Mallard Trevor: Financial Markets Conduct Bill Financial Markets (Repeals and Amendments) Bill — Third ReadingsText is incorporated into the Bound VolumeMallard Trevor: Financial Markets Conduct Bill Financial Markets (Repeals and Amendments) Bill — Third Readings[Sitting date: 27 August 2013. Volume:693;Page:13014. Text is incorporated into the Bound Volume.]Hon TREVOR MALLARD (Labour—Hutt South): I am pleased to make a contribution in this debate on the Financial Markets Conduct Bill and the Financial Markets (Repeals and Amendments) Bill. There are a couple points that I do want to make in relation to this legislation but first of all I want to do some thankyous. Lianne Dalziel did a lot of work on this. Clayton Cosgrove did as well. I was lucky enough to meet with the Capital Market Development Taskforce on I think four or five occasions when I had a variety of associate finance and economic development - type roles. There was a very firm view amongst people on our side of the House and I think it was shared on the other side as well that it was important that we develop a system of capital raising in New Zealand that reminded us a bit less of the Wild West. I think that those of us of our generation will remember some of the problems in the late 1980s—in particular in 1987—around the crash there when fortunes were made and lost with almost no relationship to the underlying value of shares in the market. Certainly what happened in the 1980s caused a massive migration of investors out of the stock market because essentially there was a lack of trust in the vehicles that were being used at the time.There is a view that it is important for New Zealand to have a variety of arrangements where people can put their money—whether it is shares whether it is bonds whether it is a variety of savings arrangements—and they can have a clear indication of the level of security involved. I have had some considerable experience over most of my life in the sharemarket. One thing that is very important is that people are aware that whenever they invest especially in anything that does not carry a substantive guarantee there is a possibility of losing part or all of their money. What I hope this legislation does is get us to a point where risks are clearer because again as all of us know if there is real money to be made then there will be a risk that sits in behind that as well. The more transparent that risk the better.I have related to the House in the Committee stage the experience of a number of my constituents who live inWainuiōmata. I pointed out that because of its proximity toIndustrial Research Ltd the fact that land prices and house prices are relatively cheap and the fact thatWainuiōmata is surrounded by bush that has been regenerating for well over about 25 years and it has the coast and the forest park it is a place where a lot of the scientists and technical people from the old Industrial Research Ltd which is nowCallaghan Innovation tend to live. There is a very high proportion—one would not expect it in a decile 4 community—of PhDs because they know that it is a great place to live.What is also interesting is that when you have a community of about 17000 people when people start talking about investments quite a big proportion of the community finds out about it. The case I related was a case ofBioCryst Pharmaceuticals which is a Nasdaq-listed company and which has I am not saying a significant proportion of the shareholders or the shareowners but a disproportionate number coming fromWainuiōmata compared with most Nasdaq-listed companies. The reason that they come from there is that the underlying intellectual property that is owned byBioCrystPharmaceuticals was developed at Industrial Research Ltd. It was sold by Industrial Research Ltd—and I cannot remember the amount—for $10 million or $20 million or $30 million. It was significant. It made a big difference to Industrial Research Ltd.My view is that it is a pity that it could not have formed some sort of financial arrangement to retain some of the value and to have the possibility of some of the upside but that did not happen. But because people inWainuiōmata knew of the potential of this intellectual property and because a number of their friends and neighbours had been working on it or worked with people who had worked on it it created quite a sense of excitement. You had people going to the local brokerage houses. Back in the day there used to be minimum brokerage fees which meant that making investments of $200 or $300 was not really economic but these days a lot of it is much more on a percentage term and therefore people can make relatively small investments. So the community ofWainuiōmata was involved—and I understand is still involved—in investing in this Nasdaq-listed company.What that led me to think was that there are probably lots of other things that are developed or invented in New Zealand where local communities if they had the right vehicles would like to put some of their money. I just want to make it clear that I am not promotingBioCryst Pharmaceuticals. I just want to say to people investing on the Nasdaq that it is slightly safer than the TAB but not much and I do not want to be seen to be doing a promotion. But what it does say to me is would it not be better than putting money into a casino or putting it into the TAB or even—and I say this with some reluctance as a member of the Lottery Grants Board—putting it into Lotto if there can be arrangements where relatively small amounts can be wagered or even one might like to say invested in vehicles that mean that good New Zealand ideas have the ability to be developed? That was part of the objectives of the legislation.I want to say that I have not dealt with the current Minister of Commerce on this legislation but I certainly dealt with the Hon Simon Power over a period of time. I think it is fair to say that he had some reasonable vision in that area and it has been continued through into this legislation.But the point I will come back to is that it is important especially for these New Zealand - based investments that there is transparency that people are told what they are about that the risks are set out clearly and that this is done in plain language so that people know what they are getting into. I think it is useful if we can do as I indicated earliercrowdfunding—thecrowdsourcing of funding using the internet using Facebook or using a number of different vehicles for getting money in. Again the evidence that I know of is that for bands who want to produce what I would have called records in the old days and who want to produce and share music quite a lot of the funding of the studio and other production arrangements is now done through thatcrowdfunding. Well that is good for bands but I would like to see it being done more and more for areas that are likely to create jobs and wealth for New Zealanders and I think that this legislation has the potential to do that.