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Statement of Intent 2009-2012
Statement of Forecast Service Performance
Performance standards and measures for the outputs of the Commission
OUTPUT 1
Market 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 | |
|---|---|---|
| 2009/2010 Forecast |
2008/09 Achievements as estimated at 31 March 2009 |
|
| Quantity | ||
| Complete surveillance actions that meet the Commission’s case criteria relating to the above matters | 86 | 110 |
| Complete the enforcement actions that meet the Commission’s case selection criteria, relating to the above matters | 2 | 1 action was completed Proceedings were filed in Court in respect of two finance companies |
| One key area (e.g. finance companies or adviser disclosure statements) is identified, investigated & reported on | N/A (one-off measure for 2008/09 only but may be considered in future years) | 1 – covering investment adviser disclosure |
| Complete the financial reporting surveillance programme | 2 cycles in the year | 2 cycles |
| 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% | 100% |
| Enforcement actions achieve the desired regulatory result | 80% | 100% – for one action that was completed Progress was made on finance company enforcement and investment adviser disclosure in the year |
| There is no successful judicial review of the Commission’s decisions or actions | 100% | 100% |
| Timeliness | ||
| Complete surveillance actions | On average within 3 months | 5.2 months on average - includes long term jobs that took 12 months plus |
| Progress civil enforcement actions from investigation to the filing of proceedings | On average, within 24 months of commencement of investigation | 17 months |
| Complete other enforcement actions. | On average, within 6 months of action commencing | 4.5 months |
| Complete financial reporting surveillance reporting programme | On average within 9 months of commencing each cycle | 9 months |
| Cost | ||
| Expenditure allocated to surveillance and enforcement work | 35% | 39% |
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
- ensuring appropriate resources needed to implement new law for financial advisers are identified and in place
| Performance measures Oversight and supervision |
Performance standards | |
|---|---|---|
| 2009/2010 Forecast |
2008/09 Achievements as estimated at 31 March 2009 |
|
| Quantity | ||
| Complete NZX oversight review | 1 time in the year | 1 time in the year |
| Advise the Minister on proposed changes to Conduct Rules of the NZX | 2 times in the year | 2 times in the year |
| Consider and comment on continuous disclosure applications under the MOU with the NZX | 6 | 2 |
| Quality | ||
| NZX takes actions in response to recommendation in the Commission’s oversight review reports | NZX responds constructively to recommendations | NZX responded constructively to recommendations |
| The recommendations for the proposed changes to Conduct Rules of the NZX satisfy the Minister | The Minister responds that he is satisfied with the quality of the proposed changes | N/A (new measure) |
| Appropriate resources needed to implement new law for financial advisers are identified and in place | N/A (not a future output measure) | Funding bids for the appropriate resources were submitted during the year |
| Timeliness |
|
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| 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 for financial advisers | N/A (not a future output measure) | Funding bids for the appropriate resources were submitted during the year |
| Subject to funding, the Commission has in place the people, training, procedures and infrastructure to perform its functions under the financial adviser law when the law comes into force | Implementation of plan is on schedule | N/A (new measure) |
| Cost | ||
| Expenditure allocated to oversight and supervision work | 27% | 14% |
OUTPUT 3
Law and practice reform - reviewing securities law and practice and making recommendations for reform.
Activities
Maintain oversight of NZX's performance of its regulation function and prepare to undertake new roles under Government reforms.
This is done by:
- Contribute to Government law reform programmes
- Recommend changes to corporate and securities law
- Comment on accounting and other industry standards and codes
| Performance measures Law and practice reform |
Performance standards | |
|---|---|---|
| 2009/2010 Forecast | 2008/09 achievements as estimated at 31 March 2009 | |
| 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 advised the Minister on the proposed trading of Emissions Units in terms of the Securities Act |
The Commission will seek priority for reforms to address
|
The Commission advised the Minister and MED on the proposed Financial Advisers Bill policy |
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| The Commission’s contributions to law reform will arise in particular from its experience gained in the course of its enforcement work | Advised the Minister on legal issues concerning real estate and securities law | |
| Review exposure drafts of financial reporting and auditing standards, and Financial Reporting Act | Review as required | Reviewed 3 discussion papers, 3 exposure drafts, and 2 existing standards |
| Participate on projects and reviews with the Ministry of Economic Development, other government departments and interested parties | Participation as required | Provided advice and comment to the Minister, MED, and the Finance and Expenditure Committee on the Financial Advisers and Financial Service Providers reforms Provided advice and comment to MED and Minister of Commerce on settlement systems reforms, review of financial products and providers, Securities Disclosure and Financial Advisers Amendment Bill and other recommendations of the Capital Markets Development Taskforce Provided advice and comment to the Ministry of Justice on proposed AML reforms |
| 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 | MED is satisfied with the quality of advice and assistance given |
| Timeliness |
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| 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% |
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