For the purposes of the description of the Austraclear New Zealand Electronic Registries Interface System,—

The Austraclear New Zealand Electronic Registries Interface System is the system within Austraclear NZ for the electronic transfer of securities to and from NZCSD as custodian trustee for Austraclear NZ. The essential features of the Austraclear New Zealand Electronic Registries Interface System are the following:

Connecting to Austraclear NZ

• (a) an individual may only electronically access Austraclear NZ on behalf of a member by first logging on as that member, using the member's logon details, and then logging on as an individual authorised by that member using his or her personal logon details:

• (b) electronic messaging between members and Austraclear NZ is encrypted:

• (c) members connect electronically to Austraclear NZ through the SWIFT network, the private ESAS-Austraclear network, or the Internet:

• (d) if members connect to Austraclear NZ through the Internet, they are required to provide additional network authentication using a device provided to them by the Reserve Bank:

• (e) Austraclear NZ allocates a unique identifier, confidential to Austraclear NZ, for each member's network:

• (f) Austraclear NZ performs an additional cross-check on each member logon to confirm that the system is being accessed from that member's network or using an authentication device issued to that member:

Electronic entry of transaction instructions

• (g) a member enters the following information electronically into Austraclear NZ to initiate a transfer:

  • (i) the member's unique Austraclear NZ mnemonic:

  • (ii) the CSN of the registry account holder whose securities are being lodged or to whom securities are being uplifted:

  • (iii) the full legal name of the registry account holder whose securities are being lodged or to whom securities are being uplifted:

  • (iv) if the transfer is a lodge of securities and the member initiating the transfer is not the registry account holder, the registry account holder's PIN:

  • (v) the ISIN for the securities being transferred:

  • (vi) the number of units of the securities being transferred:

• (h) if securities are electronically lodged and the member initiating the transfer is not the registry account holder, the registry account holder's PIN is not visible on the input screen, is only stored temporarily in Austraclear NZ, and is not visible in any form within Austraclear NZ or during transmission:

• (i) if the information entered by the member is validated by Austraclear NZ, it is formatted into a unique message that complies with ISO 15022, assigned a unique transaction identifier, and sent within a unique encrypted file via a secure transfer mechanism to the registry:

The electronic lodge and uplift of securities

• (j) if the information in the file is validated by the registry—

  • (i) in the case of an instruction to lodge securities, the name of the transferor is removed and the name of NZCSD is entered as the registered holder of the securities:

  • (ii) in the case of an instruction to uplift securities, the name of NZCSD is removed and the name of the transferee is entered as the registered holder of the securities:

• (k) the registry sends a message that complies with ISO 15022 to Austraclear NZ via a secure transfer mechanism either advising validation failure or confirming the transfer of securities:

• (l) on receipt of a message from the registry confirming the transfer of securities, Austraclear NZ updates its records and member accounts to reflect the transfer and marks the relevant lodge or uplift as being complete:

• (m) each successful transfer results in notification by the registry to both the transferor and the transferee in accordance with that registry's usual practice for transfers:

• (n) reconciliation of all electronic transfers is performed as follows:

  • (i) at the time of transfer, each message sent to the registry is matched by a return message to Austraclear NZ and a list is kept of all unmatched messages and those that result in negative responses:

  • (ii) Austraclear NZ performs a daily reconciliation for each security between aggregate holdings recorded in Austraclear NZ and the relevant holding in NZCSD's accounts at the registry:

Essential provisions in the rules relating to electronic transfers and essential features of NZCSD

• (o) the rules provide that only members who fit at least 1 of the following categories may electronically lodge another person's securities:

  • (i) registered banks, subsidiaries and holding companies of registered banks, and other subsidiaries of holding companies of registered banks:

  • (ii) trustee corporations (as defined in section 2(1) of the Trustee Act 1956):

  • (iii) persons subject to the market rules of a licensed market (within the meaning of section 6(1) of the Financial Markets Conduct Act 2013):

  • (iv) an issuer of FINEWISS securities who is registering a FINEWISS security for which they are the issuer:

• (p) the rules provide that members must indemnify issuers and any person out of whose registry account a security was wrongfully transferred against all losses, damages, costs, and expenses suffered or incurred as a result of an inaccurate or wrongful lodge effected by the member through an electronic security transfer function provided by Austraclear NZ:

• (q) the rules provide that no person is eligible to be a member or to remain a member unless the Reserve Bank is satisfied that that person has the capacity to meet its present and future obligations under the rules, having regard to—

  • (i) the person's operational capacity; and

  • (ii) the person's financial condition; and

  • (iii) the person's business continuity arrangements; and

  • (iv) the person's character and business integrity; and

  • (v) any other considerations that in the opinion of the Reserve Bank relate to the standing of the person and the integrity of Austraclear NZ:

• (r) NZCSD's capacity, rights, powers, and privileges are restricted by its constitution to those necessary to carry out its sole function of acting as custodian trustee for Austraclear NZ in accordance with the rules.