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Statement of Intent 2008-2011

Statement of Forecast Service Performance

Performance standards and measures for the outputs of the Commission

OUTPUT 1

Surveillance and enforcement - monitoring securities market activity, inquiring into suspected breaches of securities law and taking actions to enforce the law.

Activities

Monitor securities market activity and take enforcement action in the following areas:

Primary market -

offer documents, illegal offers, contributory mortgages.

Secondary market -

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:

reviewing practices of market participants and issuers
assessing referrals from NZX
monitoring market disclosures
reviewing offer documents and advertisements for securities
responding to public complaints
using compulsory information-gathering powers (inspections, summons)
commenting publicly on market practice
accepting enforceable undertakings
reviewing financial reporting by issuers
reviewing corporate governance reporting
acting on behalf of overseas commissions
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 measures Surveillance and enforcement	Performance standards
Performance measures Surveillance and enforcement	2008/2009 Forecast	2007/08 Achievements as estimated at 30 April 2008
Quantity
Complete surveillance actions that meet the Commission's case criteria relating to the above matters	132	87
Complete the enforcement actions that meet the Commission's case selection criteria, relating to the above matters.	5	6
One key area (e.g. finance companies or adviser disclosure statements) is identified, investigated & reported on	1	NA - new measure in 2008/09
Complete the financial reporting surveillance programme	2 cycles in the year	2
Quality
Surveillance & enforcement resources are applied in accordance with the Commission's market surveillance and enforcement priorities	Full compliance	Full compliance
The desired regulatory result is achieved in surveillance cases where deficiencies are identified	90%	N/A - new measure in 2008
Enforcement actions achieve the desired regulatory result.	80%	80%
There is no successful judicial review of the Commission's decisions or actions.	100%	100%
Timeliness
Complete surveillance actions	On average within 3 months	On average within 3 months
Progress civil enforcement actions from investigation to the filing of proceedings.	On average, within 24 months of commencement of investigation	No cases taken
Complete other enforcement actions.	On average, within 6 months of action commencing	1.5 months
Complete financial reporting surveillance reporting programme	On average within 9 months of commencing each cycle	On average within 8.7 months of commencing each cycle
Cost
Expenditure allocated to surveillance and enforcement work	38%	38%

OUTPUT 2

Oversight and supervision - oversight of NZX's performance of its regulatory function and preparation for potential supervisory roles under Government reforms.

Activities

Maintain oversight of NZX's performance of its regulation function and prepare to undertake new roles under Government reforms.

This is done by:

overseeing the operation of NZX
analysing the resources that will be needed in order to undertake new roles

Performance measures Oversight and supervision	Performance standards
Performance measures Oversight and supervision	2008/2009 Forecast	2007/2008 Achievements as estimated at 30 April 2008
Quantity
Complete NZX oversight review	1 time in the year	1
Advise the Minister on proposed changes to Conduct Rules of the NZX.	2 times in the year	1
Consider and comment on continuous disclosure applications under the MOU with the NZX.	6	11
Quality
NZX takes actions in response to recommendation in the Commission's oversight review reports	NZX responds constructively to recommendations 100%	NA - new measure in 2008
Appropriate resources needed to implement new law are identified and in place	Appropriate resources are available	NA - new measure in 2008/09
Timeliness
Complete NZX oversight review	Within 6 months	Within 6 months
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.	100%	100%
The Commission has in place the resources to implement new law	When the law comes into force	NA - new measure in 2008/09
Cost
Expenditure allocated to oversight and supervision work	10%	2%

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 measures Oversight and supervision	Performance standards
Performance measures Oversight and supervision	2008/2009 Forecast	2007/2008 Achievements as estimated at 30 April 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.	The Commission will make recommendations to comply with its obligations under the Securities Act 1978 and with other relevant legislation	The Commission will make recommendations to comply with its obligations under the Securities Act 1978 and with other relevant legislation
	The Commission will seek priority for reforms to address shortcomings in regulation of financial advisers, product disclosure, FSAO issues and auditor oversight	N/A - new measure in 2008/09
	The Commission's contributions to law reform will arise in particular from its experience gained in the course of its enforcement work	The Commission's contributions to law reform will arise in particular from its experience gained in the course of its enforcement work
Review exposure drafts of financial reporting and auditing standards, and Financial Reporting Act.	Review as required	Review as required
Participate on projects and reviews with the Ministry of Economic Development, other government departments and interested parties.	Participation as required	Participation as required
Quality
The recommendations for securities law reform and improved market practice made in accordance with obligations under the Securities Act 1978 and other relevant legislation, and the quality of advice and assistance on MED reform programmes, satisfy the MED.	MED is satisfied with the quality of advice and assistance given	The Commission will base its work on thorough and accurate research into, and analysis of, the existing law and practice
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	6%	6%

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 measures Exemptions and authorisations	Performance standards
Performance measures Exemptions and authorisations	2008/2009 Forecast	2007/2008 achievements as estimated at 30 April 2008
Quantity
Consider all applications for exemptions and authorisations of market participants.	All applications	75 15
Review existing exemption notices and authorisations.	As required	As required
Quality
The Regulations Review Committee does not recommend disallowance of notices, and notices are not successfully judicially reviewed.	100%	100%
A Statement of Reasons published in each notice explains the policy basis for the exemption	100%	N/A new in 2008/09
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%	7%

