GENERAL: NZXR: Notice of Amendment to NZMDT Rules

6 Aug 2010 6:00 pm

NZXR 06/08/2010 GENERAL

REL: 1800 HRS NZX Regulation

GENERAL: NZXR: Notice of Amendment to NZMDT Rules

6 August 2010

NZX Market Supervision ("NZXMS") gives notice of amendment to the NZ Markets Disciplinary Tribunal Rules ("NZMDT Rules") pursuant to Rule 1.3 of the NZMDT Rules. This notice replaces the previous notice dated 25 June 2010.

The amendments relate to the introduction of NZX's new clearing and settlement system ("Settlement System") and the introduction of a new derivatives market in New Zealand ("Derivatives Market").

These amendments will come into effect on the date NZX notifies to the market on which the Settlement System will become operative (the "Go-Live Date"). As the Go-Live Date is dependant on the receipt of necessary regulatory approvals, NZX will advise the market of the Go-Live Date, provided that it shall not be earlier than 20 Business Days after the date of this notice.

By implementing the Settlement System, NZX seeks to align New Zealand's clearing and settlement infrastructure with international best practice. This is intended to promote confidence and participation in New Zealand's capital markets. The Settlement System comprises a central counterparty clearing house ("Clearing House") (operated by New Zealand Clearing Limited ("CHO")) and a central securities depository ("Depository") (operated by New Zealand Depository Limited ("CDO")).

The amended NZMDT Rules are dated 6 August 2010 and are in a form agreed with the Securities Commission and as submitted to the Minister of Commerce under section 36J of the Securities Markets Act 1988. The Rules and Procedures can be found at http://www.nzx.com/market-supervision/rules/nz-markets-disciplinary- tribunal-rules. The amended NZMDT Procedures are also dated 6 August 2010. We have provided marked copies which show the differences between the amended NZMDT Rules and Procedures and the NZMDT Rules and Procedures which are presently in force.

Broadly, the amendments are as follows: 1. Jurisdiction Amendments to provide the NZ Markets Disciplinary Tribunal (the "Tribunal") with jurisdiction over Clearing Participants, in respect of the Clearing and Settlement Rules, and Derivatives Participants, in respect of the Derivatives Market Rules, in a similar way that the Tribunal currently has jurisdiction in respect of Market Participants and the NZX Participant Rules and Futures and Options Participants and the Futures and Options Rules.

The amendments also give Clearing Participants and Lending Clearing Participants the ability to apply to the Tribunal for a determination as to whether CHO has failed to determine in good faith a claim for compensation made under the C&S Rules.

Depository Participants are also party to the NZMDT Rules so that they can seek a review of waiver and ruling decisions made by CDO pursuant to Rule 4.5. Depository Participants are not subject to any disciplinary proceedings pursuant to the NZMDT Rules.

2. Composition of Tribunal/ Divisions To ensure that the Tribunal is appropriately qualified to deal with its increased mandate, amendments have been made so that the membership of the Tribunal shall consist of at least one person who has, or has had, relevant experience with a Clearing Participant, former Clearing Participant or a Delivery and Settlement Participant, and, at least one current, or former, Derivatives Participant or Futures and Options Participant.

The amendments also require that the Appeal Panel consist of up to two persons who have had relevant experience with Clearing Participants or Delivery and Settlement Participants.

3. General A number of minor amendments have also been made to reflect amendments made to the NZX Participant Rules, the NZSX/NZDX Listing Rules and the NZAX Listing Rules and cross references to specific provisions in each of those rule sets and to correct typographical errors.

These amendments do not affect the obligations of NZX Listed Issuers, NZX Participants or NZX Futures and Options Participants nor the jurisdiction of the Tribunal in respect of any of them.

Further background information about the amendments can be found in the document entitled Consultation Memorandum - NZ Markets Disciplinary Tribunal Rules - August 2009, which is available at http://www.nzx.com/market- supervision/rules-consultation/.

Please note that all documents provided to assist with understanding the changes to the NZMDT Rules are intended as a guide only. NZX Listed Issuers, NZX Participants, NZX Futures and Options Participants, NZX Derivatives Market Participants, Clearing Participants, Lending Clearing Participants and Depository Participants must refer to the 6 August 2010 NZMDT Rules to determine their rights and obligations under the NZMDT Rules and the Procedures as amended.

ENDS. End CA:00198117 For:NZXR Type:GENERAL Time:2010-08-06:18:00:47

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