4228 NEW ZEALAND GAZETTE, No. 147 29 SEPTEMBER 2011

(6) In calculating the Company’s liquid assets that calculation excludes:

(a) any client funds held by the Company;

(b) the value of any asset encumbered as a security against another person’s liability;

(c) the assets of any trust of which the Company is a trustee;

(d) loans and advances to, or amounts owing by, any related party or associate; and

(e) any asset that directly or indirectly funds an investment in or loan to the Company itself.

(7) The Company must apply the following risk based reductions to the calculation of its liquid assets:

(a) for a futures contract entered into where the client has not paid to the futures dealer any margin due in respect of that futures contract by the second business day following the date the liability to make that margin payment arose, a reduction of 120% on that uncollected margin;

(b) for equity securities held or receivable by the Company including short positions:

(i) for leading equities (meaning NZSX listed equities or equities listed on the main board of an overseas exchange):

A. 10% for an equity ranked 1 to 50 in the leading index of the relevant exchange; or

B. 15% for all other equities quoted on the main board; and

(ii) for rights, the lesser of:

A. 100%; or

B. 10% of the combined value of rights and application monies; and

(iii) for other equity securities (including partly paid shares), 100%;

(c) for liquid assets comprising debt securities in New Zealand dollars:

*All rated Securities must carry a rating by an agency approved by the Reserve Bank for the purposes of section 80 of the Reserve Bank of New Zealand Act 1989.

(d) for liquid assets comprising debt securities in foreign currencies:

*All rated Securities must carry a rating by an agency approved by the Reserve Bank for the purposes of section 80 of the Reserve Bank of New Zealand Act 1989.

(8) The Company’s gross external liabilities include its current, long-term and contingent liabilities, whether or not those contingent liabilities appear on the Company’s statements of financial position.

(9) In calculating the Company’s gross external liabilities that calculation excludes:

(a) any client funds held by the Company; and

(b) the liabilities of any trust of which the Company is a trustee.

6. Reporting requirements—(1) The Company must:

(a) appoint a compliance officer with responsibility for ensuring compliance with this authorisation notice; and

(b) make available to the compliance reporter any information the compliance reporter requests to satisfy itself that the Company has complied with the capital adequacy requirements in clause 5.

(2) The Company must enter into agreed upon procedures with the compliance reporter, a copy of which must be lodged with the Financial Markets Authority, which provide for (without limitation):

(a) the compliance reporter to receive the monthly reports referred to in clause 6(3) and semi-annual prospective financial statements referred to in clause 6(8) from the Company;

(b) the compliance reporter to check each month that:

(i) the monthly report contains all of the information that is required to be in the monthly report pursuant to clause 6(3);

(ii) each of the statements required to be referred to in the certificate pursuant to clause 6(4) have been certified as true by the directors; and