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There are three different sets of proposed rule changes at various stages throughout the submissions process being considered at the current time. Collectively the rules are intended to form the backbone of an optimum regulatory framework for New Zealand 's capital markets and have been carefully designed to build market integrity, enhance investor confidence and create maximum efficiency amongst market participants.
“To attract both domestic and international investment back into New Zealand's capital markets, we had to assess our regulatory framework and make changes to design a regulatory environment that would enhance investor protections at every level, maintain integrity and build confidence in our markets,” said Mark Weldon, NZX CEO. “We looked to international models to benchmark against and to the people in New Zealand who have to utilise the system to create the optimal environment for raising capital and creating shareholder wealth.”
The three sets of rule changes include the introduction of the NZX Discipline Rules, the introduction of the NZX Participant Rules and changes to miscellaneous Listing Rules to support the introduction of the NZX Discipline Rules. NZX has posted a full table of the submissions process for each set of rules on their website and will be updating it regularly throughout the approvals process (www.nzx.com/regulation).
“Given the large number of complex rule changes being proposed by NZX, we felt that it was important to help the market understand exactly what we're proposing and why and how they can contribute to the process so that we develop the optimal set of rules for this market,” said Rebecca Cottrell, NZX Acting General Counsel.
A summary of these rules and the process surrounding each is outlined below.
- NZX Discipline Rules
- Goal: To create one simple, consistent, fair and transparent structure for both Listed Issuers and all market participants. The NZX Discipline Rules govern this new framework.
- Submission process: The proposed NZX Discipline Rules are the result of an 8 month submission process in which the initial framework was first proposed in May 2003. NZX received 7 submissions on this framework which helped form the basis of the proposed rules. NZX released the first draft of the NZX Discipline rules on 11 December 2003 and held a conference call with all market participants and interested parties on 15 January 2004. The submissions process closed on Friday 23 January.
- Next steps: NZX is currently reviewing feedback and seeking further clarification from key submitters on specific issues prior to redrafting the final Rules. The final proposed NZX Discipline Rules will go to the Minister for review once complete.
- Goal: To create one simple, consistent, fair and transparent structure for both Listed Issuers and all market participants. The NZX Discipline Rules govern this new framework.
- NZX Participant Rules
- Goal: The NZX Participant Rules have been designed to better reflect the current structure of the marketplace and the differing relationships various participants have with NZX. They will allow greater flexibility and potential cost benefits for participants based on how they choose to operate in the market.
- Submission process: The proposed NZX Participant Rules
are currently with the Minister of Commerce for review. The first draft
was put out for public submission on 2 December 2003 after consultation
with various industry groups, including the Compliance Working Group (CWG),
to develop the best possible framework. In addition, NZX received a number
of submissions which were reviewed and incorporated where appropriate. NZX
sought further clarification with some individual submitters and the CWG
on a number of issues and a final draft was submitted to the Minister on
January 7 2004.
- Next steps: Review by the Minister.
- Goal: The NZX Participant Rules have been designed to better reflect the current structure of the marketplace and the differing relationships various participants have with NZX. They will allow greater flexibility and potential cost benefits for participants based on how they choose to operate in the market.
- Miscellaneous NZX Listing Rules changes
- Goal: NZX identified certain anomalies during review
of the legal and regulatory framework and sought to clarify and rectify
these. The proposed changes to the Listing Rules are designed to further
enhance market efficiency and bring the rules into line with both current
practices and overseas standards.
- Submission process: The proposed NZX Listing Rule changes were first published on 11 December 2003 and a conference call was held on Friday 23 January 2004 to listen to market feedback and gather further submissions.
- Next steps: The submission period closed yesterday, Wednesday 28 January, with 15 submissions. NZX will review all submissions, update all those who have participated in the submission process and seek further clarification from some individual submitters on specific issues, before redrafting the final rules.
- Goal: NZX identified certain anomalies during review
of the legal and regulatory framework and sought to clarify and rectify
these. The proposed changes to the Listing Rules are designed to further
enhance market efficiency and bring the rules into line with both current
practices and overseas standards.
Recent public comments about the need for independent directors has created some confusion about the proposed rules given that these requirements make up part of the Corporate Governance provisions introduced in late last year and are not part of this rules review.
The Listing Rules pertaining to Corporate Governance were deemed by the Minister and Securities Commission to be in the public interest and passed into law on October 29, 2003 .
For further information, please contact: Rebecca Cottrell on the NZX Discipline Rules and Listing Rules (Rebecca.cottrell@nzx.com) or Rachael Cross on the NZX Participant Rules (Rachael.cross@nzx.com).
