ASB Securities is a NZX firm. When you trade on the NZX markets through ASB Securities you must comply with:

• the NZX Participant Rules
• the requirements of good broking practice
• any applicable directions and guidance issued by NZX, (the NZX Rules).

A summary of some of the key requirements of good broking practice in relation to trading conduct encompassed by the NZX Participant Rules are set out below. Please note this is intended to be a brief summary of some of the key requirements of good broking practice only. You should review the NZX Rules for more detailed information on all of the requirements prior to trading through ASB Securities.

Orderly market

• The NZX Participant Rules (See Rule 8.8) requires broking firms to ensure their conduct promotes and helps maintain an orderly market. This requirement seeks steady (i.e. not unusually volatile) movement in the price of a financial product being traded on the NZX markets.
• In ensuring your conduct promotes and helps maintain an orderly market you must consider a range of circumstances relevant to the current condition of the market for any financial product. Accordingly, in allowing each order to proceed through to the market, you must first determine (among other things) whether the execution of the order:
  
  • Is consistent with the recent trading activity in the relevant financial product?
  • Will materially affect the price or market for the relevant financial product?

Please refer to the NZX Participant Guidance Note - Trading Conduct for further information on this requirement.

Prohibition on insider trading

• NZ law prohibits a person who is an information insider from trading, advising or encouraging others to trade or disclosing the inside information. You will be an information insider if you have access to material information relating to a listed issuer that is not generally available to the market, know (or should know) that the information is material and know (or should know) that the information is not generally available to the market.
• The NZX Participant Rules (see Rule 15.6) require NZX Participants to report instances of suspected insider trading to NZX. Breach of this prohibition could result in prosecution.
• If you are employed by an NZX listed issuer, you may need to obtain permission from your employer before you trade in that issuer’s shares. You should consult with your employer before trading.

Prohibition against market manipulation

• New Zealand law and the NZX Participant Rules (see Rule 10.2) prohibit market manipulation. Market manipulation is conduct that creates a false or misleading appearance of the trading activity, the price/yield of, or the market (including supply and demand) for a quoted financial product traded on the NZX. Both trading that is intended to create this impression and trading that has the effect of creating this impression (whether intended or not) can be considered manipulative.
• Setting or maintaining a price or creating an impression of active trading does not need to be the sole purpose for the conduct in order for it to be considered market manipulation. In addition conduct that has the effect of setting or maintaining a price or creating an impression of active trading, whether or not it was intended to, can also be considered market manipulation.
• Breach of this prohibition could result in prosecution.
• Some examples of market manipulation may include:
  
  • buying or selling of shares where there is no change in beneficial owner
  • buying or selling shares to deliberately affect the price of a security
  • placing orders then cancelling them before they trade to give a false impression of interest in a security.

Please refer to the NZX Participant Guidance Note - Trading Conduct for further information and examples of conduct that could be viewed as market manipulation.

Prescribed Persons

ASB Securities is not permitted to operate an account for a Prescribed Person of another Trading Participant or NZX Advising firm.

A Prescribed Person is:

• An Employee of a Market Participant (which includes a Trading Participant or NZX Advising Firm)
• The Immediate Family of an Employee of a Market Participant
• A Family Company or Family Trust of a person referred to above; and
• A company, body corporate or other entity controlled by any of the persons referred to above.

An Employee includes all persons employed by a Market Participant and includes directors (but not independent directors), partners, employees, officers, agents, dealers, advisers and contractors. Immediate Family means the spouse or de facto partner and dependent children of an individual.

You can check whether your employer is a Market Participant on the NZX website.

If you are or if you become a Prescribed Person you should notify ASB Securities immediately.