OUTPUT 5

International liaison - promoting New Zealand's markets as well regulated, 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 Vice Chairman),
- Committee on the Implementation of Objectives and Principles of Securities Regulation,
- Communications Group.
Meet and confer with overseas regulators and institutional investors.
Respond to overseas enquiries about New Zealand's regulatory regime.
Participate in the international standard setting process by completing comparative surveys on securities law and regulation.
Fulfill the obligations under the IOSCO MMoU and bilateral MOUs.
Contribute towards trans-Tasman initiatives.
Liaise with MFAT and NZTE to take opportunities to promote New Zealand's markets and regulatory environment to wider audiences

Performance measures International recognition	Performance standards
Performance measures International recognition	2008/2009 Forecast	2007/2008 achievements as estimated at 30 April 2008
Quantity
Take part in the work of IOSCO's Executive Committee, Asia Pacific Regional Committee, Implementation of Objectives and Principles of Securities Regulation Committee, and the Screening Group.	100% of relevant meetings	Participated as required
Take opportunities at IOSCO meetings to promote understanding of New Zealand as a well regulated market in which investors can have confidence	100% of appropriate opportunities are taken	All appropriate opportunities taken
When travelling for IOSCO take opportunities identified with MFAT and NZTE to promote New Zealand to wider business audiences as a well regulated market in which investors can have confidence	Leveraging undertaken in 70% of international destinations visited	NA new in 2008/09
Respond to requests from overseas regulators	As required	As required
Meet with ASIC	Twice per year	Completed
Meet with overseas regulators and institutional investors.	As required	As required
Contribute towards trans-Tasman initiatives.	As required	Contributed
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.	Presentations include information about NZ's regulatory environment	The Commission based its presentations on sound research & analysis
The Commission contributes to achievement of IOSCO's strategic goal for the IOSCO MMoU	IOSCO positively assesses our work towards IOSCO's strategic goal for the MMoU	NA new in 2008/09
The Commission makes a positive contribution to the work of IOSCO's screening group	IOSCO & Commission satisfied with contribution	NA new in 2008/09
Cooperative work with ASIC is completed to agreed standards and time frames	100%	100%
Timeliness
Presentations at meetings and responses to committees provided within agreed timeframes.	100%	100%
Contribute towards trans-Tasman initiatives within agreed time.	100%	100%
Obligations under MOUs with overseas regulators are fulfilled in agreed times.	100%	100%
Cost
Expenditure allocated to international recognition	18%	18%

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 measures Output - Public understanding	Performance standards
Performance measures Output - Public understanding	2008/2009 Forecast	2007/2008 achievements as estimated at 30 April 2008
Quantity
Publish The Bulletin.	4 times a year	4 times a year
Deal with inquiries from the public.	All inquiries	1,400 a year
Manage the Commission’s website.	Website is available 95% of the time	Website was available 99% of the time
Develop and implement public education projects	3 sub-projects are implemented per year	4 approved sub-projects were implemented
Quality
Readers respond that The Bulletin is interesting and relevant.	No responses will be sought - next survey July 2009	100% of survey respondents say they find The Bulletin interesting and relevant
Education projects meet their set measures of success.	90% of measures of success for each sub-project are met	Objectives for each sub-project were met
Inquiries are dealt with effectively.	Absence of material number of complaints	Did not received a material number of complaints
Market tests indicate the Guide to the New Law is useful and relevant	N/A Not a measure in future	Market tests in 2007 found the guide useful & relevant
Timeliness
The Bulletin is produced on time.	July/Oct/Jan/April	July/Oct/Jan/April
Education projects are carried out to agreed timetables.	Sub-projects milestones are achieved	Sub-projects' milestones achieved
Public inquiries are handled within 5 working days of receipt.	95%	95%
New information is published on the website without delay.	New information is available on the website within 3 days of receipt	On website within 2 days of receipt by Communications staff
Cost
Expenditure allocated to public understanding	14%	14%

Performance measures	Performance standards
Performance measures	20082009 Forecast	2007/2008 Esachievements as estimated at 30 April 2008timate
Takeovers Panel
Quality, Quantity 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 Takeovers Panel	7%	15%

Expected revenue and proposed expenses (for class of output)

Class of output - Performance of Securities Market Functions (Vote Commerce)

	2008/09 Forecast $000	2007/08 Estimate $000

Expected revenue	8,364	7,794

Proposed expenses	9,415	8,415

Operating surplus	(1,051)	(441)

Litigation fund

	2008/09 Vote Commerce $000	2007/08 Estimate $000

Expected revenue	430	2,076

Proposed expenses	638	51

Litigation surplus	(208)	2,025

This information is provided pursuant to section 142(2)(b), Crown Entities Act 2004.

Glossary

Functions

For the purposes of this SOI functions are the areas of work for which the Commission is funded from the Vote Commerce. [The Commission's statutory functions are set out in the Securities Act 1978.]

Outcomes

The six specific outcomes for the New Zealand securities markets that the Commission contributes to by delivering the outputs for which it is funded and achieving its objectives.

Outputs

The six areas of work undertaken by the Commission which are funded from the Vote Commerce.

Objectives

Objectives set by the Commission which it intends to achieve within specified periods in the term of this SOI, and which also contribute to the outcomes.

Primary markets

Offers of new securities made to the public.

Secondary markets

Trading of securities.

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