Oversight Review of NZ Exchange Limited

News Release

24 January 2008

Securities Commission Oversight Review of New Zealand Exchange Limited

The Securities Commission has released the terms of reference for its oversight review of NZX for the 2007 calendar year.

The terms of reference are in four parts.

1. The main focus of this review, that is, NZX’s policies on the continuous disclosure rules and its administration of these, including publishing market announcements.

2. The three areas which were the focus of last year’s review including any new developments or issues about:

* the management and operation of the NZAX market;

* NZX’s processes for admission or approval of listed issuers and market participants to its markets; and

* how NZX minimises the risk of non-compliance by listed issuers and market participants with the Listing Rules and Participant Rules.

3. Any issues arising during the review in relation to the eight areas identified for the first oversight review, and a new area i.e. the impact, if any, of NZX’s expanding commercial activities on its regulatory function.

4. NZX’s progress implementing the Commission’s recommendations in its report of 28 June 2007.

The Commission expects to complete the review and publish a report by 30 June 2008.

The full terms of reference are set out below.

ENDS

Oversight Review of NZX

Terms of Reference

The Securities Commission (“the Commission”) is conducting an oversight review of New Zealand Exchange Limited (“NZX”) under sections 10(b), 10(c) and 10(caa) of the Securities Act 1978. The purpose is to review NZX’s performance of its co-regulatory function, in particular its obligations under section 36G of the Securities Markets Act 1988 and, in respect of futures and options dealers, NZX’s regulation of dealers under its Futures and Options Participant Rules.

In particular, the Commission will review the following aspect of NZX’s activities:

(a) NZX’s policies in respect of its continuous disclosure rules and its administration of these, including its practices regarding publication of market announcements.

The Commission’s review will consider any new developments, and any issues arising in the course of the review, in relation to the following areas:

(a) the management and operation of the NZAX market, including resources, practices and procedures, and the ongoing maintenance of that market;

(b) the processes undertaken by NZX in considering the admission or approval of listed issuers and market participants to its markets, and any particular issues which arise as a result of those processes; and

(c) NZX’s role in minimising the risk of non-compliance by listed issuers and market participants in relation to their obligations under the Listing Rules and Participant Rules.

The review may also consider any issues arising in the course of the review in respect of the following areas:

(a) supervision of market participants and enforcement of the Participant Rules;

(b) supervision of listed issuers and enforcement of the Listing Rules;

(c) allocation of human, technological and financial resources as it affects performance of the regulatory functions of NZX;

(d) internal practices and procedures associated with investigations, price enquiries, complaints-handling and referrals;

(e) discipline practices, procedures and resources;

(f) arrangements for market infrastructure development and maintenance;

(g) Special Division practices, procedures and resources;

(h) corporate governance arrangements, including board composition, policy setting, crisis response and oversight of executive management, with reference to regulatory standards relating to governance of demutualised exchanges under IOSCO and other international principles; and

(i) the impact, if any, of NZX’s expanding commercial activities on its regulatory function.

The Commission’s review will consider the progress made by NZX (up to the date of the Commission’s report on this oversight review) towards implementing the Commission’s recommendations set out in its report dated 28 June 2007.

AND accordingly, will obtain, consider and utilise information for the purposes of any recommendation, report or comment the Commission may decide to make under sections 10(b), 10(c) or 10(caa) of the Securities Act 1978 in relation to the above matters.

SUBJECT to the Commission’s discretion to amend these Terms of Reference as it may consider fit.

December 2007

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