Guide to becoming an NZX Participant
March 2018
CONTENTS
CONTENTS ...... 2
A .Purpose of this Guide ...... 3
B .NZX Participant Categories and Permitted Services ...... 4
Primary Market only Participant Categories ...... 5
NZX SPONSOR...... 5
DISTRIBUTION AND UNDERWRITING SPONSOR ...... 6
NXT ADVISOR ...... 7
Advice and Trading Participant Categories ...... 8
ADVISING FIRM ...... 8
TRADING AND ADVISING FIRM ...... 9
BANK ONLY PARTICIPANTS ...... 11
PRINCIPAL BOOK ONLY DEALERS ...... 13
Clearing and Settlement / Depository ...... 14
Participant Categories ...... 14
INDIVIDUAL CLEARING PARTICIPANT ...... 14
GENERAL CLEARING PARTICIPANT ...... 15
DEFAULT CLEARING PARTICIPANT ...... 16
LENDING CLEARING PARTICIPANT ...... 18
DEPOSITORY PARTICIPANT ...... 19
C .Application Process and Timeframes ...... 20
D .NZX Markets ...... 22
E .NZX Rules ...... 23
Appendix 1 ...... 24
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A Purpose of this Guide
In order to trade, clear and settle transactions on the securities markets operated by NZX, and to facilitate primary offers of securities on NZX’s markets, it is necessary to be accredited as an NZX Participant. There are various categories of NZX Participant. Each category depends on the relevant services to be performed, as set out in the table on page 4.
This guide is designed to:
• Describe the different categories of trading, advising and clearing Participant and what they are permitted to do in relation to NZX’s securities markets
• Provide details on how to apply for accreditation as an NZX Participant
• Summarise the key ongoing obligations of NZX Participants under the NZX Rules
This guide should be read in conjunction with the relevant NZX Rules and the application forms for each Participant category.
This guide is a summary. Detailed advice on any matter referred to in this guide can be obtained from the NZX Participant Compliance team, who can be contacted at:
NZX Participant Compliance
NZX Limited 11 Cable Street PO Box 2959 Wellington 6140 New Zealand Participant Compliance contact
General Telephone: +64 (4) 498 2279 General Email: compliance@nzx.com Team Lead Telephone: +64 (4) 498 2279 Team Lead Email: [email protected]
For the purposes of this guide:
• NZX Participant refers to the various types of participation available on the NZX Markets, depending on the services an applicant intends to provide (see further Section B “NZX Participant categories and Permitted Services”)
• NZX Rules refers to the various rules and procedures that are applicable to the specific category of Participant (see further Section E “NZX Rules”)
• NZX’s cash markets refers to the NZX Main Board, NZX Debt Market, NXT Market, NZAX Market, and Fonterra Shareholders Market operated by NZX
• NZX’s derivatives markets refers to the dairy derivatives and equity derivatives markets operated by NZX
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Bring Bring Distribute Provide Trade Trade as Hold Clear Clear and Clear and Access the new new and advice on Principal client and settle trades settle NZCDC issues to issues underwrite to behalf assets settle for other lending system to
the NZX to the issues clients of trades Trading and transactions borrow, lend Main NXT clients for itself Advising on its own or effect legal Board Market Participants behalf title transfer
NZX Sponsor
Distribution and Underwriting Sponsor
Primary
Market Only NXT Advisor
Advising Firm *
Trading and Advising Firm
Bank Only Participant (NZDX only)
Principal Book Only Advice Trading and Dealer
Individual Clearing
Participant
General Clearing Participant
Default Clearing Participant
Lending Clearing Participant
Clearing Settlement and Depository Participant * Advising Firms may request Trading Participants to place principal orders into the market on behalf of the Advising Firm.
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Primary Market only Participant Categories NZX SPONSOR Cash Market
What is an NZX Sponsor? What ongoing obligations do NZX Sponsors have? An NZX Sponsor is a Participant that has been accredited and approved by NZX for An NZX Sponsor is required to act in the purpose of bringing, but not distributing, accordance with the NZX Rules specific to securities to NZX’s cash markets (except this category of Participant (see NZX the NXT market). Participant Rule 2.4). This requires the Participant to, for example: NZX Sponsors can: • Accept responsibility to NZX and • Provide advice to companies about acknowledge that it does not have any listing on the NZX; and conflicting duties of interest in relation to the Issuer that the NZX Sponsor is • Bring new offers of securities to a cash bringing to the NZX market market provided by NZX (except the NXT market) • Observe proper ethical standards and acting with honesty, integrity and fairness What is involved in becoming an NZX Sponsor? • Act in accordance with Good Broking Practice An NZX Sponsor must: Application Forms • Complete the application process (see further section C “Application Process Please refer to Appendix 1 for details of the and Timeframes”) relevant application forms and checklists. Forms and checklists can be downloaded • Have adequate conflict management at: arrangements https://www.nzx.com/regulation/participant-rules • Appoint a Responsible Executive who is
responsible for ensuring that the NZX Sponsor complies with the NZX Rules
• Ensure that its personnel are suitably qualified and experienced to meet their responsibilities to the Issuer, under the NZX Rules.
