Conference on NZSE rules

Press, 8 December 1988, Page 28

Conference on NZSE rules

Wellington reporter

A conference to discuss whether New Zealand Stock Exchange regulations limit competition more than they benefit investors will be held next year by the Commerce Commission.

The commission’s chairman, Mr John Collinge, yesterday announced the conference would take place on February 21, 1989.

The NZSE has applied to the commission for authorisation of its rules, regulations, and by-laws. Rules which concerned the commission related to those restricting competition among sharebrokers, restricted membership of the exchange, and those which regulated the sales of share parcels below a certain size.

A draft determination issued by the commission yesterday said some of

these rules substantially lessened competition. But the NZSE argued that restrictions of competition would be outweighed by benefits to the public. These benefits included efficient operation of capital markets, public confidence in the sharemarket, and a guarantee of the financial soundness and expertise of members.

In its draft determination, the Commerce Commission judged the following rules had benefits outweighing detriments: • The criteria for admission to NZSE membership, other than the requirement to be elected by existing members. O Rules relating to financial stability of brokers. 9 Rules requiring disclosure of brokers’ interests.

© The requirement for

broking employees to trade through their own firm.

The following rules did not meet with the commission’s approval: © Those restricting activities of brokers in other financial services. • Lack of open disciplinary procedures in relation to compliance with the rules.

® Rules limiting the minimum parcels of shares which may be traded through the stock exchange. • Rules relating to the setting of margins for “odd lots.”

Mr Collinge said the NZSE had already said it intended amending some rules. The commission would make a final determination after the conference, which will be held at the commission’s chambers in Wellington.