Dated at Wellington this 19th day of November 2012.
Statement of reasons
This notice, which comes into force on 26 November 2012, extends the terms of 3 class exemption notices made under section 157G of the Reserve Bank of New Zealand Act 1989 (the Act). Specifically, this notice—
The Reserve Bank of New Zealand (the Bank), after taking into account the principles set out in section 157F of the Act and satisfying itself as to the matters set out in section 157G(2) of the Act, considers that the extension of the expiry date of the charitable and religious organisations notice and the non-trustee entities risk management notice to 30 November 2013 is appropriate because,—
to come within the scope of the charitable and religious organisations notice, an entity must, amongst other things, first utilise the Securities Act (Charitable and Religious Purposes) Exemption Notice 2003, which is under review by the Financial Markets Authority (FMA) and is due to expire on 30 November 2013. Extending the charitable and religious organisations notice to 30 November 2013 will allow it to be reviewed concurrently with the Securities Act exemption notice that it is reliant upon:
the non-trustee entities risk management notice provides an exemption from the requirement for a deposit taker to have its risk management programme approved by its trustee, in circumstances where it is not required to have a trustee under the Securities Act 1978. This exemption is used by deposit takers covered by the charitable and religious organisations notice, and by Public Trust. It is therefore appropriate for the exemption to be extended to the same date as the charitable and religious organisations notice, pending the outcome of the review of that notice:
in the interim, for the reasons set out in the charitable and religious organisations notice and the non-trustee entities risk management notice, the Bank is satisfied that—
the exemptions are consistent with the maintenance of a sound and efficient financial system:
compliance with the relevant provisions of the Act would be unduly onerous or burdensome:
the exemptions are no broader than necessary given the matters giving rise to them.
The Bank, after taking into account the principles set out in section 157F of the Act and satisfying itself as to the matters set out in section 157G(2) of the Act, considers that the extension of the expiry date of the credit ratings minimum threshold notice to 1 March 2016 is appropriate because—
the Bank is satisfied that the exemption is consistent with the maintenance of a sound and efficient financial system in that the liabilities of the exempted entities represent a very small percentage of the total liabilities of the deposit taking sector. The additional direct and indirect costs of obtaining a credit rating are unduly onerous and burdensome when compared with the balance sheet size and average profitability of the exempted deposit takers:
the benefits of the exemption are that unnecessary compliance costs are avoided and potential barriers to entry are removed, therefore maintaining competition in the deposit taking sector. These benefits outweigh the costs of inconsistent treatment between small and larger deposit takers and the loss of information to investors:
the conditions of the exemption imposing disclosure requirements on exempted deposit takers manage the risk posed by the absence of a credit rating, including any risk of the public being misled by the disclosure of ratings from a non-approved agency, and therefore the extent of the exemption is not broader than what is reasonably necessary to address the matters that gave rise to the exemption.
Date of notification in Gazette: 22 November 2012.
This notice is administered by the Reserve Bank of New Zealand.