Seeking authorisation as a futures dealer?Futures dealers in New Zealand are regulated in the first instance either by the Securities Commission or under class authorisations granted to NZX Futures and Options Participants and to Sydney Futures Exchange (SFE) Participants, depending on the nature of their activities. The class authorisation for SFE Participants only authorises these dealers in respect of SFE-traded contracts. SFE Participants wishing to trade in New Zealand in other types of futures contracts (including contracts traded on any futures exchange other than SFE) must either seek additional authorisation from the Commission or must apply to be accredited as an NZX Futures and Options Participant. The Commission has welcomed NZX’s involvement as frontline regulator of futures dealers who operate under the NZX Futures and Options Rules. Dealers whose business activities fit within the scheme of these rules should seek accreditation under the NZX Rules, rather than direct authorisation by the Commission. The NZX Futures and Options Rules are designed primarily for firms dealing in futures contracts that are derived from securities. This means NZX regulation is likely to be most suitable for firms that: - receive and pass orders in futures and options products to a futures exchange; or - deal in futures and options products with similar characteristics to those traded on an exchange. The NZX Futures and Options Rules are unlikely to be suitable for dealers who: - deal primarily in foreign exchange futures, and related products; - act as issuers of derivative products; - act primarily as market providers; - deal solely in their capacity as funds managers; or - deal solely for wholesale clients. These dealers should approach the Commission directly to seek authorisation. If someone wishes to be a futures dealer we recommend that person approaches either the Commission or the NZX in the first instance, depending on the nature of the proposed business. We are likely to ask some initial questions about the business, and may confer with NZX if the business involves elements of dealing that could be covered by both regimes. Our aim, and that of NZX, is to find the most appropriate regulation for any dealer, and to avoid any duplication of regulation. We will then either seek a formal application for authorisation by the Commission or refer the applicant to NZX to seek accreditation under the NZX Futures and Options Rules. Commission staff are happy to meet potential applicants to assist them on how to proceed. |
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Second Cycle reviews of financial reports |
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The Securities Commission has published a report on the second cycle of its financial surveillance programme. The Commission reviewed the audited full-year financial reports of 46 issuers with balance dates from 31 December 2004 to 31 March 2005. It also considered financial information in any current prospectuses, substantial security holder information, continuous disclosure notices and other sections of the annual report, such as the chairman’s report. The selection of 46 issuers included 35 issuers listed on the NZX, 5 issuers listed on the NZAX, 1 issuer whose shares are traded on Unlisted, and 5 other non-listed issuers. “High quality reporting enables investors to have confidence in the financial information provided by issuers, and contributes to the integrity of New Zealand’s securities markets,” says Chief Accountant Alastair Boult. |
Reports of 19 issuers had some shortcomings. The Commission’s report on the Cycle 2 Review identifies various shortcomings and how they should be addressed. Cycle 2 findings were similar to Cycle 1 results in that few serious problems were identified, but a number of issuers need to raise the standard of their financial reporting. Some of the matters found were:
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The Commission is continuing its Financial Reporting Surveillance Programme. Cycle 3 is underway with reviews of financial reports of early adopters of New Zealand equivalents of International Financial Reporting Standards with a 31 December 2005 balance date. This is part of the Commission’s plan to review disclosures and adjustments made by issuers as they move to NZ IFRS. “We have published the report on Cycle 2 because the information will be useful to issuers who want to improve the quality of their financial reporting,” Alastair Boult says. The report can be printed from the
Commission’s website or alternatively a
hard copy can be ordered by calling
04-472 9830 or by emailing |
| 3 | THE BULLETIN April 2006 | |