WAV/RULE: NZXR: OMFA - Waiver from NZX F&O Rule 10.14(b)

26 Jul 2010 9:50 am

NZXR 26/07/2010 WAV/RULE

REL: 0950 HRS NZX Regulation

WAV/RULE: NZXR: OMFA - Waiver from NZX F&O Rule 10.14(b)

26 July 2010

NZX Market Supervision Decision OM Financial Limited Application for a Waiver from NZX Futures and Options Rule 10.14(b)

Background

1. OM Financial Limited ("OMFA") is an NZX Futures and Options Firm.

2. As an NZX Futures and Options Firm, OMFA is required to meet the requirements of the NZX Futures and Options Rules ("Rules").

3. OMFA conducts its trading primarily on the US futures and options markets. As such, OMFA does not receive the figures and statements required for its Daily Liquid Capital Report until after the close of those US markets. This occurs at approximately midday New Zealand time (for the previous day's figures).

Application

4. OMFA has applied to NZX Market Supervision ("NZXMS") for a waiver from the requirements of Rule 10.14(b) to calculate and report Liquid Capital levels by 11.00am on a daily a basis.

5. OMFA is seeking an extension of three hours to calculate and submit its Daily Liquid Capital Report. OMFA propose a deadline of 2.00pm for the submission of the calculation.

6. OMFA is requesting the waiver as OMFA's Actual Liquid Capital calculation relies upon data received from the US market, which closes 18-22 hours behind the New Zealand markets.

7. OMFA has installed a new operating system (Ubix) to process trades. This will enable OMFA to provide liquid capital reports based on more up to date information than is currently available.

Relevant Rules

8. Rule 10.14(b) requires a Futures and Options Firm to:

"undertake a calculation to check that its Actual Liquid Capital exceeds its Prescribed Liquid Capital Amount (Daily Liquid Capital Report) daily and file that calculation with NZX no later than 11.00 a.m. or such other time as determined from time to time by NZX on each Trading Day for the close of the previous Trading Day in the format set out in Appendix 14;"

Decision

9. Based on the information provided by OMFA to NZXMS being complete and accurate in all respects, NZXMS hereby grants a waiver from the requirements of Rule 10.14(b) to calculate and report Liquid Capital levels by 11.00am. This time extension is granted on the following conditions:

(a) Daily reporting is performed and submitted to NZXMS by 2.00pm on the required Trading Day; and

(b) OMFA must comply with all conditions in respect of the waiver and all other Rules in full.

10. This waiver is granted until revoked by NZXMS.

Reasons

11. In coming to its decision to grant OMFA a time extension to the requirements of Rule 10.14(b) to calculate and report Liquid Capital levels on a daily basis, NZXMS has considered that:

(a) OMFA has a history of stable liquid capital, maintained well above the prescribed levels;

(b) Due to the terms of relationship with OMFA's US based broker, trading data for the previous day is not available until the close of the US markets at approximately midday New Zealand time;

(c) OMFA will be able to complete the calculation of Liquid Capital by 2.00 pm on the day OMFA receives the information from the US;

(d) OMFA is required to notify NZXMS immediately if Actual Liquid Capital is below 120% of Prescribed Liquid Capital; and

(e) NZXMS can revoke this waiver for any reason. In particular, the appropriateness of this waiver will be reconsidered automatically in the event that OMFA sustains a Client Funds Account overdraw or fails to meet its daily liquid capital requirements.

Publication of Decision

12. This waiver will be released to the Market in its present form.

ENDS End CA:00197614 For:NZXR Type:WAV/RULE Time:2010-07-26:09:50:52

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