27 OCTOBER 2011 NEW ZEALAND GAZETTE, No. 163 4617

(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) subject to clause 4(7), any loans and advances to, or amounts owing by, any related party or associate (including any margins lodged with a related party); and

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

(7) Loans and advances to, or amounts owing by a related party or associate may be included in the company’s liquid assets if:

(a) the amount is receivable as a result of a transaction entered into by the Company in the ordinary course of its business on standard commercial terms applicable to arms length transactions with persons that are not associated with the Company;

(b) no part of the consideration for the transaction directly or indirectly funds an investment in or loan to the Company; and

(c) the total value of all such receivables, excluding margins on hedging arrangements, (before any discount is applied) does not exceed 20% of the total tangible assets of the Company.

(8) The Company must apply the following risk based reductions to the calculation of its Liquid Assets:

(a) For any loans and advances to, or amounts owing to which clause 4(7) applies (including any margins lodged with a related party), 18% of the value of the asset;

(b) 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 2nd business day following the date the liability to make that margin payment arose, a reduction of 120% on that uncollected margin;

(c) 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%;

(d) 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.

(e) 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.

(9) 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.

(10) 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.

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

(a) appoint an Auditor;

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