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DISTRIBUTION AND UNDERWRITING SPONSOR Cash Market
What is a Distribution and Underwriting responsibilities to the Issuer, under the Sponsor? NZX Rules
A Distribution and Underwriting Sponsor is a Participant that has been accredited and What ongoing obligations do approved by NZX for the purpose of Distribution and Underwriting Sponsors assisting prospective Issuers distributing have? and/or underwriting debt or equity securities on NZX’s cash markets (except the NXT A Distribution and Underwriting Sponsor is market). required to act in accordance with the NZX Rules specific to this category of Participant A Distribution and Underwriting Sponsor (see NZX Participant Rule 2.5). This must not act as an NZX Sponsor or NXT requires the Participant to, for example: Advisor (and bring an issue of securities to an NZX cash market) without also being an • Maintain adequate capital as required for accredited NZX Sponsor or NXT Advisor. a Distribution and Underwriting Sponsor
Distribution and Underwriting Sponsors can: • Accept responsibility to NZX and acknowledge that it does not have any • Distribute and/or underwrite an Issuer’s conflicting duties of interest in relation to debt or equity securities on the NZX’s the Issuer’s securities that are being cash market. distributed and/or underwritten
What is involved in becoming a • Have the ability to meet its financial Distribution and Underwriting Sponsor? obligations in respect of underwriting the initial public offer or subsequent public A Distribution and Underwriting Sponsor offer must: • Comply with the Employee Trading • Complete the application process (see requirements set out in the NZX Rules further section C “Application Process and Timeframes”) • Observe proper ethical standards and acting with honesty, integrity and fairness • Meet the prescribed minimum capital adequacy requirements for a Distribution • Act in accordance with Good Broking and Underwriting Sponsor Practice
• Appoint a Responsible Executive who is Application Forms responsible for ensuring that the Distribution and Underwriting Sponsor Please refer to Appendix 1 for details of the complies with the NZX Rules relevant application forms. Forms can be downloaded at: • Ensure that its personnel are suitably qualified and experienced to meet their https://www.nzx.com/regulation/participant-rules
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NXT ADVISOR Cash Market – NXT Market only What ongoing obligations do NXT What is a NXT Advisor? Advisors have?
A NXT Advisor is a Participant that has A NXT Advisor is required to act in been accredited and approved by NZX for accordance with the NZX Rules specific to the purpose of bringing companies to the this category of Participant (see NZX NXT Market. Participant Rule 2.8). This requires the Participant to, for example: NXT Advisors can: • Accept responsibility to NZX and • Provide advice to companies about acknowledge that it does not have any listing on the NXT Market conflicting duties of interest in relation to the Issuer that the NXT Advisor is • Bring new offers of securities to the NXT bringing to the NXT Market market • Assess the suitability of applicants for A NXT Advisor must not distribute and/or listing and to assist an applicant for underwrite an offer of securities on an NZX listing on the NXT Market to ready itself cash market, without also being an for listing accredited Distribution and Underwriting Sponsor. • Provide ongoing support to the company listed on the NXT Markets What is involved in becoming a NXT Advisor? • Observe proper ethical standards and acting with honesty, integrity and fairness A NXT Advisor must: • Act in accordance with Good Broking • Complete the application process (see Practice further section C “Application Process and Timeframes”) Application Forms
• Have relevant experience in order to be Please refer to Appendix 1 for details of the able to assess the suitability of applicants relevant application forms. Forms can be for listing and to assist an applicant for downloaded at: listing on the NXT Market to ready itself for listing https://www.nzx.com/regulation/participant-rules
• Have relevant experience in order to be able to provide ongoing support to the company listed on the NXT Market
• Appoint a Responsible Executive who is responsible for ensuring that the NXT Advisor complies with the NZX Rules
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Advice and Trading Participant Categories ADVISING FIRM Cash Market or Derivatives Market
What is an Advising Firm? • Appoint a Compliance Manager who is responsible for ensuring compliance with An Advising Firm is a Participant that has the NZX Rules, maintaining appropriate been accredited and approved by NZX for registers, and overseeing the effective the purpose of providing advice to clients in control of the Advising Firm’s business NZX’s cash or derivatives markets. • Ensure that any employees who are Advising Firms are unable to directly enter providing advice to clients have the and/ or settle trades and must enter into an required training and are accredited as agreement with a Trading and Advising Firm NZX Advisers, or NZX Derivatives for the execution of trades. Advisors (as relevant)
Advising Firms can: What ongoing obligations do Advising Firms have? • Provide advice to clients An Advising Firm is required to act in • If permitted by NZX, hold client funds accordance with the NZX Rules specific to • Provide advice to companies about this category of Participant. This requires listing (except on the NXT market) the Participant to, for example:
