NZSE proposes changes to make market more transparent

By NZPA

Thursday 1st August 2002

The New Zealand Stock Exchange (NZSE) has released a list of suggested rule changes to make the market more transparent, in the wake of the recent US accounting scandals.

A discussion paper on proposed changes to the exchange's rules of conduct was released today.

The NZSE said the plan was to align its listing rules with key aspects of the new Securities Markets and Institutions Bill, currently before Parliament, including continuous disclosure and "an obligation on directors to disclose all trading in relevant securities".

Changes to the business rules, including a higher level of liquidity, would "promote growth in a fairly static market".

Other changes were aimed at the exchange's operations, including the workings of the Market Surveillance Panel and various disciplinary bodies.

The exchange said it was also seeking comment on ways to strengthen the corporate governance aspects of its listing rules.

Key proposals included:

* Imposing set numbers of independent directors, mandatory audit committees, separating the roles of chief executive officer and chairperson on boards, and setting minimum qualification standards for directors.

* Requiring non-compliance with a best practice corporate governance code to be reported to the exchange.

* changes to the continuous disclosure regime.

* a reduction in the time periods for submitting annual reports (from four to three months) and half-yearly reports (from four to two months).

* allowing issuers to apply for a trading halt for a limited period.

* giving exchange officers a greater role in Market Surveillance Panel proceedings and publishing its decisions in certain circumstances.

* adjusting the fee structure for Market Surveillance Panel matters and imposing a delisting fee on issuers.

Suggested changes to the business rules include upping penalties for disciplinary bodies and encouraging greater transparency; changes to short selling provisions; changes to regulations regarding the FASTER online trading system; and changes to the level of liquid capital required of members.

NZSE chief executive Mark Weldon said the changes included "significantly beefed up disciplinary powers in the rules and regulations relating to the actions that broker dealers take in the market".

The changes would also create more "clarity around the more opaque" regulations.

The NZSE board wanted rules concerning financial reports to start on September 31 and changes to corporate governance phased in over a year.

Also proposed were a range of fee rises which the NZSE board plans to bring into effect on August 16.

They include a 10 percent surcharge on market surveillance panel work and a 15 percent administration fee on final invoices.

The exchange also proposes to broaden the $200 hourly rate charged by exchange and surveillance panel members to include executives, who presently charge $150 an hour.

Other increases would include charging for staff time spent on rulings, waivers, and approvals concerning the new capital market, and the introduction of delisting fees.

The changes were "absolutely not" driven by the exchange's planned demutualisation, Mr Weldon said.

"Under current charges we are not even close to recovering costs," he said.

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