In its second submission to the Finance and Expenditure Select Committee considering the New Zealand Stock Exchange Restructuring Bill, Chairman Mr Simon Allen said that "while the Sharebrokers, Amendment Act has met the markets needs over the past two decades, the Exchange's current form and governing statute now limits its ability to respond to a fast changing and dynamic environment.
Mr Allen said the Companies Act provides a better statutory framework for the Exchange and the Bill enables the Exchange's members to choose company status over its existing body corporate status.
"The current statutory framework and corporate form place considerable limits on the Exchange's activities and doubts as to where the boundaries of those limits lie”.
“The NZSE's objective is to secure the best possible structure and basis for New Zealand's capital markets,” Mr Allen said.
'There are three major challenges facing Stock Exchanges globally, namely: technological advancements and changes requiring a broader access to capital for investment; increasing competition from international exchanges and alternatives; and increasing demand from investors for global investment driving an increase in cross-border investment products and arrangements between exchanges to facilitate trading”.
Mr Allen said demutualisation was an important step in enabling the Exchange to meet these challenges.
“It will provide great scope and flexibility in the range and nature of activities that the Exchange can undertake. The Companies Act provides companies with full capacity to carry on business, and through the statutory and contractual framework it provides great certainty as to the rights of owners and provides incentives to ensure the Exchange enhances a customer focus.
It would also enable the separation of ownership and provision of capital from access to the stockmarket with the consequent advantages of widening the potential capital base, providing market participants with greater opportunity to have an ownership involvement in the Exchange, improving accountability and efficiency of service pricing and use of investment capital.
"It returns value to members who have contributed to the creation of that value and listing the shares of company enables its true value to be determined and allows investment interests to be transferred".