• Bring new offers of securities to NZX’s • Maintain adequate capital as required for cash markets (except the NXT market) an Advising Firm
• Distribute and/or underwrite offers of • Ensure that only NZX accredited debt or equity securities on NZX’s cash Advisers provide advice to clients markets (except the NXT market) • Enter into Client Agreements with its What is involved in becoming an clients and obtain the required client Advising Firm? information An Advising Firm must: • Meet the Client Assets requirements (if applicable) • Complete the application process (see further section C “Application Process • Observe proper ethical standards and and Timeframes”) acting with honesty, integrity and fairness
• Meet the prescribed minimum capital • Act in accordance with Good Broking adequacy requirements for an Advising Practice Firm Application Forms • Enter into a trading agreement with a Please refer to Appendix 1 for details of the Trading and Advising Firm in order to relevant application forms. Forms can be facilitate trading downloaded at: • Appoint a Managing Principal or https://www.nzx.com/regulation/participant-rules or Responsible Executive who is responsible for ensuring that the Advising https://www.nzx.com/regulation/derivatives-rules Firm complies with the NZX Rules
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TRADING AND ADVISING FIRM Cash Market or Derivatives Market
What is a Trading and Advising Firm? • Appoint a Managing Principal or Responsible Executive who is A Trading and Advising Firm is a Participant responsible for ensuring that the Trading that has been accredited and approved by and Advising Firm complies with the NZX NZX for the purpose of providing advice to Rules clients and trading in NZX’s cash or derivatives markets. • Appoint a Compliance Manager who is responsible for ensuring compliance with Trading and Advising Firms can: the NZX Rules, maintaining appropriate registers, and overseeing the effective • Provide advice to companies about control of the Trading and Advising listing (except on the NXT market) Firm’s business
• Bring new offers of securities to NZX’s • Ensure that any employees who are cash markets (except the NXT market) providing advice to clients have the required training and are accredited as • Distribute and/or underwrite offers of NZX Advisers or NZX Derivatives debt or equity securities on NZX’s cash Advisors (as relevant) markets (except the NXT market) • Ensure that any employees who are • Provide advice to clients entering orders into the trading system have the required training and are • Hold client assets accredited as Dealers or Derivatives Dealers (as relevant) • Trade on behalf of clients or as principal in NZX’s markets What ongoing obligations do Trading and Advising Firms have? • Enter into Trading Agreements with Advising Participants A Trading and Advising Firm is required to act in accordance with the NZX Rules • If accredited to do so, offer Direct Market specific to this category of Participant. This Access (DMA) facilities to its clients requires the Participant to, for example: What is involved in becoming a Trading • Maintain adequate capital as required for and Advising Firm? a Trading and Advising Firm
A Trading and Advising Firm must: • Ensure that only NZX accredited Advisers provide advice to clients • Complete the application process (see further section C “Application Process • Enter into Client Agreements with its and Timeframes”) clients and obtain the required client information • Meet the prescribed minimum capital adequacy requirements for a Trading and • Meet the Client Assets requirements Advising Firm • Ensure that only Dealers or DMA • Enter into a Clearing and Settlement Authorised Persons can place orders into Agreement with a Clearing Participant if it the market is not itself a Clearing Participant • Ensure the accuracy and integrity of orders placed into the market
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• Maintain fair, orderly and transparent markets
• Observe proper ethical standards and acting with honesty, integrity and fairness
• Act in accordance with Good Broking Practice
Application Forms
Please refer to Appendix 1 for details of the relevant application forms. Forms can be downloaded at https://www.nzx.com/regulation/participant-rules or https://www.nzx.com/regulation/derivatives-rules
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BANK ONLY PARTICIPANTS Cash Market – NZX Debt Market only
What is a Bank Only Participant? • Appoint a Compliance Manager who is responsible for ensuring compliance with A Bank Only Participant is a Bank that has the NZX Rules, maintaining appropriate been accredited and approved by NZX for registers, and overseeing the effective the purpose of providing advice to clients control of the Bank Only Participant’s and trading in the debt market provided by business NZX (the NZDX). • Ensure that any employees who are Bank Only Participants can: providing advice to clients have the required training and are accredited as • Provide advice to companies about NZDX Advisers listing on the NZDX • Ensure that any employees who are • Bring new offers of securities to NZDX entering orders into the trading system have the required training and are • Distribute and/or underwrite offers of accredited as Dealers debt securities on the NZDX What ongoing obligations do Bank Only • Provide advice to clients Participants have?
