New Zealand’s Ministry for Economic Development has proposed introducing a new financial regulatory act to replace the outdated Securities Act 1978 and Securities Markets Act 1988, and amend other laws.
The proposed new bill would distinguish between four categories
of financial products: equity, debt, collective investment
schemes and derivatives.
A futures or options contract would be defined as one meeting
"Changes value in response to the change in a specified
interest rate, financial instrument price, commodity price,
foreign exchange rate, index of prices or rates, credit
rating or credit index, or other variable, provided in the
case of a non-financial variable that the variable is not
specific to a party to the contract (ie. the
A derivative would also require no initial net investment or
an initial net investment that is smaller than would be
required for other types of contracts that would be expected
to have a similar response to changes in market
Finally, the contract is settled at a future
The ministry said it was aware that this definition would
exclude contracts demanding a 100% margin and asked for
feedback on this.
The ministry said it would also like to distinguish between OTC
and exchange-traded contracts.