2004 IOSCO Asia Pacific Regional Committee (APRC) meeting

Margaret Wilson Speech: 6pm Grand Hall, Parliament House Wellington

Ladies and gentlemen, distinguished guests. It is with pleasure that I welcome you to this reception to mark the opening of the 2004 IOSCO Asia Pacific Regional Committee (APRC) meeting. I am especially pleased to welcome the IOSCO committee members and guests to New Zealand, as this is the first time an IOSCO committee meeting has been held here. I understand that a meeting of the APRC enforcement directors will also take place at the same time.

As Minister of Commerce I have responsibility for the policy and legislative framework relating to securities markets in New Zealand, which means I am the Minister responsible to Parliament for the Securities Commission. I also have the role of monitoring the Commission's performance.

I support the Commission's active participation in IOSCO and congratulate the Commission on hosting this meeting which I am sure will provide the opportunity to focus on implications for the Asia Pacific region as part of the international debate on securities issues. IOSCO is recognised amongst international financial institutions and governments as the standard setter in securities regulation. The IOSCO principles are used as the benchmark when we are reviewing our securities law.

I was pleased that the NZ Securities Commission was successful last year in becoming a signatory to the IOSCO multilateral memorandum of understanding on information sharing between regulators.
The fact that the Commission passed the rigorous screening process confirms that our regulation meets the high standards set by the MOU.

It was also a significant achievement for New Zealand to have our regulator elected to the IOSCO Executive Committee. I congratulate the Commission, in particular Jane Diplock, for raising New Zealand's profile with securities regulators around the world.

With the trend towards globalisation, including the growth in cross-border trading; the openness of domestic markets to international capital investments; and the multiple listings of issuers, it is now even more important for securities regulators to be able to cooperate and share information.

The development of new technology has also created new opportunities for those who wish to promote illegal investment schemes or mislead investors. The Internet has increased the opportunities for cross-border offences such as market manipulation, as well as making it more difficult to detect and investigate such conduct. Global markets require cooperation among regulators to detect and prevent cross-border offences.

As some of you may be aware, NZ has recently undergone an assessment by an IMF mission (including an IOSCO expert) under the Financial Sector Assessment Programme. This provided an opportunity for us to consider the extent to which we have implemented the IOSCO principles and the further work we have to do, as well as to obtain an independent view on how we are progressing. We are well advanced in the process of reforming our securities laws and the IMF assessment will be helpful as we continue that process.

Rather than give you a detailed rundown of the work that we are doing here, I thought I would take the opportunity that this international forum provides to formally launch the latest report I have received from the NZ Securities Commission.

The Commission has, at my request, been leading the development of a set of corporate governance principles to establish a benchmark for shaping the behaviour of New Zealand businesses. The aim is to ensure that New Zealand's corporate governance regime compares well internationally, and to demonstrate that our regulatory regime is robust and credible. The Securities Commission issued their draft corporate governance principles yesterday and I warmly welcome their contribution to improving corporate behaviour in New Zealand.

I thought that I would end with an internet joke, just to show that I still have a sense of humour.
Feudalism: You have two cows. Your lord takes some of the milk.
Fascism: You have two cows. The government takes both, hires you to take care of them and sells you the milk.
Communism: You have two cows. You must take care of them, but the government takes all the milk.
Capitalism: You have two cows. You sell one and buy a bull. Your herd multiplies, and the economy grows. You sell them and retire on the income.
Enron Capitalism: You have two cows. You sell three of them to your publicly listed company, using letters of credit opened by your brother-in-law at the bank, then execute a debt-equity swap with an associated general offer so that you get all four cows back, with a tax exemption for five cows. The milk rights of the six cows are transferred through an intermediary to a Cayman Island company secretly owned by the majority shareholder who sells the rights to all seven cows back to your listed company. The Enron annual report says the company owns eight cows, with an option on one more.

I conclude by wishing you a successful, productive meeting and a wonderful stay here in New Zealand. I look forward to a continuing relationship with IOSCO, and to following its achievements in promoting well regulated securities markets in this challenging global environment.

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