Pursuant to section 38 of the Securities Markets Act 1988, the Securities Commission gives the following notice.
N o t i c e
Clause 1: Title, commencement and expiry—(1) This notice is the Authorised Futures Dealers Notice (iPredict Limited) 2008.
(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 31 August 2013.
Clause 2: Interpretation—(1) In this notice, unless the context otherwise requires:
“Act” means the Securities Markets Act 1988.
“clearing house” means Predictions Clearing Limited.
“Commission” means the Securities Commission.
“ISCR” means the New Zealand Institute for the Study of Competition and Regulation.
“market”:
(a) means the market that has been, or will be, established by the market provider for the purposes of trading specified futures contracts; and
(b) includes a sponsored market.
“market provider” means iPredict Limited.
“participant” means any person who has an account with the market provider for the purposes of trading specified futures contracts.
“participant’s contribution limit”, in respect of
a participant, means $1,000 in any period of 6 months.
“participants’ funds account” means a call deposit account with a registered bank that is established and maintained by the clearing house for the purposes of the market.
“participation agreement” means an agreement between the participant, the market provider, and the clearing house under which the market provider allows the participant to trade on the market and the participant agrees to be bound by the rules of the market.
“specified agreement” means an agreement:
(a) under which a participant has a contingent or an actual right to be paid, by the clearing house from funds held in the participants’ funds account, at a specified future date, an amount that depends on one or more political, business, economic, sociological, or demographic events or circumstances;
(b) under which that payment may not exceed
the total amount payable by participants for the acquisition from the market provider of a bundle of specified agreements of which the specified futures contract forms a part;
(c) in respect of which a participant’s right referred to in paragraph (a) is able to be traded on the market; and
(d) the terms of which are publicly available on an Internet site maintained by, or on behalf of, the market provider at all reasonable times.
“specified future date” includes a date that is described by referring to the day, or number of days (including, to avoid doubt, the number of working or other specified type of days) after a specified future act or event happens or circumstance occurs.
“specified futures contract” means:
(a) a specified agreement;
(b) a specified right.
“specified right” means the right of a participant under paragraph (a) of the definition of “specified agreement” (whether held by the participant who is a party to that specified agreement or by another participant).
“sponsor” means the person on whose behalf, or
by arrangement with whom, the market provider establishes a sponsored market.
“sponsored market” means a market established by
the market provider on behalf of, or by arrangement with, a sponsor:
(a) to meet specific information or research needs of the sponsor;
(b) on which the only specified futures contracts able to be traded relate to one or more business projects or financial indicators of the sponsor;
(c) in respect of which the sponsor, for the
purposes of trading by any participant, may only contribute sponsor’s contributions that do not exceed the sponsor’s contribution limit.
“sponsor’s contribution” means, in respect of a participant, an amount that a sponsor of a sponsored market certifies to the market provider:
(a) has been or will be provided to the participant in a specified period for the purposes of trading exclusively on that sponsor’s sponsored market; and
(b) will not be deducted from, or be taken into account in determining, the amount of any salary, bonus, benefit or other entitlement payable to that participant by or on behalf of
that sponsor or any related party of that sponsor.
“sponsor’s contribution limit”, in respect of a participant, means $1,000 in any period of six months.
“Vic Link” means Victoria Link Limited.
(2) Any term or expression that is defined in the Act
and used, but not defined, in this notice has the same meaning given to it by the Act.
Clause 3: Authorisation—(1) The market provider is authorised to carry on the business of dealing in specified futures contracts to which the market provider or clearing house is, or intends to be, a party.
(2) The authorisation in clause 3(1) is subject to the conditions that:
(a) the only contracts which may be traded on the market are those declared to be contracts to
which Part III of the Act relates pursuant to the declaration and exemption under section 37(7)
and section 48(1)(d) of the Act known as the
Futures Contracts (iPredict Limited) Declaration and Exemption Notice 2008;
(b) the market provider must comply with all
conditions of the Futures Contracts (iPredict Limited) Declaration and Exemption Notice 2008; and
(c) the fees charged by the market provider and clearing house from participants may not exceed:
(i) $20 for account opening; and
(ii) 12.5% of net earnings (payable only when and to the extent that funds are withdrawn by a participant);
and no such fees will be charged in respect of any sponsored market;
(d) all funds paid to the clearing house by participants for credit to their accounts with the clearing house must be held in the participants’ funds account, and the clearing house may only disburse funds from that account in the following circumstances:
(i) payments to participants in accordance with their account entitlements;
(ii) deductions of fees and interest;
(iii) repayment of amounts lodged in error or in excess of the participant’s contribution limit; and
(iv) repayment of amounts lodged in error or in excess of the sponsor’s contribution limit;
(e) the clearing house remains at all times a
wholly-owned subsidiary of the market provider, and ISCR and Vic Link, together or individually, must at all times retain a majority of the voting shares in and the ability to control the appointment of a majority of the directors to the board of the market provider;
(f) the clearing house must keep and maintain proper records of each participant’s dealings, account and holdings;
(g) the financial statements of the market provider and clearing house for each financial year are audited, and a copy of those financial statements and the audit report is made available electronically to any person requesting them and sent to the Commission no later than five months after the end of each financial year;
(h) the clearing house is and remains obliged, under the terms and conditions of the participation agreement, to pay to any participant the available balance in
that participant’s account as soon as practicable (and in any event no later than three working days
after receiving a request or instruction from that participant to do so) – except to the extent (if any) that that balance consists of sponsor contributions which the sponsor has required not to be disbursed until after the liquidation date of the relevant sponsored market;
(i) under the terms of participation the market provider can prohibit any person from participating in the market;
(j) the market provider and clearing house must
report to the Commission annually on the operation of the market, including contracts traded, volume and value of trades, number of participants, and any material systems failures or interruptions.;
(k) the market provider and clearing house must immediately report to the Commission any discrepancy or shortfall discovered in the participants’ funds account;
(l) the market provider’s website contains, in a prominent place, a statement to the effect that:
(i) the markets operated by the market provider are intended as a research and educational facility, not as an investment market or a gambling facility, and the market provider has been authorised to act as a futures dealer, and the contracts traded are treated as futures contracts under New Zealand law, in order to provide certainty as to the legal treatment of the contracts;
(ii) the 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 concerned; and
(iii) the Commission has not approved any documentation of the market provider, or the terms and conditions on which it carries out its business.
Dated at Wellington this 26th day of August 2008.
The Common Seal of the Securities Commission was affixed in the presence of:
[L.S.]
JANE DIPLOCK, Chairperson.