• Hold client assets A Bank Only Participant is required to act in accordance with the NZX Rules specific to • Trade on behalf of clients or as principal this category of Participant (see NZX in the NZDX Participant Rule 2.6). This requires the Participant to, for example: • Enter into Trading Agreements with Advising Participants • Maintain adequate capital as required for a Bank Only Participant • If accredited to do so, offer Direct Market Access (DMA) facilities to its clients • Ensure that only NZX accredited Advisers provide advice to clients What is involved in becoming a Bank Only Participant? • Enter into Client Agreements with its A Bank Only Participant must: clients and obtain the required client information • Complete the application process (see further section C “Application Process • Meet the Client Assets requirements; and Timeframes”) • Ensure that only Dealers or DMA • Meet the prescribed minimum capital Authorised Persons can place orders into adequacy requirements for a Bank Only the market Participant • Ensure the accuracy and integrity of • Enter into a Clearing and Settlement orders placed into the market Agreement with a Clearing Participant if it is not itself a Clearing Participant • Maintain fair, orderly and transparent markets • Appoint a Responsible Executive who is responsible for ensuring that the Bank • Observe proper ethical standards and Only Participant complies with the NZX acting with honesty, integrity and fairness Rules
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• Act in accordance with Good Broking Practice
Application Forms
Please refer to Appendix 1 for details of the relevant application forms. Forms can be downloaded at https://www.nzx.com/regulation/participant-rules
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PRINCIPAL BOOK ONLY DEALERS Cash Market or Derivatives Market • Ensure that any employees who are What is a Principal Book Only Dealer? entering orders into the trading system have the required training and are A Principal Book Only Dealer is a accredited as Dealers or Derivatives Participant that has been accredited and Dealers (as relevant) approved by NZX for the purpose of trading on its own account on NZX’s cash or What ongoing obligations do Principal derivatives markets. A Principal Book Only Book Only Dealers have? Dealer cannot advise or trade on behalf of clients. A Principal Book Only Dealer is required to act in accordance with the NZX Rules Principal Book Only Dealer can: specific to this category of Participant. This requires the Participant to, for example: Be Acting as Principal (trading on its own account) in any of the markets • Maintain adequate capital as required for provided by NZX a Principal Book Only Dealer
What is involved in becoming a Principal • Ensure that only Dealers or DMA Book Only Dealer? Authorised Persons can place orders into the market A Principal Book Only Dealer must: • Ensure the accuracy and integrity of • Complete the application process (see orders placed into the market; further section C “Application Process and Timeframes”) • Maintain fair, orderly and transparent markets • Meet the prescribed minimum capital adequacy requirements for a Principal • Observe proper ethical standards and Book Only Dealer acting with honesty, integrity and fairness
• Enter into a Clearing and Settlement • Act in accordance with Good Broking Agreement with a Clearing Participant if it Practice is not itself a Clearing Participant Application Forms • Appoint a Managing Principal or Responsible Executive who is Please refer to Appendix 1 for details of the responsible for ensuring that the relevant application forms. Forms can be Principal Book Only Dealer complies with downloaded at the NZX Rules https://www.nzx.com/regulation/participant-rules or • Appoint a Compliance Manager who is https://www.nzx.com/regulation/derivatives-rules responsible for ensuring compliance with the NZX Rules, maintaining appropriate registers, and overseeing the effective control of the Principal Book Only Dealer’s business
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Clearing and Settlement / Depository Participant Categories INDIVIDUAL CLEARING PARTICIPANT Cash Market or Derivatives Market • Appoint a Responsible Executive who is responsible for ensuring that the What is an Individual Clearing Individual Clearing Participant complies Participant? with the NZX Rules
An Individual Clearing Participant is a • Ensure that employees who have access Clearing Participant which has been to the Clearing and Settlement system accredited and approved by NZX for the are trained appropriately purpose of clearing and settling transactions through the NZX Clearing House behalf of What ongoing obligations do Individual its clients and on its own behalf. Clearing Participants have?
