Pursuant to section 38 of the Securities Markets Act 1988, the Financial Markets Authority gives the following notice.
N o t i c e
1. Title, commencement and expiry-(1) This notice is the Authorised Futures Dealers (HiFX Limited) Notice 2013.
(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 March 2018.
2. Interpretation-(1) In this notice, unless the context otherwise requires:
Act means the Securities Markets Act 1988.
advertisement has the meaning given to it in section
2A of the Securities Act 1978, except that every reference to securities should be read as a reference
to specified futures contracts, and every reference to the issuer should be read as a reference to the company.
adviser means a director, employee or agent of the company who provides, or may provide, futures adviser services to a client.
AFS Licence means an Australian financial services licence granted under the Corporations Act 2001.
ASIC means the Australian Securities and Investments Commission.
FMA means the Financial Markets Authority.
company means HiFX Limited.
Corporations Act 2001 means the Corporations Act 2001 of the Commonwealth of Australia.
futures adviser service means a service provided by
or on behalf of the company in relation to a specified futures contract that would, but for section 14(1)(n) of the Financial Advisers Act 2008, constitute financial advice or a discretionary investment management service under that Act.
offence of dishonesty means:
(a) an offence described in any of sections 104, 105B, 108 to 117, and 217 to 266 of the Crimes Act 1961;
(b) an offence described in any of sections 15 to 20 of the Summary Offences Act 1981; and
(c) an offence under the laws of another jurisdiction which is equivalent to an offence referred to in paragraph (a) or (b).
personalised futures adviser service means a futures adviser service that would, but for section 14(1)(n) of the Financial Advisers Act 2008, constitute a personalised service under that Act.
product disclosure statement means a document:
(a) that describes and contains the offer of, and relates specifically to, the specified futures contracts;
(b) that is identical to a document that is:
(i) a product disclosure statement in terms of the Corporations Act 2001; and
(ii) signed by the persons (if any) who are required by law to sign that document;
(c) by means of which it is lawful under the laws of Australia to make an offer of the specified futures contracts to the public in Australia; and
(d) that is not an "offer information statement" or "profile statement" (as those terms are defined in section 9 of the Corporations Act 2001).
remuneration means any commission, fee or other benefit, whether pecuniary or non-pecuniary, and whether direct or indirect; but in the case of an adviser, does not include wages or salary which are of a fixed amount; and remunerated has a corresponding meaning.
retail client means any person who is not a wholesale client.
specified futures contract means a futures contract that is a forward foreign exchange contract, that is issued by the company.
wholesale client means any client that is:
(a) a person who controls at least $10 million; or
(b) a trustee of a trust or a funds manager, acting in that capacity, who has under that person’s control, as trustee or funds manager, net assets of at least $10 million; or
(c) a person who is authorised to carry on the business of dealing in futures contracts under the Act; or
(d) a person authorised in another jurisdiction by the competent authority of that jurisdiction to deal in futures contracts; or
(e) Her Majesty The Queen in right of New Zealand, a Crown entity named in the Crown Entities Act 2004, or a State enterprise named in the First or Second Schedule to the State-Owned Enterprises Act 1986 (each as amended from time to time); or
(f) a person who is a statutory corporation or a registered bank; or
(g) a person whose principal business is the investment of money or who, in the course of and for the purposes of their business, habitually invests money; or
(h) a person who is a related body corporate of any of the persons mentioned in (a) to (g) above; and
(2) any term or expression that is defined in the Act or the Regulations and used, but not defined, in this notice has
the same meaning as in the Act or the Regulations.
3. Retail and wholesale client authorisation-(1) The company is authorised to carry on the business of dealing
in specified futures contracts to which the company is, or intends to be, a party.
(2) The authorisation in this clause 3 is subject to the conditions that:
(a) the company does not enter into specified futures contracts with any person other than a person
who has entered into a written agreement with
the company, and then only in accordance with the terms of that agreement;
(b) the company is licensed as an Australian Financial Services Licensee under the Corporations Act 2001 and holds an AFS Licence which authorises the company to advise retail and wholesale clients on, and deal with or on behalf of retail and wholesale clients in, specified futures contracts;
(c) there is a product disclosure statement relating to
the specified futures contracts at the time that the specified futures contracts are made available to New Zealand investors that are retail clients, or the company gives advice or assistance to, or induces or attempts to induce, New Zealand investors that are retail clients, in relation to the acquisition or disposal of any specified futures contract;
(d) before the company enters into a specified futures contract with a retail client, that person has received copies of the following:
(i) a product disclosure statement relating to that specified futures contract; and
(ii) every supplementary product disclosure statement relating to that specified futures contract in use at the time of the entry by the company into the specified futures contract;
(e) the company must hold client money in a segregated client funds account as if the client money were subject to the provisions of its AFS Licence, the Corporations Act 2001 and any Regulations made under the Corporations Act 2001 in relation to the protection of client money and client property;
(f) the company maintains proper records:
(i) to record dealings in respect of specified futures contracts with clients;
(ii) to record client money, funds and property held or received in connection with dealings in specified futures contracts; and
(iii) which are audited or reviewed, and reported on, in accordance with the company’s AFS Licence;
(g) the company maintains adequate professional indemnity insurance for its business at all times;
(h) the company maintains at all times an external dispute resolution scheme that is available to its New Zealand investors that are retail clients;
(i) at the same time as the specified futures contracts are made available by the company to retail clients in New Zealand, in reliance on the authorisation in this notice, those specified futures contracts are also made available to Australian investors in accordance with the laws of Australia;
(j) every advertisement for a specified futures contract that is offered to a retail client in New Zealand, must refer to a product disclosure document that relates
to the specified futures contracts referred to in the advertisement;
(k) no advertisement shall contain any information, sound, image or other matter that is inconsistent with any product disclosure document referred to in the advertisement;
(l) before the company provides any personalised futures adviser service to any retail client in relation to a specified futures contract, the company has provided that person with an adviser disclosure statement which clearly sets out the following information:
(i) The name and contact details of the company;
(ii) a statement to the effect that that advice on futures contracts is regulated under the company’s authorisation as a futures dealer and is not regulated under the Financial Advisers Act 2008;
(iii) the types of products the company deals in and, if advice on any product is only provided by some advisers, which advisers can provide advice on each product;
(iv) a description of any other factors which may materially influence the advice given by the company or its advisers;
(v) a description of how the company and its advisers are remunerated for futures dealing services;
(vi) details of any bankruptcy or insolvency event occurring in the past five years in respect of the company or one of its advisers;
(vii) details of any disciplinary or criminal proceedings resulting in an adverse finding
in the past five years in respect of the company or one of its advisers;
(viii) details of any conviction for an offence of dishonesty against any of the company’s advisers;
(ix) a description of the internal and external dispute resolution schemes available to the client, and an explanation of how to make a complaint; and
(x) a description of the Financial Markets Authority’s role in authorising futures dealers, and details of how to contact the Financial Markets Authority.
