STATEMENT OF OBJECTIVES
for the year ended 30 June 2008
Funds are to be appropriated by Parliament for the year to 30 June 2008 for the stated purpose of:
"Enforcement - inquiring into suspected breaches of securities law and intervening in the interests of investors in accordance with statutory powers.
Monitoring and market oversight - maintaining oversight of securities market activity and taking actions in accordance with statutory powers.
Enforcement-based law and practice reform - reviewing securities law and practice and making recommendations for reform.
Exemptions and authorisations - considering and deciding on applications for exemptions from the provisions of the Securities Act 1978, Securities Markets Act 1988 and the Securities Regulations 1983; considering and deciding on applications for authorisation of market participants, for example, futures exchanges and dealers, trustees and statutory supervisors; reviewing existing authorisations.
International 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.
Public understanding and market presence - promoting public understanding of the law and practice of securities."
(The Estimates of Appropriations for the Government of New Zealand for the year ending 30 June 2008, Volume 1: 149-150).
STATEMENT OF SERVICE PERFORMANCE
Performance standards and measures for the outputs of the Commission
for the year ended 30 June 2008
OUTPUT 1
Enforcement - inquiring into suspected breaches of securities law and intervening in the interests of investors in accordance with statutory powers.
insider trading, market manipulation, secondary market disclosures
(substantial security holder disclosure, continuous disclosure, disclosure
of trading by directors and officers).
Intermediaries
futures dealers, investment advisers.
This is done by:
prohibiting advertising,
removing offer documents from the market,
taking civil enforcement action in the Courts,
referring for prosecution,
acting on behalf of overseas commissions,
making other compulsory orders.
Performance standards
Performance measures
Enforcement
Actual
2008
Budget
2008
Quantity
Complete the enforcement actions
that meet the Commission’s case
selection criteria, relating to the
above matters.
6
5
Enforcement resources are applied
in accordance with established
targets subject to variances under
the Commission’s case selection
and public interest criteria.
Full compliance
Full compliance
Quantity
Enforcement actions achieve the
desired regulatory result.
100%
80%
There is no successful judicial
review of the Commission’s
decisions or actions.
100%
100%
Timeliness
Progress civil enforcement actions
from investigation to the filing of
proceedings.
There were no civil enforcement
actions to progress
On average, within 24 months of
commencement of investigation
Complete other enforcement
actions.
2.0 months
On average, within 6 months of
action commencing
Cost
Expenditure allocated to
enforcement work.
2%
4%
OUTPUT 2
Monitoring and market oversight – maintaining oversight of securities market activity and taking
actions in accordance with its statutory powers.
Activities
Maintain oversight of securities markets and take appropriate action in the following areas:
Advise the Minister on proposed changes to Conduct
Rules of the NZX.
NZX had no proposed changes
2 times in the year
Consider and comment on continuous disclosure
applications under the MOU with the NZX.
8 times
6
MMO resources are applied in accordance with
established targets subject to variances under the
Commission’s case selection and public interest criteria
Full compliance
Full compliance
Quality
There is no successful judicial review of the
Commission’s decisions or actions.
100%
100%
Percentage of cases where compliance breaches or poor
standards of conduct in the markets are identified and
the desired regulatory result is achieved.
On average, within 9
months of commencing
each cycle
Advice is provided to the Minister on approvals of, or
proposed changes to, the NZX Conduct Rules within
timeframes agreed with the NZX and allowing the
Minister to exercise powers within the timeframes
specified in the Securities Markets Act 1988.
NZX had no approvals
or proposed changes
100%
Cost
Expenditure allocated to monitoring and market
oversight work.
37%
41%
OUTPUT 3
Law and practice reform – reviewing securities law and practice and making recommendations for
reform.
Activities
Contribute to Government law reform programmes
Recommend changes to corporate and securities law
Comment on accounting and other industry standards and codes
Performance standards
Performance measures
Law and practice reform
Actual
2008
Budget
2008
Quantity
Make recommendations for securities law reform and
improved market practice in accordance with obligations
under the Securities Act 1978 and other relevant
legislation.
In September the
Commission made a recommendation for
urgent changes to the
Securities Regulations
1983 to strengthen the
power of trustees of
finance companies. This
was accepted and
amendments came into
force on 21 September
2007
The Commission will
make recommendations
to comply with its
obligations under the
Securities Act 1978 and
with other relevant
legislation.
The Commission’s
contributions to law
reform will arise in
particular from the
experience gained in the
course of its
enforcement work
Review exposure drafts of financial reporting and
auditing standards, and Financial Reporting Act.