Individual Clearing Participant can: An Individual Clearing Participant is required to act in accordance with the NZX Clear and settle trades executed on Rules. This requires the Participant to, for behalf of its clients and for itself as a example: Trading Participant • Maintain adequate capital as required for What is involved in becoming an an Individual Clearing Participant Individual Clearing Participant? • Satisfy its daily settlement and margin An Individual Clearing Participant must: obligations
• Complete the application process (see • Maintain satisfactory systems for the further section C “Application Process execution, recording, reporting, clearing and Timeframes”) and settlement of transactions
• Meet the prescribed minimum capital • Maintain sufficient personnel with adequacy requirements for an Individual adequate knowledge, skill, training and Clearing Participant competence to ensure compliance with the NZX Rules • Be a Depository Participant • Refrain from any conduct which is likely • Be a Trading and Advising Participant to harm the reputation or integrity of the NZX Clearing House or constitute • Satisfy NZX that the Individual Clearing unprofessional conduct Participant is of suitable standing, and has appropriate systems, management Application Forms structures, and procedures Please refer to Appendix 1 for details of the • Provide documentation to satisfy the relevant application forms. Forms can be Clearing House’s obligations in relation downloaded at to the Anti Money Laundering and Countering Terrorism Financing regime https://www.nzx.com/regulation/nzx-rules- guidance/clearing-depository-rules in New Zealand
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GENERAL CLEARING PARTICIPANT Cash Market or Derivatives Market
What is a General Clearing Participant? • Appoint a Responsible Person who is responsible for ensuring that the General A General Clearing Participant is a Clearing Clearing Participant complies with the Participant that has been accredited and NZX Rules approved by NZX for the purpose of clearing and settling trades through the NZX • Ensure that employees who have access Clearing House. to the Clearing and Settlement system are trained appropriately General Clearing Participants can: What ongoing obligations do General • Clear and settle trades executed on Clearing Participants have? behalf of other Trading Participants with which it has a Clearing and Settlement A General Clearing Participant is required to Agreement act in accordance with the NZX Rules. This requires the Participant to, for example: • Clear and settle trades executed on behalf of its clients and for itself as a • Maintain adequate capital as required for Trading Participant a General Clearing Participant
What is involved in becoming a General • Satisfy its daily settlement and margin Clearing Participant? obligations
A General Clearing Participant must: • Maintain satisfactory systems for the execution, recording, reporting, clearing • Complete the application process (see and settlement of transactions further section C “Application Process and Timeframes”) • Maintain sufficient personnel with adequate knowledge, skill, training and • Meet the prescribed minimum capital competence to ensure compliance with adequacy requirements for a General the NZX Rules Clearing Participant; • Refrain from any conduct which is likely • Be a Depository Participant to harm the reputation or integrity of the NZX Clearing House or constitute • Satisfy NZX that the General Clearing unprofessional conduct Participant is of suitable standing, and has appropriate systems, management Application Forms structures, and procedures Please refer to Appendix 1 for details of the • Provide documentation to satisfy the relevant application forms. Forms can be Clearing House’s obligations in relation downloaded at to the Anti Money Laundering and Countering Terrorism Financing regime https://www.nzx.com/regulation/nzx-rules- in New Zealand guidance/clearing-depository-rules
• Enter into a Clearing and Settlement Agreement with any Trading and Advising Participant on whose behalf it will clear and settle trades
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DEFAULT CLEARING PARTICIPANT Cash Market or Derivatives Market • Appoint a Responsible Person who is What is a Default Clearing Participant? responsible for ensuring that the Default Clearing Participant complies with the A Default Clearing Participant is a Clearing NZX Rules Participant that has been accredited and approved by NZX for the purpose of providing the clearing and settlement of • Ensure that employees who have access transactions through the Clearing House on to the Clearing and Settlement system behalf of Trading Participants. are trained appropriately
Default Clearing Participants are not able to What ongoing obligations do Default clear and settle transactions on their own Clearing Participants have? behalf as principal or for its own clients. They must accept any genuine and A Default Clearing Participant is required to reasonable request from a Trading act in accordance with the NZX Rules. This Participant who seeks to enter into a requires the Participant to, for example: Clearing and Settlement Agreement with the Default Clearing Participant. • Maintain adequate capital as required for a Default Clearing Participant Default Clearing Participants can: • Satisfy its daily settlement and margin Clear and settle trades executed by obligations other Trading Participants only • Maintain satisfactory systems for the What is involved in becoming a Default execution, recording, reporting, clearing Clearing Participant? and settlement of transactions
A Default Clearing Participant must: • Accept any genuine and reasonable request from a Trading Participant who • Complete the application process (see seeks to enter into a Clearing and further section C “Application Process Settlement Agreement with the Default and Timeframes”) Clearing Participant
• Meet the prescribed minimum capital • Use best endeavours to remain adequacy requirements for a Default technologically current and being able to Clearing Participant clear and settle all products as they are introduced • Be a Depository Participant • Maintain sufficient personnel with • Satisfy NZX that the Default Clearing adequate knowledge, skill, training and Participant is of suitable standing and competence to ensure compliance with has appropriate systems, management the NZX Rules structures, and procedures • Refrain from any conduct which is likely • Provide documentation to satisfy the to harm the reputation or integrity of the Clearing House’s obligations in relation NZX Clearing House or constitute to the Anti Money Laundering and unprofessional conduct Countering Terrorism Financing regime in New Zealand
