Foss Craig: Financial Markets Conduct Bill — In CommitteeText is incorporated into the Bound VolumeFoss Craig: Financial Markets Conduct Bill — In Committee[Sitting date: 27 August 2013. Volume:693;Page:12985. Text is incorporated into the Bound Volume.]Hon CRAIG FOSS (Minister of Commerce): The Financial Markets Conduct Bill is a very very large bill with many parts. It is very complex. The tentacles of it go everywhere. It has huge impact on the modernisation the new sophistication of financial markets regulation in New Zealand. I acknowledge the Commerce Committee which originally worked on the bill and of course the consultation that has been going on around this bill out in the finance sector for quite some time to get it to where it is now. Mostly I think without exception the demand of the sector is to know when this bill is to be passed and whether we can get it in place as soon as possible because of course it changes the framework under which all securities banking capital raising reporting you name it must operate within New Zealand. It is well overdue in terms of the need for it. Its journey has taken quite some time but that is a function of constant ongoing consultation and regulatory review with stakeholders and there have been changes to the bill as reported back from the select committee. But the substance of the bill is absolutely unchanged. It is a once-in-a-generation opportunity to upgrade and modernise our financial regulation. This bill goes hand in hand with its companion legislation the Financial Advisers Act which was passed in September 2008 by the previous Labour Government. This bill is the other part the right hand of that left-hand bill or the other way around if you like. It is absolutely crucial to the modernisation of our financial regulatory scheme.The bill has many parts. Members may know that Supplementary Order Paper 220 is something quite different because it is so large. I think there are about 700 pages of it. Actually it is basically a revision-tracked bill incorporating the Supplementary Order Papers to help members work their way through it. Early examples of it have been consulted on widely out there in the financial sector and not just the big end of town either but all stakeholders from shareholder associations banking organisations listed markets you name it—anyone and everyone involved in the commerce sector. As I noted it is part of a suite of legislation that is associated with this bill including the Financial Advisers Act passed in September 2008 under Labour and some of the latter parts in it refer to the Financial Reporting Bill which is before the House at the moment. Hopefully we will be able to progress that pretty soon. The Companies and Limited Partnerships Amendment Bill amongst others is also before the House with one or two yet to be introduced. Each and every single one of those bills is about making the securities the financial regulatory arrangements the framework and platforms within New Zealand not quite leading edge I suppose but as good as you could get anywhere in the world. That is what New Zealanders deserve and that is what they need.These bills are in response to unfortunate activities that happened in the finance sector of New Zealand in the early 2000s—about 2004 to 2008 as the global financial crisis crashed upon us finance companies failed and the courts found some activities to be questionable with prosecutions that pointed to many many gaps in our legislation. This bill is the second completion of this reform. It does take in lessons of the global financial crisis and the collapse of finance companies and it is a response to the Capital Market Development Taskforce work of a few years ago. It will play a key role in continuing to rebuild the trust and the confidence in our financial sector for all New Zealanders. I quite openly admit that for some New Zealanders recent behaviours saw the loss of their savings in various organisations some through investment failure and some as the courts have shown through quite deliberate and even fraudulent actions.We need those Kiwis to trust in our financial sector and we need those who fund New Zealand’s debt to fund our mortgages to trust in our regulatory environment as they send their capital from overseas back into New Zealand. The bill will also enable different ways of raising capital with pathways of capital from the big end of town the NZX-listed organisations right down to unlisted exchanges alternative exchanges which are possible and most importantcrowdfunding and peer-to-peer lending which I am extremely optimistic will be a very positive growth opportunity for New Zealand.Yes it is a bill of considerable technical complexity. It has been the subject of extensive consultation. I would again like to thank all of those who have been engaged from the pre-drafting stage to the select committee to the parallel process that went on at that stage. We have constantly engaged with officials as we have improved the bill to the form it is in now. There are only three Supplementary Order Papers. One was released in May I think. It was considerably large and it was I think the one that had in it some policy changes. But again those changes were in response to consultation and awareness of some issues that were not in the bill as reported back. A Supplementary Order Paper was tabled yesterday or today and that is generally a technical tidy-up in response particularly to the Public Trust changes that Minister Collins brought in recently.I look forward to the debate and discussion on this bill. It is a very organised bill. Different parts deal with distinct parts of the market how capital is processed and managed and how signals are sent around New Zealand from again the smallest participant a KiwiSaver investor a managed funds player a discretionary investment managed scheme and the various permutations around those right up to the large initial public offerings and what a very large company would need to do the form of its prospectus and what it will now need to say and declare in conjunction with Financial Markets Authority directives as it is looking to raise substantial amounts of capital.I look forward to the discussion and the debate in the Committee. I understand that the bill is pretty much widely supported so I hope that continues. Thank you.