 June 2010 sets out the detailed work to be undertaken (under each output) to achieve all the objectives, including the objectives highlighted in this statement of intent. This work will contribute to the outcomes the Commission seeks for New Zealand's securities markets.

The details of this work, and how performance will be measured, are provided in the Statement of Forecast Service Performance on page 28 of this statement of intent.

Investment risks and how we will manage them
Risk is inherent in all investments. The Commission cannot take the risk out of investing, nor should it. However, the Commission is concerned with other risks to investors e.g. dishonest and fraudulent activity, misleading descriptions of investment offers, poor investment choices, and poor investment advice. These risks can affect the markets and investor confidence, and impact on the Commission's desired outcomes for the securities markets.

The Commission reduces these risks by its work in enforcement, monitoring and market oversight, law reform, and by applying resources where market integrity is at greatest risk.

Environmental risks and how we will manage them
The Commission will have a strategy in place by June 2007 to operate and use resources in a sustainable manner. The strategy will set out the methods to achieve the strategy and the performance indicators and targets to be met during the period of this statement of intent.

How we will work with others
The Commission's stakeholders include:

the Minister of Commerce;
the Ministry of Economic Development;
investors, news media, and the general public;
securities markets participants (issuers of securities, brokers, futures dealers, market analysts, stock and futures exchanges, investment advisers, financial intermediaries, debt security trustees and statutory supervisors of participatory securities);
advisers to market participants (lawyers, accountants and auditors);
other New Zealand regulators and enforcement agencies (the Companies Office, Takeovers Panel, Reserve Bank of New Zealand, Serious Fraud Office, Commerce Commission, New Zealand Police);
overseas regulators;
Parliamentary Counsel Office.

Our policy on stakeholders is published at www.seccom.govt.nz/about/stakeholder-policy.shtml

We work with the Minister of Commerce and the Ministry of Economic Development, in accordance with our statutory functions and powers, on policy, regulatory matters, law reform, and appropriations. We report to the Minister under the Crown Entities Act.

Under the Securities Markets Act we have a co-regulatory role with the NZX over the markets operated by that exchange. NZX is currently the sole registered exchange in New Zealand.

We also work with other government agencies including the Registrar of Companies, Reserve Bank of New Zealand, Serious Fraud Office, Parliamentary Counsel Office, Commerce Commission, Retirement Commission, Police and State Services Commission, as appropriate and in accordance with our statutory functions and powers.

We work with overseas securities regulators and agencies in accordance with the IOSCO MMoU, bilateral MOUs and applicable law. We also work with a variety of industry organisations and professional bodies.

Possible changes to our operating environment
Some aspects of securities regulation are currently under review by Government. These include financial intermediaries, the wider law relating to financial products and providers, and anti-money laundering supervision. It is likely that reforms arising from these reviews will affect the Commission within the period of this statement of intent. In particular, if the Commission is given new functions it will need additional resources.

Effectiveness and managing organisational health

The Commission has set a main financial measure for the period of this statement of intent.

Financial objective

To carry out our strategic plan on time and within budget and resources

Financial measure

The Commission will achieve the financial objective when it delivers its outputs, as detailed in the Statement of Service Performance, within the funds appropriated by Parliament for this purpose

Key elements of our capability and how we will manage risks to these
The Commission developed a risk management framework following a study by Deloitte in 2004. This identified the key areas of our capability and risks to these. The main risks are recruitment, key personnel, staff retention, physical event/disaster, reputation, confidentiality of information and knowledge available. The Commission has developed responses to these.

Staff
Our staff has increased from 22 in 2002 to 43 in 2007. A risk for the Commission is that it may not be able to recruit suitably qualified staff. The Commission counters this by boosting graduate recruitment, intensifying overseas recruitment, and targeting New Zealand recruitment campaigns effectively. To date the Commission has managed to recruit as required for its increased responsibilities.

