Foss Craig: Financial Markets Conduct Bill Financial Markets (Repeals and Amendments) Bill — Third ReadingsText is incorporated into the Bound VolumeFoss Craig: Financial Markets Conduct Bill Financial Markets (Repeals and Amendments) Bill — Third Readings[Sitting date: 27 August 2013. Volume:693;Page:12999. Text is incorporated into the Bound Volume.]Hon CRAIG FOSS (Minister of Commerce): I moveThat the Financial Markets Conduct Bill and the Financial Markets (Repeals and Amendments) Bill be now read a third time. The legislation is a major milestone in the reform of New Zealand’s capital market regulation. It modernises and makes substantial changes to New Zealand’s securities laws. These set many of the rules for how financial products and financial services are offered to the public and how they are governed and operated.The legislation has two main purposes. It aims to promote the confident and informed participation of businesses investors and consumers in the financial markets and it aims to promote and facilitate the development of fair efficient and transparent financial markets. These are vital outcomes for New Zealand businesses vital to have access to the capital they need to grow and they are critical for investors to benefit from financial markets.The current securities laws are not fit for purpose. The main law this legislation replaces the Securities Act 1978 is 35 years old. The legislation consolidates five other pieces of legislation. As well as responding to the massive changes that we have seen in the financial markets over recent decades this legislation is informed by more recent lessons of the global financial crisis and our experiences with the collapse of the finance companies. It implements many of the recommendations of the industry-led Capital Market Development Taskforce.I will mention some of the main changes this legislation makes to financial markets regulation. The legislation replaces the requirement for issuers of financial products to prepare a prospectus and an investment statement. Issuers will now prepare a single product disclosure statement which will set out the key information that retail investors need to know before they invest. The legislation proposes a system of escalating liability from infringement notices for minor breaches through to civil pecuniary penalties of up to $1 million for individuals and $5 million for companies. There are criminal penalties of up to 10 years’ imprisonment for the most egregious conduct. A new licensing regime is established for specific financial sector participants. These include fund managers discretionary investment management services and derivative issuers. The legislation also overhauls the regulation of managed investment schemes such as KiwiSaver schemes by providing a consistent set of duties on fund managers and supervisors and stronger governance requirements. These are vital steps to bring retail investors back into the markets and make more capital available to growing firms whatever their size.The legislation makes a number of changes to make it easier and cheaper to raise capital. It enables the introduction of new forms of capital raising such as peer-to-peer lending andcrowdfunding and it provides new exemptions for small offers and employee share schemes which will be of particular benefit to small growing companies. The legislation introduces a new system for the regulation of securities exchanges. This will include allowing the development of low-cost exchanges that support capital raising by small and medium sized enterprises.In summary this legislation aims to strike a balance that works for both issuers and investors. Only by providing the right kind and degree of regulation will we see our financial markets make their full contribution to the New Zealand economy. I commend this legislation to the House.