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Unlisted Surprised By Regulatory Notice

December 15 2004

Unlisted Surprised By Regulatory Notice

Bevan Wallace, Chairman of Efficient Market Services Limited, which operates as the internet-based security trading platform Unlisted, expressed surprise and disappointment with the Minister of Commerce Margaret Wilson’s notice that she proposes to declare that Unlisted be required to operate as a registered exchange under section 36B of the Securities Market Act.

Mr Wallace said that if Unlisted is required to become a registered exchange it will severely undermine Unlisted’s business model and may render it unsustainable, or else will force Unlisted into direct competition with the NZAX.

“Requiring Unlisted to be registered would hinder the growth of small to medium-sized companies in New Zealand. It will raise their compliance costs and could result in companies invoking less formal share transfer practices. Unlisted as it currently operates improves the transparency around securities trading, which in turn improves the accountability of the companies concerned. That can only enhance New Zealand’s capital markets. Unlisted’s success to date confirms there has been a previously unmet need for these growing companies,” said Mr Wallace.

Mr Wallace also expressed disappointment that the Minister had given no opportunity for Unlisted to meet and discuss her concerns before announcing the declaration this morning.

“Unlisted was informed of this declaration only hours before it was publicised. We would expect to be afforded natural justice in such a process, and given a reasonable opportunity to discuss with the Minister and her officials the specific factors which led to this declaration and how they might otherwise have been addressed.”

“This move [to require Unlisted to be a registered exchange] will limit the depth and liquidity of New Zealand’s capital markets, and will likely drive the quoted companies back to over the counter trading of their securities by their company secretaries and the like. We expect that there will be many stakeholders, as well as Unlisted, who will want to express their views on the situation.”

Having received the notice Mr Wallace said that the Board would be considering the Minister’s comments in light of the Act, and providing submissions on the matter in due course as part of the consultation process.

“We welcome the opportunity for a full discussion of Unlisted’s operation, and are confident the outcome will require few, if any, changes.”


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