Dated at Wellington this 31st day of August 2010.
The Common Seal of the Securities Commission was affixed in the presence of:
Statement of reasons
This notice, which comes into force on the day after the date of its notification in the Gazette, amends clause 4(1) of the Securities Act (Group Investment Index Funds) Exemption Notice 2002 (the 2002 notice) by—
revoking and substituting the definition of fund; and
inserting, in their appropriate alphabetical order, definitions of lend and settlement system (which relate to the new definition of fund).
The amendments to clause 4(1) will enable funds (as defined) that lend securities in an automated manner, which involves no discretion on the part of the fund or the fund managers, to benefit from the exemptions granted in the 2002 notice.
The Securities Commission (the Commission) considers it appropriate to grant the exemptions because—
the 2002 notice exempts passive index-tracking funds from certain provisions of the Securities Act 1978 and the Securities Regulations 1983, in particular the requirement to have a statutory supervisor. This reflects the policy that passive funds are of such a nature that an additional level of supervision is unnecessary:
some passive funds that have relied on this notice now wish to partake in lending. Where that lending is undertaken in an automated, non-discretionary way, the Commission is of the view that the activities of the fund continue to fall within the policy of the notice, and this should be reflected in the terms of the 2002 notice.
Date of notification in Gazette: 2 September 2010.
This notice is administered by the Securities Commission.