On 31 July 2009, the Capital Market Development Taskforce issued an Interim Report, which was welcomed by the Government. The Report is relatively detailed for an interim assessment and explores some of the reasons for New Zealand’s persistently thin capital markets.
The problems identified include: (a) improved investment choices available for investors, who should be better able to understand and access them; (b) larger scale public debt and equity markets; (c) better supported private finance, through private equity and venture capital funds; (d) appropriate and responsible use of derivative products; (e) clearer and simpler regulation; (f) tax reforms which are competitively neutral with those of other countries; and (g) stable clearing and settlements infrastructure.
Some of the concerns are already starting to be addressed by the Securities Disclosure and Financial Advisers Amendment Bill, which was enacted on 27 July 2007 in the form of separate acts amending, respectively, the Securities Act 1978 and the Financial Advisors Act 2008. The former seeks to make easier the preparation and understanding of disclosure prospectuses for securities issues. The latter seeks to encourage the development of a higher and more independent standard of financial advice in New Zealand. But these are only initial steps.
The Interim Report concludes with a limited set of recommendations in its Appendices. One of the most notable observations relates to the poor quality of New Zealand financial advice, which the Taskforce suggests be addressed by the imposition of a fiduciary duty on financial advisers to act in their clients’ best interests. Whilst the Interim Report goes on to some concrete recommendations relating to streamlining applicable regulatory frameworks, it seems the big ideas for how significantly to grow New Zealand’s equity and debt markets are still to be fully developed.