Securities lending paper like a power tool, says NZX

1 December 2004 – New Zealand Exchange Limited (NZX) likens today's recommendation to eliminate tax on stock lending to the addition of a power tool to the New Zealand investment market toolbox.

“The Minister of Finance and Revenue and IRD proposal will bring New Zealand into line with leading economies and improve the attractiveness of New Zealand as an investment destination,” said NZX CEO Mark Weldon.

“To date New Zealand market participants have been like master builders missing critical tools from their toolbox. The proposed change will bring to New Zealand asset management tools whose absence has prevented us from building our markets with the right strength and depth,” said Weldon.

NZX cites the lack of market for borrowing stock in this country, resulting from the current tax treatment, as having been a significant impediment to investment and growth, and efficient price discovery in New Zealand.

“NZX has worked directly with many brokers, fund managers and institutions to understand the impact of the current tax treatment of stock lending transactions. There is strong and broad based support for the changes recommended by the paper,” said NZX Head of Finance and Strategy Carl Daucher.

Along with the Stobo report on the tax treatment of investment income, NZX holds the IRD's work as evidence of significant effort on the part of Government to address issues relating to New Zealand 's capital markets infrastructure.

“Taken together, these are very positive moves that will strengthen New Zealand 's capital markets and will, NZX believes, increase participation by a wide range of institutions,” said Daucher.

For more information, please contact:

Rowan Macrae
Corporate Affairs
New Zealand Exchange Limited
04-496-2874
027-472-7599