NEW ZEALAND GAZETTE

No. 206

4622

(c) vary any Contract Specifications provided that:

(i) a variation of any Contract Specifications which affects liability under a Contract (where such liability is under the control of the Company) shall only become operative in respect of that Contract on or after three months from the date of the variation; and

(ii) any adjustment to a class of Contract in accordance with the relevant Contract Specifications shall not be deemed to be a variation of those Contract Specifications for the purposes of these Rules.

10.3 The adoption of any new Contract Specifications, or the rescission or variation of any existing Contract Specifications, pursuant to Rule 10.2 will constitute an alteration to these Rules to which the provisions of Section 12 apply.

10.4 The Company will from time to time introduce new settlement months for each class of Contract and may at any time withdraw any settlement month in respect of which there are no open positions.

10.5 (a) The effect of a Contract which is open on a mandatory settlement day is that on that day:

(i) in the case of a cash settled Contract the parties must make an adjustment between them according to whether the settlement price is greater or less than the price at the time of making the Contract;

(ii) in the case of a deliverable Contract the parties must make or take delivery of the Underlying Security specified in the Contract Specifications in accordance with their respective liabilities under the Contract.

(b) Cash adjustment or delivery must be made in such manner, at such place, to such person, and by no later than such time, as may be specified in the Contract Specifications.

(c) A buyer or seller who does not settle with the Clearing House as required by the Rules will be considered to have defaulted.

10.6 (a) If any Contract of a particular class is open at the close of business for that class of Contract on the final trading day, the Clearing House will declare a mandatory settlement price for that class of Contract in accordance with the procedures set out in the Contract Specifications.

(b) If in the opinion of the Company or the Clearing House a situation is developing or has developed which is capable of preventing the Clearing House from declaring a mandatory settlement price, the Clearing House may in consultation with the Company (unless consultation is impracticable in the circumstances) take such steps, if any, as it deems necessary in the circumstances to correct the situation so as to enable it to declare a mandatory settlement price and may give directions to Trading Permit Holders accordingly.

(c) The Clearing House may announce an indicative settlement price as soon as practicable. If it does so, it will declare and announce the mandatory settlement price as soon as practicable after announcement of the indicative settlement price, but in any event no later than the time specified in the Contract Specifications. Neither the Company nor the Clearing House, nor any of their respective employees, shall be liable to any person in the event that the mandatory settlement price differs from the indicative settlement price for any reason whatsoever.

(d) All decisions taken by the Clearing House in respect of mandatory settlements shall be final and binding.

10.7 (a) Where an Approved Settlement List is required for the purpose of determining a settlement price the Contract Specifications will specify the minimum number of parties to be approved by the Company for the purposes of the List. Parties may from time to time be added to, or deleted from, the Approved Settlement List by the Company. In approving parties for addition to or deletion from an Approved Settlement List the Company will have regard to the extent of their participation in the market for the Underlying Securities in the relevant class of Contract. Parties will be required to complete a form of undertaking agreeing to provide quotes as specified.

(b) The Clearing House will request buying and selling quotes from the parties on the Approved Settlement List within the times specified in the Contract Specifications. All quotes must be confirmed to the Clearing House in writing.

(c) The Clearing House will select at random the number of buying and selling quotes specified in the Contract Specifications and will calculate the midrate of each of the quotes and disregard the number of midrates specified in the Contract Specifications. The remaining midrates will be rounded in accordance with the procedures specified in the Contract Specifications.

(d) The Clearing House will publish the names of the parties polled in arriving at the mandatory settlement price and the quotes submitted by those parties.

10.8 The Company may from time to time prescribe maximum position limits for any class of Contract, and may at any time vary any limits so prescribed. Where any maximum position limits are so prescribed for any class of Contract:

(a) the Company will give notice of the prescribed limits, and of any subsequent variation thereof, to Dealers;

(b) a Dealer shall not exceed, or permit any client, or group of clients acting in concert to exceed, the maximum net position limits specified for the Contract; and

(c) a Dealer shall file with the Company when required to do so a report in the form prescribed by the Company, and shall report promptly to the Company any instance in which the Dealer has reason to believe that a client acting alone or in concert with others has exceeded, or is attempting to exceed, the maximum position limits prescribed for that class of Contract.

10.9 The following provisions shall apply in respect of exercise prices for each class of option Contract:

(a) Trading in puts and calls on the first day of an option Contract month will be fixed at:

(i) an exercise price which is reasonably close to the value of the Underlying Security at the time the options are first opened for trading;

(ii) exercise prices above and below that mentioned in paragraph (i) at intervals determined by the Company.

(b) Trading in puts and calls in that class of Contract thereafter will be at the exercise prices determined by the Company from time to time.

(c) No new exercise prices for that class of Contract will be introduced in such period prior to the expiration date for trading as the Company from time to time determines.