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Wednesday, 13 May 1981
Page: 2351

Mr MOORE (Minister for Business and Consumer Affairs)(10.16) —I would also like to thank those who participated in this debate, particularly the honourable member for Parramatta (Mr John Brown) and the honourable member for Hawker (Mr Jacobi) who very obviously have made a considerable study of what has been in the Bills and have gone out of their way to inform themselves on a matter which does not really entice a lot of people to take much notice of. I commend them for the effort they have put into it and certainly for the knowledge that they have imparted during the debate tonight. It is a very helpful contribution to what I hope will be a fairly memorable occasion insofar as it is the first time in Australia's history that we have had a national companies Bill passed by the national Parliament.

In relation to crossings, I hate to inform the honourable member for Parramatta that the man not named by the Stock Exchange was not involved in a crossings problem. Nevertheless, this case does bear out some of the migivings that people have with the Stock Exchange as a whole. What people really need to do is to brush up on their public relations and to see far more of their public responsibilities. I will say something about crossings because this is one of those areas where very few people have an idea of what it is all about. There is plenty of recrimination and plenty of saying: 'It's all wrong'. But there is no great background of understanding what it is about.

The term 'crossing' simply means a sale within a broker's office, that is, broker to broker and from client to client. In those circumstances a relationship develops between a client and a broker in exactly the same way as between a patient and a doctor. The most important thing to anyone, after health, is a person's shares or money. I think everyone in this place and some of those who have gone will probably recognise that. Because of that the relationships between a broker and his client are particularly close.

I go on to the next stage because most of the problems appear to be in the area of crossings associated with an offer. An offer is made for a company and is well publicised in the Press. Notice of the offer is posted on the boards of the stock exchange. Those brokers who are dealing in a stock not only are presumed to have read the newspapers but also are presumed to have read the notices on the boards within the stock exchange. So, on two counts they are adjudged to know of the offer. Under those circumstances a client who is a client of the broker acting for the offeror who wishes to sell his shares then approaches his broker with that order to sell. He is offering his shares for sale in the knowledge of the offer because it is advised in the newspapers. The broker knows about it because he has read about it in the newspapers. If he has not, that notice is on the board on the floor of the Stock Exchange where the deal must take place and, as a consequence, he is informed. Therefore, in my view a crossing within the full knowledge of both the buyer and the seller is quite within the bounds of commercial activity and quite within the rules of the stock exchange.

Mr Jacobi —But the rules of the stock exchange are defective in that case.

Mr MOORE —They are not at all. I am surprised that the honourable member for Hawker seems not to understand that these are transactions taking place in a fully informed market.

Mr John Brown —What about before the offer is made public?

Mr MOORE —The honourable member for Parramatta has raised a point. I think I told him about this in the corridor. That problem can only really take place where a broker is building up a holding on behalf of an offeror prior to the offer being made. Under the circumstances of the new Bill dealing with the National Companies and Securities Commission that relates to shares prior to the 20 per cent threshold. Under those circumstances a broker acting for an offeror accumulating up to the 20 per cent mark on a rising market will, of course, be buying shares at a varying price. A client of that broker offering to sell on those price patterns needs to know of these activities or have complete trust in that broker. It is only within that context that I see a problem within the prospect of crossings.

I take the view that most brokers are honest. I take the view that most clients trust the activities of their broker. As I have said before, we are dealing with a person's most precious commodity-his money. Therefore, I say that it would be a very silly broker who acted not with the best interests of his client at heart despite the fact that he could be acting for an offeror. I can only say that in a position like that the broker is more likely to say to his client: 'Hold on, there is something coming', and to advise him quietly that there is something better coming and that he ought to hold on on that occasion. I do not hold these enormous fears for crossings. I think there is a lot in the relationship between the individual client and his broker. Within the game of the financial world there is an enormous amount of personal trust and integrity which undoubtedly prevails in the very marked majority of cases throughout Australia.

Question put:

That Part III of the Bill be agreed to.