Reviewed 3 exposure
drafts.
In August the
Commission made a
recommendation to the
Ministry of Economic
Development to
consider a review of independent auditor
oversight in NZ so it
may be brought into
line with international
best practice
Review as required
Participate in projects and reviews with the Ministry of
Economic Development, other government departments
and interested parties.
Participated in MED
projects and reviews being:
Securities Legislation
Bill Regulations
Review of Financial
Products and
Providers
Review of Financial
Intermediaries
Non-bank deposit
takers and Ministry of
Justice’s Anti-Money
Laundering proposals
Participation as required
Quality
Make recommendations for securities law reform and
improved market practice in accordance with obligations
under the Securities Act 1978 and other relevant
legislation; quality of advice and assistance on MED
reform programmes satisfies MED.
MED has advised it is
satisfied with the quality
of advice and assistance
given. Recommendations to strengthen the powers
of trustees of finance
companies were
accepted by Cabinet
MED is satisfied with
the quality of advice
and assistance given
Timeliness
Provide information and responses to the Ministry of
Economic Development and others within agreed
timeframes.
100%
100%
Cost
Expenditure allocated to law and practice reform.
7%
7%
OUTPUT 4
Exemptions and authorisations – considering and deciding on applications for exemptions from the
provisions of the Securities Act 1978, Securities Markets Act 1988 and the Securities Regulations 1983;
considering and deciding on applications for authorisation of market participants, including futures
exchanges and dealers, trustees and statutory supervisors; reviewing existing authorisations.
Activities
Receive and consider applications for exemption from securities law.
Review existing exemptions.
Undertake special review projects relating to policy on exemptions.
Authorise futures dealers and exchanges.
Consider amendments to futures exchange rules.
Approve NZFOX participant rules.
Approve trustees and statutory supervisors.
Review existing authorisations.
Performance standards
Performance measures
Exemptions and authorisations
Actual
2008
Budget
2008
Quantity
Consider all applications for exemptions and
authorisations of market participants.
Considered all applications
The Commission
completed its 5-yearly
review of class exemptions
All applications
Review existing exemption notices and authorisations.
Reviewed as required
As required
Quality
The Regulations Review Committee does not
recommend disallowance of notices, and notices are not
successfully judicially reviewed.
100%
100%
Proportion of notices issued which comply with the
Commission’s internal processes.
100%
100%
Timeliness
Percentage of exemption applications and authorisations
completed within 6 weeks of receiving all necessary
information or within other period agreed with
applicant.
100%
100%
Cost
Expenditure allocated to exemptions and authorisations.
7%
8%
OUTPUT 5
International liaison – 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.
Activities
Promote New Zealand's markets and regulatory environment.
Take part in the work of IOSCO's:
- Executive Committee (Jane Diplock is Chairman of this committee),
- Asia Pacific Regional Committee (Jane Diplock is Deputy Chairman),
- Committee on the Implementation of Objectives and Principles of Securities Regulation,
- Communications Group.
Meet and confer with overseas regulators and institutional investors.
Contribute to implementation of the FSAP recommendations.
Respond to enquiries from overseas about New Zealand's regulatory regime.
Participate in the international standard setting process by completing comparative surveys on securities law and regulation.
Fulfil the obligations under the IOSCO MMOU and bilateral MOUs.
Contribute towards trans-Tasman initiatives.
Performance standards
Performance measures
International recognition
Actual
2008
Budget 2008
Quantity
Take part in the work of IOSCO’s
Executive Committee, Asia Pacific
Regional Committee and
Implementation of Objectives and
Principles of Securities Regulation
Committee.
The Chairman was re-elected chair of
IOSCO’s Executive Committee for a third 2 year term. The Commission was also reelected
Vice-chair of the Asia-Pacific Regional
Committee
Attended a series of IOSCO meetings in Dubai, Tokyo, South Korea, Amsterdam and Paris
The regulator’s perspective was presented at the IASC Foundation’s conference on IFRS in Singapore
Contributed to the IOSCO IFRS Database as Moderator and recorded a decision in the Database
Completed the recruitment process of the next Secretary General of IOSCO and met with the new Secretary General and his team
The Commission also took part in the work of the IOSCO MMOU Screening Group
The Commission’s proposal for NZAID funding to assist the securities regulator of Papua New Guinea to apply to the IOSCO MMOU was approved
100% of relevant
meetings
Make presentations at IOSCO
meetings which promote New
Zealand’s markets and regulatory
environment.
