24 Jun 2010

Capital markets overhaul could be a long haul

7:43 am on 24 June 2010

A securities lawyer says the overhaul of the rules governing capital markets could take some time, following the release of a Government discussion document on the relevant legislation.

Commerce Minister Simon Power wants to restore confidence in New Zealand's financial markets in the wake of finance firm collapses, aiming to better protect investors while also making it easier for firms to raise money.

The country's securities laws are more than 30 years old, and Chapman Tripp partner Roger Wallis says that while the proposed changes are heading in the right direction, they won't be easy to implement quickly.

The changes to the Securities Act and Securities Market Act would include simplifying financial documents, loosening rules for raising money from more experienced investors, and considering the economic substance of a financial product rather its legal form.

Separately, legislation requiring financial advisors to gain new qualifications and adhere to a code of conduct has been unanimously passed in Parliament.

The new law requires financial advisors who deal in complex products to gain a level 5 qualification and become authorised from the beginning of December.

Those that deal solely in simpler products like resident mortgages or term insurance are required to become registered.