4. Wholesale client advisory authorisation-(1) The company is authorised to carry on the business of dealing
in futures contracts that consists of advising or assisting a person in connection with the acquisition or disposal of futures contracts that are forward foreign exchange contracts to which the company is not, and does not intend to be, a party.
(2) The authorisation in this clause 4 is subject to the conditions that:
(a) the company does not hold client money or client property in connection with such dealings in futures contracts; and
(b) the company does not carry on the business of dealing in such futures contracts on behalf of any person other than a person who has entered into a written agreement with the company, and then only in accordance with the terms of that agreement; and
(c) the company deals in such futures contracts only on behalf of its wholesale clients;
(d) before dealing in any futures contract in respect of which the authorisation in this clause 4 applies, the company is satisfied on reasonable grounds that
the wholesale client is contracting:
(i) as principal on its own account; or
(ii) on behalf of a related body corporate; or
(iii) as trustee of a trust or manager of a managed fund; and
(e) the terms of any such futures contract:
(i) create obligations that cannot be transferred
or terminated by either party to the futures contract without the consent of the other party; or
(ii) require that the transfer of obligations under the futures contract can be made only to a person who meets the criteria described in subclauses 4(2)(c) and (d).
5. Further conditions relating to dealing in futures contracts-The authorisations in clauses 3 and 4 are also subject to the conditions that the company:
(a) notifies FMA if the company’s AFS Licence is varied or revoked and notifies FMA of any regulatory action taken by ASIC in relation to the company’s AFS Licence; and
(b) provides FMA with a copy of the company’s audited financial statements no later than three months after the end of each financial year for the company; and
(c) any company document that states the company has been authorised by FMA to carry on the business of dealing in futures contracts includes a statement
to the effect that:
(i) FMA’s role in authorising futures dealers
is limited and does not imply approval
or endorsement of the business, trading or solvency of the company; and
(ii) FMA has not approved any agreements or any disclosure documents of the company; and
(d) the company immediately notifies FMA in writing of any of the following events:
(i) The insolvency of the company or the bankruptcy of any of its directors or senior management;
(ii) if the company, or any of its directors or senior management, is convicted of an indictable offence;
(iii) where a receiver, provisional liquidator, liquidator or a similar officer is appointed,
or any resolution is passed or order made for the winding up or dissolution of the company;
(iv) any regulatory action taken against the company, or any of its directors or senior management, whether in New Zealand or elsewhere;
(v) if any director or member of the senior management leaves the company, or if any new director or member of senior management is appointed to the company;
(vi) where the company has failed to comply, or believes it will fail to comply, with the
capital adequacy requirements set out in
the company’s AFS Licence;
(vii) if any auditor’s report prepared in accordance with the company’s AFS Licence shows
any non-compliance with the company’s AFS Licence, Corporations Act 2001 or any Regulations made under the Corporations Act 2001;
(viii) if there is any change to the shareholding, or ultimate beneficial ownership, of the company; and
(ix) if there is any material change to the nature
of the business activities undertaken by the company;
(e) the company takes reasonable steps to ensure at
all times that each director, employee or agent of
the company understands, and may reasonably be expected to comply with, all laws and Regulations which are applicable to the company, including all requirements of this authorisation;
(f) the company takes reasonable steps to ensure at all times that each adviser who provides futures adviser services to a client:
(i) exercises the care, diligence and skill that a reasonable adviser would exercise in the same circumstances;
(ii) has the competence, knowledge and skills to provide futures adviser services to that client, and in respect of the relevant specified futures contract;
(iii) places the interests of the client first, and acts with integrity, in providing the futures adviser services;
(iv) ensures that a retail client has sufficient information, in a form which enables the retail client to understand that information, to make an informed decision about the futures adviser service and the specified futures contracts to which that futures adviser service relates;
(v) ensures that a retail client understands whether or not any advice given takes into account the personal circumstances of the retail client; and
(vi) does not act in any way, or make any omission, which would bring the financial services profession, or any part of it, into disrepute;
(g) the company must, within three months after the end of each financial year of the company that commences after this notice comes into force, give
a report to FMA on the extent to which it has complied with its obligations under this notice in that financial year; and
(h) the company must promptly provide to FMA any information held by the company which is requested by FMA, for the purposes of any enquiry or investigation, or for the purposes of supervision of the company in connection with the company’s obligations under this notice.
Dated at Wellington this 20th day of March 2013.
ELAINE CAMPBELL, Head of Compliance Monitoring, Financial Markets Authority.