This notice, which comes into force on the day after the date of its notification in the Gazette, declares NZFOX share options to be options to which Part 3 of the Securities Markets Act 1988 applies.

The term futures contract is defined by section 37(1) of the Securities Markets Act 1988 to include an option declared by the Securities Commission to be an option to which Part 3 of the Act applies.

Under section 38 of that Act, no person may carry on the business of dealing in futures contracts unless that person is, or is a member of a class of persons that is, authorised by the Securities Commission to carry on the business of dealing in futures contracts.

The Securities Commission considers that it is appropriate to make the declaration because—

• NZFOX share options are third party options created independently of the issuer of the listed securities and are able to be settled otherwise than by delivery. As the NZFOX share options are synthetic in nature and created independently of the issuer of the listed securities, the disclosure requirements (about the issuer of the listed securities) in terms of the Securities Act 1978 do not provide the best regulatory solution for the NZFOX share options:

• the declaration provides certainty in the market as, although the NZFOX share options appear to have most of the characteristics of a futures contract, there is some doubt as to whether they fall entirely within the definition of a futures contract in the Securities Markets Act 1988:

• the declaration enables the buying and selling of the NZFOX share options in New Zealand to be regulated in the same manner as futures contracts under New Zealand law:

• the NZFOX share options will be traded in accordance with the rules of Sydney Futures Exchange Limited, which is an authorised futures exchange under New Zealand law.