Application Forms
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Please refer to Appendix 1 for details of the relevant application forms. Forms can be downloaded at https://www.nzx.com/regulation/nzx-rules- guidance/clearing-depository-rules
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LENDING CLEARING PARTICIPANT Cash Market or Derivatives Market
What is a Lending Clearing Participant? What ongoing obligations do Lending Clearing Participants have? A Lending Clearing Participant is a A Lending Clearing Participant is required to Depository Participant that has been act in accordance with the NZX Rules. This accredited and approved by NZX for the requires the Participant to, for example: purpose of clearing and settling only lending transactions (which occur in the depository) • Satisfy its margin obligations (where it is on its own behalf through the NZX Clearing a borrower) House. • Maintain sufficient personnel with A Lending Clearing Participant may be adequate knowledge, skill, training and either a borrower, a lender or both. competence to ensure compliance with the NZX Rules What is involved in becoming a Lending Clearing Participant? • Refrain from any conduct which is likely to harm the reputation or integrity of the A Lending Clearing Participant must: NZX Clearing House or constitute unprofessional conduct • Complete the application process (see further section C “Application Process Application Forms and Timeframes”) Please refer to Appendix 1 for details of the • Be a Depository Participant relevant application forms. Forms can be downloaded at • Provide documentation to satisfy the Clearing House’s obligations in relation https://www.nzx.com/regulation/nzx-rules- to the Anti Money Laundering and guidance/clearing-depository-rules Countering Terrorism Financing regime in New Zealand
• Appoint a Responsible Person who is responsible for ensuring that the Lending Clearing Participant complies with the NZX Rules
• Ensure that employees who have access to the NZX Clearing and Settlement system are trained appropriately
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DEPOSITORY PARTICIPANT Cash Market or Derivatives Market
What is a Depository Participant? What ongoing obligations do Depository Participants have? A Depository Participant is a Participant that A Depository Participant is required to act in has been allowed to participate in the accordance with the NZX Rules. This depository operated by NZX. requires the Participant to, for example: Depository Participant can: • Maintain satisfactory systems for the • Access the NZX Clearing and Settlement execution, recording, reporting, clearing system and settlement of transactions
• Access the Legal Title Transfer system in • Maintain sufficient personnel with relation to securities on the NZX cash adequate knowledge, skill, training and markets competence to ensure compliance with the NZX Rules What is involved in becoming a Depository Participant? • Refrain from any conduct which is likely to harm the reputation or integrity of the A Depository Participant must: Depository operated by NZX or constitute unprofessional conduct • Complete the application process (see further section C “Application Process and Timeframes”) Application Forms • Satisfy NZX that it is of suitable standing, and has appropriate systems, Please refer to Appendix 1 for details of the management structures, and procedures relevant application forms. Forms can be downloaded at • Provide documentation to satisfy the https://www.nzx.com/regulation/nzx-rules- Depository’s obligations in relation to the guidance/clearing-depository-rules Anti Money Laundering and Countering Terrorism Financing regime in New Zealand
• Appoint a Responsible Person who is responsible for ensuring that the NZX Rules
• Ensure that employees who have access to the NZX Clearing and Settlement system or Legal Title Transfer system are trained appropriately
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C Application Process and Timeframes
Application Requirements
To be accredited as a Participant, applicants must complete and submit:
• an application form (together with all relevant appendices to the form and with all supporting documents); and
• the application checklist that is relevant to the category of NZX Participant for which accreditation is being applied for. Application Process
The application process involves the following key stages:
Stages Description
1 Pre-lodgement discussion with NZX Participant Compliance
2 Applicant completes the application form (including all appendices and supporting documents)
3 Application form (including all appendices and supporting documents) is submitted to NZX Participant Compliance
4 NZX Participant Compliance, NZX Regulation and the NZX Clearing (where applicable) review the application
5 If the application does not meet the accreditation requirements, the applicant must provide further information. If the accreditation requirements are still not met, the applicant will not be accredited
6 If the application meets the accreditation requirements, the applicant will be accredited and formal confirmation issued
All application forms, appendices and supporting documentation must be completed in full and provided to NZX’s Participant Compliance team. If an applicant cannot complete a section in the checklist, they are requested to provide some commentary in the relevant checklist. Applicants are also requested to attach supporting documents with the checklist, and that responses are adequately referenced to ensure that NZX is able to trace the commentary provided to the relevant supporting documents.
The time taken to process an application will vary depending on the type of accreditation requested and the applicant’s circumstances. Processing of the application will not commence until a complete application (including all appendices and supporting documents) has been received and accepted as complete.
These checklists can be found at https://www.nzx.com/regulation/participant-rules https://www.nzx.com/regulation/derivatives-rules https://www.nzx.com/regulation/nzx-rules-guidance/clearing-depository-rules
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On accreditation, a NZX Participant enters into a binding contractual relationship with NZX. NZX Participants agree to be bound by the NZX Rules relevant to the Participant category for which they have been accredited. NZX Participants must also comply with their applicable obligations under New Zealand legislation. New Zealand Licensing Requirements
Applicants may be required to hold licences from the Financial Markets Authority in respect of the services they will perform.
