18 NOVEMBER 2004 NEW ZEALAND GAZETTE, No. 149 3735

Pursuant to Regulation 194 (5) (c), the Commission will
publicise the exemption on the Commission’s web site and
will have regard to any views that participants make known
to it by 2 December 2004 at 5.00 p.m.
For and on behalf of the Electricity Commission:
ROY HEMMINGWAY, Chair.
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Securities Commission

Securities Markets Act 1988

The Authorised Futures Dealers Notice (No. 5) 2004

Pursuant to section 38 of the Securities Markets Act 1988,
the Securities Commission gives the following notice.

Notice

1. Title, commencement, and expiry—(1) This notice is
the Authorised Futures Dealers Notice (No. 5) 2004.

(2) This notice comes into force on the day after the date of
its publication in the New Zealand Gazette.

(3) This notice expires on the close of 30 November 2005.

2. Interpretation—(1) In this notice, unless the context
otherwise requires:

“Act” means the Securities Markets Act 1988.

“agreed upon procedures engagement terms” means
a written agreement, in terms of the Explanatory
Foreword to Reporting Engagement Standards
and Guidelines issued by the Institute of Chartered
Accountants of New Zealand, between the compliance
reporter and the company to perform specific
procedures with respect to the company’s compliance
with rules contained in the company’s compliance
manual.

“compliance reporter” means a qualified auditor who has
entered into agreed upon procedures engagement
terms with the company.

“qualified auditor” has the same meaning as in section
2C of the Securities Act 1978.

“recognised exchange” means an authorised futures
exchange or any exchange in a country other than
New Zealand which is authorised by the laws of that
country to operate as a futures exchange.

“Regulations” means the Futures Industry (Client Funds)
Regulations 1990.

“the company” means KVB Kunlun New Zealand
Limited.

(2) Any term or expression that is defined in the Act or the
Regulations and used, but not defined, in this notice has
the same meaning as in the Act or the Regulations.

3. Authorisation—(1) The company is authorised to carry
on the business of dealing in futures contracts generally.

(2) The authorisation is subject to the conditions that:

(a) the company does not carry on the business of
dealing in futures contracts on behalf of any person
other than a person who has entered into a written
client services agreement with the company, and
then only in accordance with the terms of that
agreement.

(b) before the company carries on the business of
dealing in futures contracts on behalf of any person,
the company has provided that person with copies
of the following:

(i) A document that clearly describes, for the
prudent but non-expert investor, the risks
associated with trading in futures contracts,
including any specific risk factors that apply to
trading in any of the particular contracts or
classes of contracts dealt with by the company;

(ii) one or more documents that clearly describe,
for the prudent but non-expert investor, the
class or classes of futures contracts in which
the company intends to deal on behalf of that
person; and

(iii) an investment broker disclosure document
including the information listed in section 3 of
the Investment Advisers (Disclosure) Act 1996.

(c) no employee, director or agent of the company may
give investment advice to any client unless that
director, employee or agent has first provided
investment adviser disclosure to that client in terms
of the Investment Advisers (Disclosure) Act 1996,
including the request disclosure under section 4 of
the Act.

(d) any company document that states the company has
been authorised by the Securities Commission to
carry on the business of dealing in futures contracts
includes a statement to the effect that:

(i) the Securities Commission’s role in authorising
futures dealers is limited and does not imply
approval or endorsement of the business,
trading or solvency of the company; and

(ii) the Securities Commission has not approved the
client services agreement or any disclosure
documents of the company.

(e) the company maintains proper records:

(i) to record dealings in respect of futures contracts
with or on behalf of the client;

(ii) to record client money, funds and property held
or received in connection with dealings in
futures contracts; and

(iii) which are audited or reviewed, and reported on,
in accordance with the Regulations and the
Financial Reporting Act 1993.

(f) the company has current agreed upon procedures
engagement terms.

(g) the company has appointed a compliance reporter.

(h) copies of the current agreed upon procedures
engagement terms, the company’s compliance
manual and any amendments to these documents
have been deposited with the Securities Commission.

(i) the company’s financial statements are prepared and
registered on the basis that the company is an issuer
in terms of the Financial Reporting Act 1993 and are
audited at least once a year by a qualified auditor
under the Financial Reporting Act 1993.

(j) the agreed upon procedures engagement terms
provide for (without limitation):

(i) the client money, funds and property records in
respect of futures contracts to be reviewed and
reported on by the compliance reporter at least
once a year;

(ii) the review of, and reporting on, the dealing
practices and systems of the company
against the practices and procedures set out
in the company’s compliance manual by
the compliance reporter (including on-site
inspections of the company’s records and
procedures), such review and reporting to be
undertaken at least once in every six months;