DETAILS OF SUPPORTING DOCUMENTATION REQUIRED TO BECOME AN NZX TRADING AND ADVISING PARTICIPANT

REQUIREMENT / DOCUMENTATION / PARTICIPANT COMMENTS / NZXR COMMENTS
Application Form: / Market Participant Application Form (Appendix 1)
Compliance Manager:
(Rule 3.11) / Compliance Manager Undertaking (Appendix 1E)
Surveillance Manager:
(Rule 3.11.6)
(only required if the Participant’s Compliance Manager is located outside of New Zealand) / Surveillance Manager Undertaking (Appendix 1F)
Emergency Contact Details:
(Rule 3.28) / Please provide the following details for each emergency contact:
a)Email;
b)Landline; and
c)Mobile.
Managing Principal:
(Rule 3.3) / (required for NZX Firms only)
Please supply the following documentation:
a)Confirmation of NZX Advisor Status;
b)CV; and
c)Statutory Declaration (Appendix 1A).
Responsible Executive:
(Rule 3.4)
(not required for NZX Firms who have appointed a Managing Principal) / (not required for NZX Firms who must appoint a Managing Principal)
Please supply the following documentation:
a)Responsible Executive Applicant Form (Appendix 1B);
b)Responsible Executive Statutory Declaration (Appendix 1C);
c)Meets the requirements of Rule 3.4.
Directors / Partners Details:
(Rules 3.5 / 3.6) / Please supply the following documentation:
a)Details of all Directors / Partners; and
b)Statutory Declaration for Directors / Partners (Appendix 1D).
Broking Offices:
(Rule 3.8) / Please list all Broking Offices and the NZX Advisor / Associate Advisor in charge of each Broking Office.
Insurance Details:
(Rule 3.26) / Please provide a certificate of currency for each of the following:
a)Professional Indemnity Insurance; and
b)Directors and Officers Liability Insurance.
Business Plan:
(Rule 3.1.3(d)) / Details regarding the intentions and future direction of the business with specific reference to the Participant’s activity as an NZX Market Participant.
Company Details:
(Rule 3.1.3(d) and (f)) / Please provide the following documentation:
a)Constitution;
b)Details of shareholders;
c)Certificate of Incorporation (or equivalent document confirming establishment of the entity);
d)Company Number;
e)Registered address of company if different to place of business;
f)Details of the type of Company and nature of its activities;
g)A description of the management structures evidencing that management is sufficiently experienced and capable to conduct business as a Participant;
h)A copy of the Participant’s Corporate Structure Chart to determine ownership, control and authority; and
i)Details of any companies, partnerships or other business entities within the Participant’s group.
NZX Associate Advisors:
(Rule 5.5) / (not required for Principal Book Only Participants)
Please provide the following for each NZX Associate Advisor application:
a)Application Form (Appendix 3);
b)Statutory Declaration (Appendix 3A);
c)Undertaking (Appendix 3B);
d)Confirmation of completion of Kaplan Papers:
  1. 405N The New Zealand Stock Market; and
  2. 508N Securities Law and Market Regulation in New Zealand.
e)Confirmation that the applicant has been working under the supervision of an NZX Advisor, and has had full time experience for the preceding six months or equivalent Securities industry experience (as determined by NZX).
NZX Advisors:
(Rule 5.5) / (not required for Principal Book Only Participants)
Please provide the following for each NZX Advisor application:
a)Application Form (Appendix 3);
b)Statutory Declaration (Appendix 3A);
c)Undertaking (Appendix 3B);
d)Confirmation that the applicant has obtained an NZX Diploma (6 Kaplan Papers); and
e)Confirmation the applicant has been employed or otherwise contracted full time for no less than three years in the previous five year period prior to the application being submitted, wihin an NZX Participant Firm or a member of a recognised Securities Exchange or has equivalent Securities Industry experience (as determined by NZX).
DMA Dealers / Dealers:
(Rule 4.4) / Please provide the following for each DMA Dealer / Dealer application:
a)Application Form (Appendix 2);
b)Statutory Declaration (Appenedix 2A);
c)Undertaking (Appendix 2B);
d)Designation of Access Rights (Appendix 2C);
e)Firm Manage and Enquiry Access (Appendix 2D);
f)Rules Test - To be arranged with NZX; and
g)Systems Test – To be arranged with NZX.
DMA Authorised Persons:
(Rule 10.8) / Please provide the following:
a)Written agreement between the Trading Participant and the DMA Authorised Person;
b)Details as to how the Participant will assess the DMA Authorised Persons ability to comply with the Rules before they grant them access;
c)Details of the training that will be given to DMA Authorised Persons;
d)Details of how the Participant will be notified of a new DMA Authorised Person being given access to the system; and
e)Details of the ability the Participant will have to suspend access at the client and securities level.
Integrity, Reputation, Character: / Please provide confirmation that the following are not applicable, or provide specific details if they are:
a)Any legal or arbitration proceedings active, threatened or pending against the Participant or any member of its group which may have a significiant impact on the reputation of the Participant; and
b)Any adverse or potentially adverse matters which have been brought to the attention of any relevant regulatory authority during the last 6 years.
Technology:
(Rule 3.1.3(d)) / Please provide details of software being used in relation to Client Assets, and Capital Adequacy, together with details of the technology in place to undertake business as a Participant.
Compliance Manuals and Procedures: / Please provide documents that provide information to the business on their compliance obligations and how to manage situations where a possible breach of the Rules has occurred. These documents, should at a minimum, detail the following:
  • Chinese Walls – Rule 3.24;
  • Conflict Management – Rule 15.11;
  • Custody Accounts – Rule 18.15;
  • Employee Trading – Rule 10.5;
  • Insider Trading – Rule 15.6;
  • Voice Recording – Rule 15.12;
  • Market Misconduct – Rule 10.2;
  • Discretionary Trading – Rule 9.9;
  • Breaches – Rule 21.7.1;
  • Complaints – Rule 15.7;
  • Order Records – Rule 15.13;
  • Order Trading / Placing – Section 14;
  • Contract Notes – Rule 15.17;
  • Client Maintenance – Rules 9.2 – 9.6;
  • Capital Adequacy – Section 19; and
  • Client Funds – Seciton 18.

