Ann: WAV/RULE: FSF: FSM Participants Waiver NZX R

• Release Date: 30/11/12 12:47
• Summary: WAV/RULE: FSF: FSM Participants Waiver NZX Rules 15.14.2 & 17.7.1(d)
• Price Sensitive: No
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FSF
30/11/2012 10:47
WAV/RULE

REL: 1047 HRS Fonterra Shareholders' Fund (NS)

WAV/RULE: FSF: FSM Participants Waiver NZX Rules 15.14.2 & 17.7.1(d)

23 November 2012

NZX Regulation Decision
All FSM Participants
Waiver in relation to NZX Participant Rules 15.14.2 and 17.7.1(d)

Background
1. NZX holds a market registration for the Fonterra Shareholders' Market
("FSM"), a market on which Farmer Shareholders ("Farmers") can trade Fonterra
Co-operative Group Limited ("Fonterra") shares ("Shares") among themselves.

2. The FSM is part of the arrangements for Trading Among Farmers, that
involve the trading of Shares by Farmers and the establishment of the
Fonterra Shareholders' Fund ("FSF") that gives outside investors access to
'Economic Rights' in Shares.  Units in the FSF will be traded on the NZX Main
Board.

3. Subject to meeting their shareholding requirements under the Fonterra
constitution Farmers may redeem FSF units for FSM Shares.  This process can
be effected using the Legal Title Transfer System by means of FSF Redemption
within the meaning of the NZX Participant Rules (the "Rules").

4. Any firm wishing to Trade on the FSM for Farmers, or effect FSF
Redemptions, must be accredited by NZX as an FSM Participant under the Rules.

5. Fonterra's constitution prohibits the transfer of Shares to persons who
are not Farmers.  All Shares backing 'Economic Rights' offered to outside
investors will be held by Fonterra Farmer Custodian Limited (the
"Custodian").

6. In order to effect a Farmer's instruction to effect an FSF Redemption, an
FSM Participant must arrange for the transfer of legal title to FSM Shares
using the Legal Title Transfer System and will hold the Custodian's
Authorisation Code for this purpose.

7. Verification of the Custodians holding of Shares will not be necessary
because the arrangements for Trading Among Farmers provide that the Custodian
will hold one share for every unit on issue.

Waiver from NZX Participant Rule 15.14.2

Waiver required

8. FSM Participants require a waiver from Rule 15.14.2 to allow any FSM
Participant to hold the Custodian's Authorisation Code without entering into
a written agreement with the Custodian authorising it to do so.

Rules

9. Rule 15.14.2 provides that:
"A client Authorisation Code held by a Client Advising Participant may only
be stored by a Client Advising Participant on the condition that that Client
Advising Participant enters into a written agreement with that client which
authorises that Client Advising Participant to retain the client's encrypted
Authorisation Code.  The written agreement between that client and that
Client Advising Participant pursuant to this Rule must:

(a) Detail the storage and use of that client's Authorisation Code by that
Client Advising Participant;

(b) Contain a client risk warning in relation to the possible consequences of
unauthorised access to that client's Authorisation Code and the consequence
of authorised access;

(c) Contain an acknowledgment that that Client Advising Participant will have
unlimited access to the Securities held by the client if that client's
Authorisation Code is retained by the Client Advising Participant; and

(d) Contain an undertaking by that Client Advising Participant that that
Client Advising Participant will at all times protect that client's
Authorisation Code from unauthorised use and/or access."

Decision

10. Subject to paragraph 10 below, NZXR grants all FSM Participants a waiver
from the requirement of Rule 15.14.2 in respect of the Custodian, and the
Custodian's Authorisation Code, in respect of FSF Redemptions.

11. The waiver described in paragraph 9 is subject to the following
conditions:
(a) The FSM Participant must keep the Custodian's Authorisation Code
encrypted at all times; and
(b) The FSM Participant must at all times protect the Custodian's
Authorisation Code from unauthorised use and/or access.

12. This decision is effective until revoked by NZXMS.

Reasons

13. In determining to grant the waiver described in paragraph 14, NZXMS has
considered the following matters:

(a) It is necessary for FSM Participants to hold the Custodian's
Authorisation Code in order to carry out FSF Redemptions in accordance with
the Rules for clients who are Farmers;

(b) The Custodian has executed a deed poll in favour of FSM Participants
acknowledging that FSM Participants are permitted to retain its Authorisation
Code for the purpose of transferring FSM Shares as part of an FSF Redemption;
and

(c) FSM Participants will not have a client relationship with the Custodian
and so would not otherwise need to enter into any written agreement with the
Custodian.

(d) The conditions of this waiver provide adequate protection to the
Custodian's Authorisation Code, as envisaged by the Rules.

Waiver from NZX Participant Rule 17.7.1(d)

Waiver Required

14. FSM Participants require a waiver from Rule 17.7.1(d) to allow any FSM
Participant to instruct its Legal Title Transfer Depository Participant
("LTTDP") to effect an FSF Redemption without ensuring that the LTTDP has
verified the Custodian's holding of FSM Shares.

Rules
15. Rule 17.7.1(d) provides that:
"Before instructing a Legal Title Transfer Depository Participant to submit a
CIT or a Stock Reservation instruction, a Trading Participant must:
(d) ensure that a Legal Title Transfer Depository Participant has verified
that client's holdings of Securities on the register used by the Issuer of
those Securities and note any special conditions that exist against that
client's holdings;

Decision
16. NZXMS grants all FSM Participants a waiver from the requirements of Rule
17.7.1(d) when instructing a LTTDP in respect of an FSF Redemption.

17. This decision is effective until revoked by NZXMS.

Reasons
18. In determining to grant the waiver described in paragraph 18 NZXMS has
considered the following matters:

(a) The Custodian will be required to hold one FSM Share for every FSF Unit
on issue.  As such, it is expected that the Custodian's total holding in FSM
Shares will always be greater than the quantity needing to be redeemed to
give effect to a Farmer's FSF Redemption instruction.

Confidentiality
19. This waiver decision will be published in full.

 ENDS
End CA:00230492 For:FSF    Type:WAV/RULE   Time:2012-11-30 10:47:39