Financial Advisers (Broker Trust Accounts) Exemption Notice 2010

  • revoked
  • Financial Advisers (Broker Trust Accounts) Exemption Notice 2010: revoked, on 1 April 2011, by clause 3 of the Financial Advisers (Broker Trust Accounts) Exemption Revocation Notice 2011 (SR 2011/86).

Reprint
as at 1 April 2011

Coat of Arms of New Zealand

Financial Advisers (Broker Trust Accounts) Exemption Notice 2010

(SR 2010/445)

  • Financial Advisers (Broker Trust Accounts) Exemption Notice 2010: revoked, on 1 April 2011, by clause 3 of the Financial Advisers (Broker Trust Accounts) Exemption Revocation Notice 2011 (SR 2011/86).


Note

Changes authorised by section 17C of the Acts and Regulations Publication Act 1989 have been made in this reprint.

A general outline of these changes is set out in the notes at the end of this reprint, together with other explanatory material about this reprint.

This notice is administered by the Securities Commission.


Pursuant to section 148 of the Financial Advisers Act 2008, the Securities Commission gives the following notice (to which is appended a statement of reasons of the Securities Commission).

Notice

1 Title
  • This notice is the Financial Advisers (Broker Trust Accounts) Exemption Notice 2010.

2 Commencement
  • This notice comes into force on 1 December 2010.

3 Expiry
  • This notice expires on the close of 31 May 2011.

4 Interpretation
  • (1) In this notice, unless the context otherwise requires,—

    overseas bank means a bank that is an overseas person licensed or authorised by the central banking authority of a country other than New Zealand to carry on banking business in that country

    overseas person means—

    • (a) a body corporate incorporated outside New Zealand; or

    • (b) an unincorporated body that has its head office or principal place of business outside New Zealand.

    (2) Any term or expression that is defined in the Act and used, but not defined, in this notice has the same meaning as in the Act.

5 Exemption
  • Every broker is exempted from section 77P(1)(b) of the Act to the extent that it requires the broker to ensure that client money is paid promptly into a bank in New Zealand.

6 Condition of exemption in clause 5
  • The exemption in clause 5 is subject to the condition that the broker must ensure that the client money is paid promptly into an overseas bank.

Dated at Wellington this 29th day of November 2010.

The Common Seal of the Securities Commission was affixed in the presence of:

[Seal]

D W Mayhew,
Member.


Statement of reasons

This notice comes into force on 1 December 2010 and expires on 31 May 2011.

This notice exempts brokers from the obligation in section 77P(1)(b) of the Financial Advisers Act 2008 (the 2008 Act) to pay client money into a New Zealand registered bank. It does not affect the obligation to pay client money into a trust account. The exemption is subject to the condition that the client money is instead paid into an overseas bank (which is defined to mean any overseas person licensed or authorised by the central banking authority of a country other than New Zealand to carry on banking business in that country).

The Securities Commission considers that it is appropriate to grant the exemption because,—

  • under section 77P(1)(b) of the 2008 Act, brokers must pay client funds into a trust account with a bank in New Zealand (or into any other prescribed entity). This section envisages that regulations may be made to prescribe other types of entities into which client funds can be paid, which would then permit brokers to pay client funds into entities other than New Zealand registered banks. Under the law prior to the 2008 Act, client funds could be paid into overseas banks. No regulations have yet been made under the 2008 Act to provide for that. This means that, as soon as section 77P comes into force, trust accounts with overseas banks would be in contravention of the 2008 Act:

  • a large number of brokers who are to be subject to the 2008 Act hold client money in trust accounts with overseas banks. In the circumstances, the Securities Commission is satisfied that the costs of compliance with section 77P(1)(b) of the 2008 Act as it currently stands would be unreasonable. This exemption provides an orderly transition from the current law to the 2008 Act, by allowing brokers to continue to pay and hold client money in trust accounts held with overseas banks until such time as regulations are put in place.


Issued under the authority of the Acts and Regulations Publication Act 1989.

Date of notification in Gazette: 30 November 2010.


Contents

  • 1General

  • 2Status of reprints

  • 3How reprints are prepared

  • 4Changes made under section 17C of the Acts and Regulations Publication Act 1989

  • 5List of amendments incorporated in this reprint (most recent first)


Notes
1 General
  • This is a reprint of the Financial Advisers (Broker Trust Accounts) Exemption Notice 2010. The reprint incorporates all the amendments to the notice as at 1 April 2011, as specified in the list of amendments at the end of these notes.

    Relevant provisions of any amending enactments that contain transitional, savings, or application provisions that cannot be compiled in the reprint are also included, after the principal enactment, in chronological order. For more information, see http://www.pco.parliament.govt.nz/reprints/ .

2 Status of reprints
  • Under section 16D of the Acts and Regulations Publication Act 1989, reprints are presumed to correctly state, as at the date of the reprint, the law enacted by the principal enactment and by the amendments to that enactment. This presumption applies even though editorial changes authorised by section 17C of the Acts and Regulations Publication Act 1989 have been made in the reprint.

    This presumption may be rebutted by producing the official volumes of statutes or statutory regulations in which the principal enactment and its amendments are contained.

3 How reprints are prepared
  • A number of editorial conventions are followed in the preparation of reprints. For example, the enacting words are not included in Acts, and provisions that are repealed or revoked are omitted. For a detailed list of the editorial conventions, see http://www.pco.parliament.govt.nz/editorial-conventions/ or Part 8 of the Tables of New Zealand Acts and Ordinances and Statutory Regulations and Deemed Regulations in Force.

4 Changes made under section 17C of the Acts and Regulations Publication Act 1989
  • Section 17C of the Acts and Regulations Publication Act 1989 authorises the making of editorial changes in a reprint as set out in sections 17D and 17E of that Act so that, to the extent permitted, the format and style of the reprinted enactment is consistent with current legislative drafting practice. Changes that would alter the effect of the legislation are not permitted.

    A new format of legislation was introduced on 1 January 2000. Changes to legislative drafting style have also been made since 1997, and are ongoing. To the extent permitted by section 17C of the Acts and Regulations Publication Act 1989, all legislation reprinted after 1 January 2000 is in the new format for legislation and reflects current drafting practice at the time of the reprint.

    In outline, the editorial changes made in reprints under the authority of section 17C of the Acts and Regulations Publication Act 1989 are set out below, and they have been applied, where relevant, in the preparation of this reprint:

    • omission of unnecessary referential words (such as of this section and of this Act)

    • typeface and type size (Times Roman, generally in 11.5 point)

    • layout of provisions, including:

      • indentation

      • position of section headings (eg, the number and heading now appear above the section)

    • format of definitions (eg, the defined term now appears in bold type, without quotation marks)

    • format of dates (eg, a date formerly expressed as the 1st day of January 1999 is now expressed as 1 January 1999)

    • position of the date of assent (it now appears on the front page of each Act)

    • punctuation (eg, colons are not used after definitions)

    • Parts numbered with roman numerals are replaced with arabic numerals, and all cross-references are changed accordingly

    • case and appearance of letters and words, including:

      • format of headings (eg, headings where each word formerly appeared with an initial capital letter followed by small capital letters are amended so that the heading appears in bold, with only the first word (and any proper nouns) appearing with an initial capital letter)

      • small capital letters in section and subsection references are now capital letters

    • schedules are renumbered (eg, Schedule 1 replaces First Schedule), and all cross-references are changed accordingly

    • running heads (the information that appears at the top of each page)

    • format of two-column schedules of consequential amendments, and schedules of repeals (eg, they are rearranged into alphabetical order, rather than chronological).

5 List of amendments incorporated in this reprint (most recent first)