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NZX suspends Access Brokerage

Monday 6th September 2004

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Sharemarket policeman NZX Regulation has declared Access Brokerage Limited (Access) a defaulter under the NZX Participant Rules and has suspended them as an NZX Firm effective immediately.

This includes the suspension of all trading rights and privileges associated with their designation as an NZX Firm. In addition, the matter has also been referred to all relevant authorities including the Minister of Commerce, the Securities Commission, and the Serious Fraud Office.

A preliminary NZX inquiry over the last 48 hours has shown that Access is unable to meet its NZX obligations. At this stage NZX believes that direct impact is limited to less than 725 Access clients, most likely those who have traded through Access on the New Zealand market in recent days.

NZX Regulation is now conducting a thorough inquiry into all aspects of this matter. This includes an investigation of the actions of Access directors, executives, principals, suppliers and their professional advisors.

"Clearly we are very disappointed that Access Brokerage has defaulted," said Simon Allen, NZX Chairman. "NZX's primary concern is for Access' clients. As the frontline market regulator it is also critical that we do all that we can to minimise the impact on the market, from the actions of this one NZX Firm."

It is the intention of NZX to use all its resources and powers to pursue a satisfactory resolution for affected clients of Access.

"NZX considers it is vitally important that the confidence and integrity of the market is maintained," said Mark Weldon, NZX CEO. "NZX will endeavour to ensure that the obligations that Access has to affected clients are honored for any trades that have occurred on NZX Markets during the period concerned. Options available to NZX include managing the use of the Fidelity Guarantee Fund, pursuing legal action against those responsible, or using NZX's own funds - despite NZX having no legal obligation to do so."

"Over the last 12 months NZX has implemented a comprehensive compliance programme and strengthened our surveillance & inspection capabilities in this area. NZX is therefore extremely dissatisfied that these events were able to occur," said Weldon.

"We are also now working with the relevant Government agencies to further strengthen our market structure to ensure these types of events will not be repeated," said Weldon. "In particular, NZX will seek to develop a central counterparty and a true Delivery Versus Payment system (as seen in most other international markets around the world), as opposed to the current on-register system. We will also be considering potential enhancements to the NZX Participant Rules."

Access Brokerage has advised NZX that they will be communicating directly with their customers on the matter, and publishing information to their website at www.accessbrokerage.co.nz

In addition, NZX has established a helpline for concerned Access clients where they can register for information and assistance from NZX. This number is 04 496 2887 and it will remain open during normal business hours. NZX will also be publishing information relating to this matter including a Question and Answer sheet, on its website at www.nzx.com/regulation/access.

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