Applicants are advised to contact the Financial Markets Authority early in the process in order to minimise possible delays in obtaining any such regulatory approval (if required). Timeframe estimates provided by NZX do not include the time it may take for an applicant to satisfy any New Zealand or overseas regulatory/licensing requirements. Additional Requirements for Overseas Applicants
If an applicant is not incorporated or resident in New Zealand, or where an applicant intends to trade on behalf of clients who are not resident in New Zealand, additional requirements for NZX and for the applicant may arise as a result of laws in overseas jurisdictions.
Further details can be found in the relevant application checklists. Application and Ongoing Fees and Charges
Details on the current fees that apply to accreditation applications and annual fees for NZX Participants can be found at https://www.nzx.com/services/market-participants/participant-fees
NZX Clearing’s fee schedule is available from the link below
NZX Clearing Fee Schedule
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D NZX Markets
NZX operates the following markets:
Equities Debt Derivatives Fonterra Shareholders’
NZX Main Board NZX Debt Market Dairy Derivatives Fonterra NXT Market Equity Derivatives Shareholders’ NZX Alternative Market Market
Markets Description Further Information
NZX Main The NZSX is a market for larger, more http://www.nzx.com/markets/NZSX Board (NZSX) established companies
NXT Market NXT is a market for small and mid-sized http://www.nxt.co.nz (NXT) businesses. The NXT Market has simplified listing rules and alternative disclosure requirements
NZX The NZAX is a market for small to http://www.nzx.com/markets/NZAX Alternative medium-sized businesses. NZX is no Market longer accepting listing applications for (NZAX) the NZAX
NZX Debt The NZDX is a market for debt http://www.nzx.com/markets/NZDX Market securities (NZDX)
Dairy The NZX Dairy Futures Market is a http://www.nzxfutures.com Derivatives market for Dairy Futures and Options. The market is registered as a Foreign Board of Trade in the US with the Commodity Futures Trading Commission. The dairy derivative contracts currently offered are:
Whole Milk Powder Futures and Options Skim Milk Powder Futures Anhydrous Milk Fat Futures Butter Futures
Equity The NZX Equity Derivatives Market https://www.nzx.com/markets/nzx-dairy- Derivatives offers Index Futures contracts and derivatives/dairy Exchange Traded Options or https://www.nzx.com/markets/NZCX/overview
Fonterra The FSM is a private market on which http://www.nzx.com/markets/NZZX Shareholders’ Fonterra Farmer Shareholders, Market (FSM) Fonterra and a market maker are allowed to trade Fonterra Shares
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E NZX Rules
The following NZX Rules are currently in force:
NZX Rules Further Information
NZX Participant Rules, NZX Participant Procedures https://www.nzx.com/regulation/ These rules apply to NZX Participants on NZX’s cash markets participant-rules
Derivatives Market Rules, Derivatives Market Procedures https://www.nzx.com/regulation/ These rules apply to NZX Participants on NZX’s derivatives markets derivatives-rules
Clearing and Settlement Rules, Clearing and Settlement https://www.nzx.com/regulation/ Procedures nzx-rules-guidance/clearing- Depository Operating Rules, Depository Operating Procedures depository-rules These rules apply to NZX Participants who clear and settle transactions on the NZX markets
Main Board / Debt Market Listing Rules, Main Board / Debt Market https://www.nzx.com/regulation/ Listing Rules Appendices nzx-rules-guidance/main-board- These rules apply to Issuers with listed securities on the NZX Main debt-market-rules Board (NZSX) or the NZX Debt Market (NZDX)
NXT Market Rules, NXT Market Procedures, NXT Guidance Notes http://www.nzx.com/regulation/ These rules apply to Issuers with listed securities on the NXT Market NXT-rules (NXT)
NZAX Listing Rules, NZAX Listing Rule Appendices http://www.nzx.com/regulation/ These rules apply to Issuers with listed securities on the NZX NZAX-rules Alternative Market (NZAX)
FSM Rules http://www.nzx.com/regulation/F These rules apply to the Fonterra Shareholders’ Market (FSM) SM-rules
NZ Markets Disciplinary Tribunal Rules, NZ Markets Disciplinary http://www.nzx.com/NZMDT/rul Tribunal Procedures es-publications NZ Markets Disciplinary Tribunal Policy on Naming Market Participants NZ Markets Disciplinary Tribunal User Guide, NZ Markets Disciplinary Tribunal Conflicts Policy All NZX Participants are subject to these Rules, Policies and Procedures
Disclaimer
The information contained in this document is a guide only. Participation in, and trading on any NZX Market or the clearing house is subject to compliance with the relevant Rules, and this document is not a substitute for those Rules. NZX, or NZCC, as appropriate, will determine, in its sole discretion, whether any Participant or potential Participant meets the requisite criteria to participate in any NZX Market or to clear via NZCC. This publication is for information only and does not constitute an offer, solicitation or recommendation to acquire or dispose of any investment or to engage in any other transaction. Those wishing either to trade in or clear or settle any products available at NZX or via NZCC or to offer and sell them to others should consider both their legal and regulatory position, including the relevant Rules, and the risks associated with such products before doing so. All information, descriptions, examples and calculations contained in this publication are for guidance purposes only, and should not be treated as definitive.