We seek to minimise the risks associated with retention of staff by our commitment to being a good employer. The Commission won the small employer category (up to 50 staff) of the Unlimited/JRA Best Places to Work in New Zealand Survey in 2006, after coming second in 2005. We use this to measure our organisational health and our performance as an employer. Staff complete anonymous surveys under the headings:

Culture and values
Communication and cooperation
Individual's jobs
Performance and recognition

Common purpose
My team
Learning and development
Overall perceptions of the organisation.

Our objective over the next three years is to keep our status as a good employer by continuing our values-based culture, maintaining high professional standards, being responsive to staff feedback, and continuing the human resource practices that have proven effective. The Commission will continue to use the Unlimited/JRA Best Places to Work in New Zealand Survey to measure its performance as a good employer.

Physical event/disaster
The Commission's offices are code compliant under section 95 of the Building Act 2004. Our earthquake and disaster plan includes emergency food, water and first aid supplies, staff trained in first aid, and document and IT recovery systems. Staff have access to the Commission's computer network enabling them to work from home. The Commission has consulted with the State Services Commission on guidance for preparing a Pandemic Plan.

Reputation and integrity
The Commission promotes high ethical standards in the securities markets. If it is to succeed in this, and thereby strengthen confidence in the integrity of New Zealand's capital markets, it is essential that people have confidence in the integrity of the Commission itself.

The Commission must maintain a good reputation both for quality of work and integrity of approach. Much of our work is highly sensitive and confidentiality must be maintained. These risks are managed though the Values and the Code of Ethics we have adopted as an organisation.

Our values

Integrity
We set ourselves the highest professional and ethical standards.

Excellence
We are committed to achieving the highest standards in our work.

Collegiality
We work as a team. We are considerate, supportive, reliable and friendly.

Dynamism
We set goals and work to achieve them. We are proactive and open to ideas.

Responsiveness
We observe and listen. We communicate clearly.

Fairness
We act fairly, firmly and courageously.

The code of ethical standards and behaviour that is expected of Commission Members and staff is published at www.seccom.govt.nz/about/code-of-ethics.shtml

Future capability
The MED's review of financial products and providers is proposing reforms which would significantly increase the Commission's responsibilities. We have carried out a project to estimate the likely resource requirements of these new responsibilities and help prepare for these changes, and advise the Government on the possible funding implications associated with any such reforms. This project has sought to quantify the likely funding needs for premises, infrastructure, technology and personnel needs.

Collaboration on organisational health and capability building The Commission is collaborating with these agencies for its organisational capability and health initiatives:

the State Services Commissioner, for its six Development Goals for the State Services; and
the Equal Employment Opportunities Unit of the Human Rights Commission for its Good Employer Guidance under the National Equal Opportunities Network.

Financial control and acquisition processes
The Commission has policies for expenditure, financial delegations, and acquisitions. The financial delegation policy requires all expenditure to be within set delegations, or subject to prior approval by the Commission. Detailed planning and management procedures based on the Auditor-General's guidelines must be followed for significant acquisitions and for planning and managing litigation expenditure.

Takeovers Panel
The Commission provides administrative and support services to the Takeovers Panel in accordance with the Securities Act. These services are provided under an MOU. For each financial year the Commission and the Panel agree on the level of services required and on the fees to be paid for them. The income received from the Panel and the costs of providing these services are recorded in the financial statements.

Consultation and reporting to the Minister of Commerce

The Minister of Commerce is the Commission's responsible minister, and the Ministry of Economic Development is the monitoring department.

The Commission acts independently of Government and others except as required by the Securities Act 1978 or the Crown Entities Act 2004.

There are no matters on which the Commission is required to consult or notify the responsible Minister before exercising its statutory functions and powers. However, we work with the Minister and Ministry in accordance with our statutory functions and powers on policy, regulatory matters, law reform and appropriations.

The Commission consults with the Minister on the preparation of the statement of intent, and reports to the Minister quarterly and in the annual report.

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