Dated at Wellington this 29th day of October 2013.
Head of Compliance Monitoring.
Statement of reasons
This notice, which comes into force on its notification in the Gazette, amends the Futures Contracts (iPredict Limited) Declaration and Exemption Notice 2008 (the principal notice). The effect of the amendment is that the principal notice will expire on 30 November 2016 instead of on 31 October 2013.
Under the principal notice,—
every specified agreement and every specified right (as each of those terms is defined in the principal notice) is declared to be an agreement to which Part 3 of the Securities Markets Act 1988 (the Act) applies; and
the provider of a market for the trading of futures contracts (iPredict Limited) and an associated clearing house are exempted from the Futures Industry (Client Funds) Regulations 1990 in respect of the market.
The term futures contract is defined in section 37(1) of the Act to include an agreement or a right declared by the Financial Markets Authority (the FMA) to be an agreement or a right to which Part 3 of the Act applies. The declaration, and a separate authorisation to be granted by the FMA to iPredict Limited under section 38(1) of the Act to carry on the business of dealing in futures contracts, means that every specified agreement and every specified right are authorised futures contracts (within the meaning of section 37(1) of the Act) and that trading in them is regulated under the Act and not the Securities Act 1978 or the Gambling Act 2003.
The FMA, after satisfying itself as to the matters set out in section 48(2) of the Act, considers it appropriate to amend the principal notice to extend its expiry date because—
the amendment enables iPredict Limited to continue to offer trading in the contracts made on its predictions market under its current regulatory arrangements until it becomes subject to the Financial Markets Conduct Act 2013; and
the contracts have the characteristics of futures contracts, in that they are valued by reference to a future outcome and they are settled by a cash payment rather than by the delivery of any goods. Renewing the declaration contained within the principal notice is appropriate and will maintain the legal certainty as to the treatment of the contracts; and
the conditions of exemption in the principal notice include the requirement that client money must be held in a trust account and restrictions on the amounts of money that may be held for individual clients. The conditions continue to provide adequate alternative safeguards for the protection of client money and client property; and
the exemption granted to iPredict Limited in the principal notice, as amended by this notice, is not broader than is reasonably necessary to address the matters that give rise to the exemption.
Date of notification in Gazette: 31 October 2013.
This notice is administered by the Financial Markets Authority.