No part of this publication may be redistributed or reproduced in any form or by any means or used to make any derivative work without written permission from NZX. NZX (including its subsidiaries, directors, officers, employees and contractors) shall not be liable (except to the extent required by law) for the use of the information contained herein however arising in any circumstances connected with actual trading or otherwise. NZX is not responsible for any errors or omissions contained in this publication. © Copyright NZX Limited 2016
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Appendix 1 Primary Market only Participant Categories NZX SPONSOR Cash Market
• NZX Sponsor / Distribution and Underwriting Sponsor Accreditation Application Information Checklist
• Market Participant Application – Appendix 1 (including schedules 3 and 6)
• Responsible Executive Application – Appendix 3
• Director or Partner Undertaking – Appendix 4
DISTRIBUTION AND UNDERWRITING SPONSOR Cash Market
• NZX Sponsor Accreditation Application Information Checklist
• Application Form – Appendix 1 (including schedules 3 and 6)
• Managing Principal Undertaking – Appendix 2
• Responsible Executive Application – Appendix 3
• Compliance Manager Undertaking – Appendix 5
NXT ADVISOR Cash Market – NXT Market only
• NXT Advisor Accreditation Application Information Checklist
• Application Form – Appendix 1 (including schedules 3 and 7)
• Responsible Executive Application – Appendix 3
• Director or Partner Undertaking – Appendix 4
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Advice and Trading Participant Categories ADVISING FIRM Cash Market
• Advising Participant Accreditation Application Information Checklist
• Application Form – Appendix 1 (including schedules 2 and 5)
• Managing Principal Undertaking – Appendix 2
• Director or Partner Undertaking – Appendix 4
• Compliance Manager Undertaking – Appendix 5
• Surveillance Officer Undertaking – Appendix 6
• NZX Adviser Application – Appendix 9
Derivatives Market
• Derivatives Participant Accreditation Application Information Checklist
• Advising and Trading Participant Application Information
• Responsible Executive Application
• Director Statutory Declaration
• Compliance Manager Statutory Declaration
• Derivatives Advisor Application
TRADING AND ADVISING FIRM Cash Market
• Trading and Advising Participant Accreditation Application Information Checklist
• Market Participant Application – Appendix 1 (including schedules 2, 4 and 5)
• Managing Principal Undertaking – Appendix 2
• Director or Partner Undertaking – Appendix 4
• Compliance Manager Undertaking – Appendix 5
• Surveillance Officer Undertaking – Appendix 6
• Dealer Application – Appendix 7
• NZX Adviser Applications – Appendix 9
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• DMA Application – Appendix 12
Derivatives Market • Derivatives Participant Accreditation Application Information Checklist
• Advising and Trading Participant Application Information
• Responsible Executive Application
• Director Statutory Declaration
• Compliance Manager Statutory Declaration
• Dealer/DMA Dealer Application
• Direct Market Access Application
• Derivatives Advisor Application
BANK ONLY PARTICIPANTS Cash Market – NZX Debt Market only • Trading and Advising Participant Accreditation Application Information Checklist
• Application Form – Appendix 1 (including schedules 3, 4 and 5)
• Responsible Executive Application – Appendix 3
• Director or Partner Undertaking – Appendix 4
• Compliance Manager Undertaking – Appendix 5
• Surveillance Officer Undertaking – Appendix 6
• Dealer Application – Appendix 7
• NZX Adviser Applications – Appendix 9
• DMA Application – Appendix 12
PRINCIPAL BOOK ONLY DEALERS Cash Market • Trading and Advising Participant Accreditation Application Information Checklist
• Application Form – Appendix 1 (including schedules 3 and 4)
• Responsible Executive Application – Appendix 3
• Director or Partner Undertaking – Appendix 4
• Compliance Manager Undertaking – Appendix 5
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• Surveillance Officer Undertaking – Appendix 6
• Dealer Application – Appendix 7
• DMA Participant Application – Appendix 12
Derivatives Market • Derivatives Participant Accreditation Application Information Checklist
• Responsible Executive Application
• Director Statutory Declaration
• Dealer/DMA Dealer Application
• Direct Market Access Application
Clearing and Settlement / Depository Participant Categories CLEARING PARTICIPANT
Cash Market or Derivatives Market
• CHO Accreditation Application Information Checklist
• Clearing Participant Application
• Clearing Participant Responsible Person Application
• Must also complete Depository Participant Application Forms (as detailed below) DEPOSITORY PARTICIPANT
Cash Market or Derivatives Market
• CDO Accreditation Application Information Checklist
• Depository Participant Application
• Depository Participant Responsible Person Application
• Clearing and Depository Participant Set Up Form
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