Developments in New Zealand's securities market regulatory framework

In a speech made by Professor Keitha Dunstan, a member of the New Zealand Securities Commission, the focus was on the following four developments in the New Zealand regulatory framework:

Securities Legislation Bill

Professor Dunstan stated that the New Zealand Securities Commission (the NZSC) is very supportive of the Securities Legislation Bill because it will bring New Zealand more fully into the international mainstream of regulatory law and practice.

In addition, the Bill introduces a new regime for dealing with market manipulation - for example, a prohibition on false or misleading statements with regard to listed securities will be introduced, together with general provisions for dealing with misconduct in relation to securities issues and trading.

Professor Dunstan also noted that the NZSC will have new powers to act against anyone manipulating the market and the "courts will be able to impose hefty civil penalties and, in some circumstances, enter criminal convictions and impose prison sentences".

The Bill also addresses the regulation of investment advisers - an area where New Zealand has been seen to lag behind. Advisers will be subject to new disclosure requirements and the NZSC will have new enforcement powers, enabling it "to ban misleading, confusing or deceptive advertisements and to generally enforce compliance with the disclosure requirements".

Professor Dunstan stated that further substantive developments in the regulation of advisers and other financial intermediaries will follow.

Securities Commission

Professor Dunstan discussed the role of the NZSC, some developments in the past few years and significant cases it has dealt with.

International Financial Reporting Standards (IFRS)

All reporting entities in New Zealand must comply with IFRS equivalents for accounting periods that start on or after 1 January 2007.

The core platform of New Zealand equivalents was approved by the Accounting Standards Review Board in 2004, and the Financial Reporting Standards Board is responsible for the ongoing development of IFRS equivalents and of New Zealand specific financial reporting standards.

Professor Dunstan stated that "compliance with best international practices in accounting and reporting is a 'must' for the credibility of our companies and for investor confidence in New Zealand".

Trans-Tasman relationship

Professor Dunstan noted that New Zealand and Australia have been working on business law co-ordination for the past six years in order to pave the way for trans-Tasman co-ordination of regulatory structures.

In her concluding remarks, Professor Dunstan emphasised "the importance to New Zealand of meeting international standards in securities regulation and cross-border co-operation on matters of enforcement".

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