Compliance Monitoring Program / Please provide a Compliance Plan which includes a periodic review of your obligations and identifies key risks, together with establishing systems, procedures and controls to monitor and manage those risks.
Bank Trust Letters:
(Rule 18.6.1 and Guidance Note GN000805 – Client Funds) / (not required for Principal Book Only Participants)
Please provide to NZX, from the Bank holding the Client Funds Account, a written acknowledgement of the trust status of the account, and ensure that the words ‘Client Funds Account’ appear in the account name.
Business Continuity Plan:
(Rule 8.15.2) / Please provide a BCP that has been developed to ensure that at all times there is adequate disaster recovery and continuation of usual operations following short, medium and long term disruption. At a minimum it should include:
a)The management framework for implementation of the business continuity plan and Emergency Procedures;
b)The resource requirements, including people, systems and other assets and arrangements for how these resources will be obtained;
c)The recovery priorities for your operational processes affected by the disruption;
d)Communication arranagements in relation to the disruption and how this will be communicated to internal and external parties;
e)System processes for determining the integrity of the information affected by the disruption; and
f)Processes to test the adequacy and effectiveness of the business continuity plan and emergency procedures.
Client Agreements:
(Rule 9.12) / (not required for Principal Book Only Participants)
Please provide Client Agreements entered into with your client’s which outline without limitation:
a)Your terms of business;
b)The means by which the client instructions will be accepted;
c)Risk Warnings, particularly in relation to instructions on short selling, dealing in derivatives / warrants or any other security;
d)Details of your arrangements, if any, with a Trading Participant to facilitate Trades for that client;
e)Details of your arrangements with a Clearing Participant, if any, in relation to the delivery and settlement of Trades for that client;
f)If you are facilitating a short sale on behalf of a client, details of any additional Margin Cover that may be required if there is a rise in the market price of the security that is the subject of the short sale;
g)The name, telephone number and main business of the relevant Clearing Participant which settles trades on behalf of that Trading Participant;
h)If your firmtransfers Trades into a pool account prior to the allocation of Securities the subject of those Trades to clients, you must include(in your terms of business or client agreement) details of the policy you have adopted to allocate Securities to client orders (Allocation Policy);
i)Details as to whether the Participant discloses whether it charges interest on its Trust Account; and
j)Details as to whether the Participant discloses the cost associated with currency conversion.
Trading Agreements:
(Rule 5.14.2) / (not required for Principal Book Only Participants)
If you are entering into an agreement with an NZX Advising Firm, please provide a Trading Agreement with that NZX Advising Firm which includes:
a)Terms that require the Trading Participant to have Clearing and Settlement arrangements that comply with the Rules in place for Trades executed by the Trading Participant for the Advising Firm; and
b)Details in relation to the Clearing and Settlement of Trades for the NZX Advising Firm which must, at a minimum include the matters in Rule 15.9.1(b) and for the purposes of this Rule, Rule 15.9.1(b) shall be read as if the Advising Firm is a Client of the Trading Participant.
Clearing and Settlement Agreement:
(Rule 6.3.1) / If you are applying to be a Trading Participant, but are not also applying to be a Clearing Participant:
a)A Trading Participant who is not a Clearing Participant must enter into and maintain at all times a separate written agreement with each of its Clearing Participants setting out the terms and conditions on which each Clearing Participant will clear and settle Trades executed by that Trading Participant;
b)The Trading Participant must promptly give NZX a copy of each C&S Agreement to which it is a party; and
c)A Trading Participant is bound by each term which the C&S Rules require to be included in a C&S Agreement, whether or not that term is actually incorporated in a C&S Agreement between the Trading Participant and the Clearing Participant.
Training Plan:
(Rule 3.14(b)) / Please provide details of how you will ensure that each Employee will have ongoing training to ensure that they are kept up to date with changes in securities law, security exchange and market rules, practices and technology.
Financial Performance / Please provide:
a)Audited financial statements for the previous five years; and
b)Evidence of the Participant’s current financial position to demonstrate that the Minimum Prescribed Capital Adequacy requirements will be met.

December 2015