A market regulator rushed through in an afternoon

by MICHAEL J. PASSINGAN

Parliament repealed the Securities Commission Act 2015 and created the Capital Markets Commission of Papua New Guinea in a single sitting on 15 October. The Bill was presented, read a second time, debated by three speakers and passed at third reading on a division, 76 votes to nil. Nobody spoke against it. Nobody asked for it to go to a committee.

Richard Maru, Minister for International Trade and Investment and PNG Power, set out the theory. The Central Bank supervises banks, superannuation, life insurance and payments. The capital market, meaning shares, bonds, managed funds and the intermediaries who sell them, is a different thing with a different regulator. The new Act, he said, gives that regulator a clearer identity.

The case for replacing a whole Act leaned heavily on a name. The Minister said "securities commission" did not convey the breadth of the mandate and caused "practical ambiguity" with other institutional terms. He also said the 2015 framework, improved by 2023 governance reforms, had laid a sound foundation, and that the new Act preserves its essential functions. The House was left to work out what else changes.

The Deputy Opposition Leader offered one answer: the old Act let a single Securities Commissioner issue and cancel licences, and the new one places the regulator under a board. If accurate, that was the Bill's best argument, and the Minister did not make it. The Minister's own speech, though, credited the 2023 reforms with already clarifying the board's responsibilities. Nobody resolved which description is right.

The clause that should have drawn the hardest questions is the one the Minister called the defining feature. The Commission must, in exercising its powers, protect the national interest of Papua New Guinea. The Minister insisted this does not displace the law, due process, regulatory independence or investors' rights. It requires the Commission to weigh market integrity, investor protection and "the broader economic interest".

No definition of the national interest was read to the House. A regulator that may approve a listing, refuse a licence or open an inquiry with one eye on the national interest holds a discretion no investor can predict and no court can easily test. In a market where the State, its holding companies and politically connected businesses are major players, someone will invoke it.

The Minister's own line was that "capital moves where there is trust". Trust in a regulator comes from rules that are predictable and applied the same way to everyone. A national-interest test sits uneasily with that. Investors will want to know who decides what the national interest is, on what evidence, and whether the decision can be challenged.

All three contributions to the debate were in support, and two were mostly about something else: the Member for Sinasina-Yonggamugl on superannuation fund managers, the Deputy Opposition Leader on customary land. Both points are worth hearing. Neither engaged with the clauses of the Bill in front of the House.

Money provisions passed with almost no discussion. The Speaker reported a message from the Governor-General, dated 14 October, recommending the imposition of taxation and the expenditure of public money under section 210 of the Constitution, so far as the Bill provides for them. That usually means fees, levies or appropriations. No speaker described what the Commission will charge or cost.

The content is technical, which is why the speed matters. Investigation and examination powers, enforceable undertakings, cooperation with police and other agencies, civil and criminal processes, evidentiary rules and transitional provisions all went through on one speech and three short contributions. Each of those powers will be tested in court one day. Parliament's own test came on 15 October, and it asked almost nothing.

The Government sought leave to rush the third reading, and the House granted it. A regulator is only as credible as the scrutiny that created it. A 76–0 vote with no committee stage, no definition of its central test and no word on fees is not scrutiny. It is a Government pushing new regulatory powers through without explaining them, months before an election.