NEW ZEALAND GAZETTE, No. 163

27 OCTOBER 2011

(h) a description of the nature of any amounts or returns that may be payable, or the method of calculating any amounts or returns that may be payable, by the Company to a person in respect of that class or those classes of specified futures contracts;

(i) a description of the key factors that determine the amounts or returns that may be payable by the Company to a person in respect of that class or those classes of specified futures contracts;

(j) a description of the principal risks associated with entering into that class or those classes of specified futures contracts, including any specific risk factors that apply to any one or more of the particular specified futures contracts;

(k) if it is reasonably foreseeable that, at the end of the arrangement relating to that class or those classes of specified futures contracts, a person will have received, in total, less than the amount paid to the Company for the specified futures contracts, a statement to this effect and a brief description of the circumstances that may produce this result;

(l) a description of the parties’ rights to alter the terms of that class or those classes of specified futures contracts;

(m) a description of the parties’ rights to terminate, cancel, surrender, or otherwise make or obtain payment of any amounts or returns in respect of that class or those classes of specified futures contracts, other than as described in paragraphs (h) and (i);

(n) a statement as to whether a person is entitled to sell his or her interest in a specified futures contract to another person and, if so, whether in the opinion of the Company there is an established market for such sales;

(o) a description of the treatment of client money or client property (if any) received or otherwise dealt with in connection with dealing in specified futures contracts, other than as described in paragraph (e);

(p) the names or descriptions, and the addresses and business telephone numbers, of officers, employees, or agents of the Company to whom enquiries about the specified futures contracts can be made, and to whom complaints about the specified futures contracts can be made;

(q) a statement to the effect that other information about the Company is contained or referred to in financial statements of, or relating to, the Company and where a copy of the latest financial statements may be obtained from;

(r) a statement of the type of information that is required to be, or otherwise will be, given to clients periodically;

(s) a statement describing the type of information that is required to be, or otherwise will be, available on request from the Company, and a statement explaining how a request for this information should be made;

(t) a statement whether any charge may be made for the information referred to in paragraph (s) and the amount of any charge; and

(u) any other material matters applicable to that class or those classes of specified futures contracts.

(5) If a matter specified in clause 4(5) is not applicable to the class or classes of specified futures contracts to which a disclosure document relates, the disclosure document is not required to refer to that matter, and is not required to state that the matter is not applicable.

(6) Nothing in clause 4(5) limits the information, statements, or other matters that may be contained in a disclosure document.

5. Capital adequacy requirements

(1) The Company must at all times be able to pay its debts as they become due in the normal course of business.

(2) The Company must ensure that its Surplus Liquid Funds exceeds at all times its Prescribed Liquid Funds Amount.

(3) The Company’s Prescribed Liquid Funds Amount is $1,000,000.00.

(4) The Company’s Surplus Liquid Funds is the aggregate of all of its Liquid Assets, less any risk based reductions to its Liquid Assets, less its Gross External Liabilities.

(5) The Company’s Liquid Assets are:

(a) cash;

(b) cash equivalents (as defined by NZ IAS 7);

(c) trade receivables realisable within the next three months; and

(d) financial assets that have a ready market, which are valued at current market prices.

(6) In calculating the Company’s Liquid Assets that calculation excludes:

(a) any client funds held by the Company (for this purpose advance part payments are not client funds);

(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 advance part payment due in respect of that futures contract by the 2nd business day following the date the liability to make that advance part payment arose, a reduction of 120% on that uncollected advance part payment;

(b) for equity securities held or receivable by that dealer 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;

(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%;