Dated at Wellington this 24th day of September 2012.
Head of Primary Regulatory Operations.
Statement of reasons
This notice, which comes into force on 1 October 2012 and expires on 30 September 2017, replaces the Securities Act (Banks) Exemption Notice 2002 (the 2002 notice).
The notice exempts registered banks, subject to conditions, from various provisions of the Securities Act 1978 (the Act) and the Securities Regulations 2009 that relate to investment statements and other advertisements for debt securities. This includes an exemption from section 37A(1)(a) of the Act, which requires a subscriber to receive an investment statement before subscribing for a security. Instead, there is a period during which the bank may not allot a debt security after the investment statement is sent to the subscriber.
The provisions of the 2002 notice have been carried forward with little change of substance. However, changes have been made to—
reduce the period during which a bank may not allot a debt security to 2 days (rather than the current 3 working days) if the investment statement is sent to an electronic address specified by the subscriber for this purpose; and
refer to the Securities Regulations 2009 (rather than the Securities Regulations 1983) and to remove a redundant exemption from those regulations.
The Financial Markets Authority, after satisfying itself as to the matters set out in section 70B(2) of the Act, considers it appropriate to grant the exemptions because—
the 2002 notice provides relief for banks from requirements that impose on banks a burden unlikely to be borne to the same extent by other issuers of debt securities. The 2002 notice recognises the additional prudential requirements imposed on banks and imposes alternative compliance requirements that meet investors’ needs:
changes introduced by the Securities Regulations 2009 have reduced costs for issuers, and improved information for investors, but did not attempt to tailor disclosure and conduct requirements to the extensive range of circumstances to which securities law requirements apply. Accordingly, generally the exemptions continue to be required and remain appropriate in light of the policy of each of the exemptions. One exception is the exemption relating to persons authorised to complete the advertising certificate. The Securities Regulations 2009 provide for completion of advertising certificates by authorised agents of the issuers’ directors and so a particular exemption for banks is no longer required:
the reduced period of delay that this notice permits between sending the investment statement and allotment of securities recognises the increased use by issuers and investors of Internet-based communications that enable information to be delivered at greater speed:
given the limited application of the notice to certain regulatory requirements that impose a disproportionate burden on banks, and the alternative compliance requirements imposed that meet subscribers’ needs, the Financial Markets Authority considers that the exemptions will not cause significant detriment to subscribers and that the exemptions are not broader than is reasonably necessary to address the matters that gave rise to them.
Date of notification in Gazette: 27 September 2012.
This notice is administered by the Financial Markets Authority.