A heavy schedule of speaking and meeting commitments with both IOSCO related and wider business audiences was completed, and opportunities taken to promote New Zealand’s markets and regulatory environment in over 70% of cases
Bilateral MOUs were signed with the Emirates Securities and Commodities Authority
(ESCA), and the Securities Commission of
Jordan
60% of meetings
attended
Meet with ASIC.
Meetings were held with ASIC in October and March
Twice per year
Meet with overseas regulators and
institutional investors.
The Commission hosted delegations of regulators and government officials from Vietnam and the Trade Minister of the UAE (former Minister for the Economy and Chairman of ESCA) Met with several regulators during IOSCO meetings and bilateral country visits
As required
Contribute towards trans-Tasman
initiatives.
The Commission presented a New Zealand regulatory perspective on CER at ASIC’s Summer School.
The Commission and ASIC developed and published a joint protocol and a joint guide to facilitate the implementation of the Mutual Recognition of Securities Offerings that came into force on 13 June 2008
The Chairman took part in the Australia New Zealand Leadership Forum.
As required
Quality
The Commission will present itself as
a constructive and cooperative
member of the international
community of regulators. Views
expressed to IOSCO will take into
account the relevant New Zealand
values and principles.
The Commission presented itself
constructively and cooperatively at the
international level. Views expressed to
IOSCO were congruent with New Zealand’s
values and principles
Presentations include
information about
NZ’s regulatory
environment
Cooperative work with ASIC is
completed to agreed standards and
timeframes
100%
100%
Timeliness
Presentations at meetings and
responses to committees provided
within agreed timeframes.
100%
100%
Contribute towards trans-Tasman
initiatives, within agreed timeframes.
100%
100%
Obligations under MOUs with
overseas regulators are fulfilled within
mutually agreed timeframes.
100%
100%
Cost
Expenditure allocated to
international liaison work.
19%
14%
OUTPUT 6
Public understanding - promoting public understanding of the law and practice of securities.
Activities
Publish The Bulletin, annual report and other documents.
Respond to public inquiries.
Manage the website.
Maintain relationships with the news media.
Develop and implement a public education programme.
Performance standards
Performance measures
Public understanding and market presence
Actual
2008
Budget
2008
Quantity
Publish The Bulletin.
July / October / January /
April
4 times a year
Deal with inquiries from the public.
1,572 inquiries
All inquiries
Manage the Commission's website.
Website was available 99.52%
of the time
Website is
available 95% of
the time
Develop and implement public education projects.
Implemented sub-projects
Risk and Return, New Law
Investment Advisers, New
Law Investors, and Youth
3 sub-projects
are implemented
per year
Quality
Readers respond that The Bulletin is interesting and
relevant.
100% of reader responses
found it very useful or useful
80% of reader
response to
survey
Education projects meet their set measures of success.
Objectives for above subprojects met
90% of measures
of success for
each sub-project are met
Inquiries are dealt with effectively.
No complaints received
Absence of
material number
of complaints
Market tests indicate the Guide to the New Law is useful
and relevant.
Testing with investment
advisers and directors
indicated the guide is useful
and relevant
Market test
reports indicate
guide is useful
and relevant
Timeliness
The Bulletin is produced on time.
July / October / January /
April
July / October /
January / April
Education projects are carried out to agreed timetables.
Sub-project milestones
achieved except for:
New Law – reactivated after
Regulations approved
December 07, and
Youth student study guides
deferred awaiting NZQA
decisions
Sub-project
milestones are
achieved
Public inquiries are handled within 5 working days of
receipt.
100%
95%
New information is published on the website without
delay
New information was available
on the website within 3 days
of receipt
New
information is
available on the
website within 3
days of receipt
Meetings with, and responses to, news media meet agreed
timetables.
At all times
At all times
Cost
Expenditure allocated to public understanding.
13%
11%
OUTPUT 7
Takeovers Panel – providing administrative and support services by agreement.
Activities
Provide services related to the Panel’s outputs including:
review of Takeovers Code,
approvals,
exemptions,
enforcement,
market practice,
public understanding,
international liaison,
administration.
Performance standards
Performance measures
Takeovers Panel
Actual
2008
Budget
2008
Quantity, Quality and Timeliness
Services are provided as per the MOU between the
Panel and the Commission.
In accordance with the MOU
In accordance with the MOU
Cost
Expenditure allocated to providing
administrative services to Takeovers Panel.
