For the purposes of the description of the system,—

The essential requirements of the system are—

• (a) the electronic entry into SEATS by a broker of an order to sell approved securities:

• (b) the matching by SEATS of the selling order with an equivalent buying order so as to constitute a trade in the securities:

• (c) the electronic entry of the details of trades in approved securities into a computer that determines the net settlement obligations among brokers in respect of trades made through SEATS:

• (d) the electronic communication to brokers of their net settlement obligations for settlement on the fifth day after the date of the trade:

• (e) the allocation on the settlement date by a broker into the broker's settlement account of sufficient approved securities to satisfy the broker's settlement obligations:

• (f) in order to meet a broker's net delivery obligations, the transfer by CHESS on the settlement date of approved securities from the broker's settlement account into the settlement account of another broker entitled to receive the securities:

• (g) the adjustment on the settlement date by CHESS of the number of approved securities held by security holders of approved securities:

• (h) details of transfers of securities of a public issuer are communicated daily by the Company to the public issuer through the computer link between the Company and the public issuer:

• (i) in the case of a public issuer incorporated in New Zealand and whose securities may be transferred and registered under the system, a requirement that the public issuer issue share certificates in accordance with section 90(1) of the Companies Act 1955 or with section 95(1) of the Companies Act 1993, as the case may be, for securities that are not held on the CHESS subregister or an issuer sponsored subregister but that are held on the certificated register of the public issuer:

• (j) each participant using CHESS warrants—

  • (i) the accuracy of the messages transmitted through the computer link; and

  • (ii) in respect of each transfer of approved securities effected by the participant, that it was legally entitled or authorised to transfer the securities:

• (k) the participants using CHESS undertake to indemnify other participants, the public issuer, and the Company against all losses, damages, costs, and expenses suffered or incurred as a result of any inaccurate message transmitted through the computer link.

• Schedule approved security: amended, on 1 December 2014, by section 150 of the Financial Markets (Repeals and Amendments) Act 2013 (2013 No 70).

• Schedule paragraph (i): amended, on 26 March 1998, by clause 2 of the Securities Transfer (Approval of System for Electronic Transfer of Securities on Australian Stock Exchange) Amendment Order 1998 (SR 1998/20).