Download the submission here.

RIAA thanks the Ministry of Business, Innovation and Employment (MBIE) for the opportunity to comment on Phase Two of the Capital Markets Reforms.

RIAA supports the two overarching recommendations in the Principles for Responsible Investment’s (PRI) draft submission to this consultation, to

1. assess the reform package by reference to its effects on the availability, interoperability, predictability and quality of information used by international institutional investors; and
2. evaluate the cumulative effect of the Phase One reforms, Phase Two proposals and the External Reporting Board’s climate reporting roadmap as a single investor information environment.

RIAA provided substantive submissions to Phase One of the Capital Markets Reform on both adjustments to climate-related disclosures regime and enabling KiwiSaver investment in private assets. We take this opportunity to reiterate the points made in these submissions as they relate to the current consultation. We have provided general comments below in relation to New Zealand’s approach to capital markets regulation having regard to these previous submissions.

RIAA considers that proportionate regulation and capital-market competitiveness can be pursued together. Reducing unnecessary regulatory cost should not come at the expense of reliable, comparable and decision-useful information, market integrity or New Zealand’s attractiveness to domestic and international capital.

General comments

New Zealand’s approach to capital markets regulation

Investor information and international competitiveness

RIAA supports the PRI’s recommendation that MBIE assess each reform option from the perspective of institutional investors as well as regulated entities. This assessment should consider whether a proposed change affects:

• the availability and coverage of material information;
• the comparability of information between entities and jurisdictions;
• the reliability and assurance status of disclosures;
• the predictability and stability of the regulatory framework; and
• the ability of domestic and international investors to make informed capital-allocation decisions.

Changes affecting disclosure design and information quality may influence how New Zealand issuers are assessed. These effects should be weighed alongside issuer costs rather than assuming that lower compliance costs will necessarily improve overall market competitiveness.

This approach is consistent with RIAA’s earlier submission concerning adjustments to New Zealand’s climate-related disclosures regime. As the largest sustainable finance industry group in Australia as well as New Zealand, covering around 75% of managed Australian FUM, RIAA supports alignment with Australian and international standards, but emphasises that New Zealand’s settings should remain appropriate to the size, structure and significance of its own market. RIAA’s position continues to be that the Australian and New Zealand regimes should be consistent and interoperable, but not necessarily identical.

RIAA continues to emphasise that reporting requirements are not merely a compliance exercise. They support organisational capability, market transparency, investor decision-making and the allocation of capital towards a low-emissions, climate-resilient economy. RIAA cautions that changes which unnecessarily unwind existing reporting capability or create stop-start obligations may negate investment already made by reporting entities and reduce the quality and consistency of information available to investors.

Cumulative coherence and policy certainty

RIAA supports the PRI’s recommendation that MBIE consider the combined effects of concurrent reforms. Phase One, Phase Two and the XRB roadmap affect overlapping components of the investor information environment, including the number of entities required to report, the content of regulated disclosures, liability settings, assurance and international comparability.

Reviewing each proposal in isolation risks overlooking gaps, inconsistencies or unintended cumulative effects. RIAA recommends that MBIE:

1. assess the reform programme as an integrated package from the perspective of investors and consumers;
2. identify any material gaps in the coverage, comparability or reliability of information;
3. coordinate implementation and transitional arrangements with the XRB and other relevant agencies;
4. preserve clear and comparable identification of the scope and level of assurance; and
5. provide sufficient policy certainty to avoid fragmented or stop-start implementation.

RIAA’s previous submission similarly called for evidence-based reform, ongoing regulatory guidance, industry-supported tools, international interoperability and policy certainty. It also cautioned against using legislative amendments to address issues that could be managed more effectively through proportionate guidance and implementation support.