Memorandum of Understanding

DIRECTIONS
Principles

Under Section 36ZO of the Markets Act the Commission may give directions to a registered exchange to suspend trading in certain securities registered on a registered exchange or give other directions in relation to trading on the registered exchange in accordance with sections 36ZP to 36ZT.

Without limiting the ability of the Commission to perform its statutory functions and exercise its statutory powers, the Commission agrees that it will consider the following principles in exercising its power to give directions:

(a)	It is desirable for NZSE and the Commission to work together for the effective regulation of NZSE's listed securities market;
(b)	The NZSE is the front-line regulator of NZSE's listed securities market and should have the opportunity to sanction participants;
(c)	Where possible and appropriate the Commission will draw to the attention of NZSE matters relating to the regulation, trading, or conduct of NZSE's markets, or of participants in those markets, that might lead the Commission to give notice of an intention to give a direction;
(d)	Where the Commission raises a matter with NZSE under clause 7.2(c), NZSE will assess and report on the matter to the Commission as soon as practicable.;
(e)	Where possible and appropriate, representatives of NZSE and the Commission will meet to discuss matters of concern to the Commission and will endeavour to reach solutions in the interest of the market.

8. CONDUCT RULES APPROVAL AND DISALLOWANCE

Principles

NZSE and the Commission agree to maintain a dialogue on the operation of NZSE's conduct rules, and to consult early where changes to those rules are perceived to be needed or are proposed.

NZSE recognises that the Commission has a statutory role to advise the Minister on proposed changes to NZSE's conduct rules. The Commission will provide comment on proposed changes to the NZSE in a timely fashion. The NZSE recognises that any comment or assistance provided to NZSE cannot bind the Commission in its advice given to the Minister under the Markets Act.

The Commission will consult with NZSE prior to providing its advice on any proposed change to the Minister under the Markets Act

Process

Where NZSE proposes to introduce a new conduct rule, or to change an existing conduct rule (a "proposed change") NZSE will, where possible, give the Commission early notice of its intention to do this and will consult with the Commission on draft changes ahead of the submission of the new rule or amendment to the Minister.

The notification will include the following information:

(a)	The proposed change to the conduct rules;
(b)	The reasons for the proposed change;
(c)	Whether in the view of NZSE the approval or disallowance process under the Markets Act will apply to the proposed change;
(d)	A timetable for introduction of the proposed change; and
(e)	A description of the consultation that NZSE intends to carry out prior to making any change to the conduct rules arising from the proposal.

Where possible and appropriate NZSE and the Commission will meet to discuss proposed changes to the conduct rules before NZSE submits the new rule or amendment to the Minister.