Damage control follows NZX letter leak; brokers rally in support

Friday 13th February 2009

The Securities Industry Association has ordered its membership to investigate the source of leaked letters between the SIA and NZX over a �sub-standard� issues paper covering changes to securities clearing and settlement rules.

In a statement issued this afternoon, SIA chairman Scott St John declared the association�s �unambiguous support� for NZX�s strategic initiatives, following the publication of leaked letters between the SIA and NZX.

A January 30 letter to Mark Weldon, CEO of the NZX, which operates the nation�s stock exchange, was highly critical of the quality of the consultation paper, prompting an apology and the effective retraction of the paper, to be replaced by a second attempt at the process.

The letters were leaked, and published by the Cactus Kate blog on Thursday.

The NZX declined comment to Businesswire at the time of the leak, saying it was �working the issue through with the SIA�.

St John was at pains to stress that today�s statement represented all 10 of the SIA�s broker members � a who�s who of leading New Zealand broking firms � saying �the SIA acknowledges and applauds the NZX for developing such basic market infrastructure to the potneital benefit of the broader industry�.

�The SIA considers that the release of this SIA and NZX correspondence is likely to be a breach of legal confidentiality and of the NZX conduct rules,� said the SIA statement. �As such, the SIA has asked member NZX firms to investigate the source. The SIA will be supportive of any action that may result against any person who is found to have breached confidentiality.�

The leaks were presumed to come from �some disaffected individual with an unknown personal agenda�.

The original SIA letter leaked to Cactus Kate was highly critical of almost every aspect of the way the NZX handled last December�s submissions paper.

The document suffered from �drafting and reference errors, inconsistencies, duplicate provisions which differed within and between sets of rules, confusing and at times incomprehensible provisions, and substantial omissions,� the SIA said.

In response on February 2, Weldon apologised for the �sub-standard� documents and outlined a new process for advancing the issues involved.

By Pattrick Smellie, Businesswire.co.nz

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