THE CORPORATIONS LAW

CHAPTER 8 - THE FUTURES INDUSTRY

PART 8.7 - OFFENCES

Division 2 - General

SECTION 1266   SEQUENCE OF TRANSMISSION AND EXECUTION OF ORDERS  

1266(1)  [Transmission by futures broker of instructions to deal in class of futures contracts]  

In this section, a reference to the transmission by a futures broker of instructions to deal in a class of futures contracts is a reference:

(a)  where the broker has direct access to the futures market on which the instructions are to be executed - to the transmission of the instructions to that futures market; or

(b)  where the broker has access to the futures market on which the instructions are to be executed only through another futures broker - to the transmission of the instructions to that other futures broker.

1266(2)  [Transmission of instructions in sequence of receipt]  

Subject to subsection (3), a futures broker shall transmit in the sequence in which they are received by the broker all instructions to deal in a class of futures contracts at or near the market price for a futures contract of that class prevailing immediately before execution of the instructions.

1266(3)  [Client's instructions to take priority]  

Where a futures broker proposes to deal in a class of futures contracts on the broker's own account and the person by whom or on whose instructions the instructions for the dealing are to be transmitted is aware of instructions of a client of the broker to deal in that class of futures contracts at or near the market price for a futures contract of that class prevailing at that time (being instructions that have not been transmitted), that person shall not transmit, and shall not give instructions to any other person to transmit, the instructions to give effect to the proposal of the broker to deal in that class of futures contracts before the instructions of the client are transmitted.

1266(4)  [Instructions not to be disclosed]  

A futures broker, or a director, partner, officer or employee of a futures broker, shall not, except:

(a)  to the extent necessary to execute the instructions concerned;

(b)  as required by this Law or any other law; or

(c)  as required by the business rules of a futures organisation of which the broker is a member;

disclose to any other futures broker, or to a person engaged or employed in the business of the first-mentioned broker or of any other futures broker, instructions of a client to deal in a class of futures contracts.

1266(5)  [Instructions to be executed in order of receipt]  

A member of a futures exchange who is concerned in the execution, on a trading floor of the futures exchange, of instructions to deal in futures contracts shall execute in the order in which they are received by the member all instructions to deal in a class of futures contracts at or near the market price for a futures contract of that class prevailing immediately before execution of the instructions.

1266(6)  [Sequence in which dealings to be allocated]  

Where:

(a)  during a particular period, a futures broker transmits instructions (whether or not those instructions consist of, or include, instructions giving effect to a proposal of the broker to deal in the class of contracts concerned on the broker's own account) to deal in a class of futures contracts at or near the market price for a futures contract of that class prevailing immediately before execution of the instructions; and

(b)  dealings in that class of futures contracts are effected pursuant to those instructions;

the broker shall, except so far as the business rules of a futures organisation of which the broker is a member otherwise provide, allocate the dealings to those instructions:

(c)  in the sequence in which the dealings were effected; and

(d)  in the sequence in which the broker transmitted those instructions.

1266(7)  [Records to be kept]  

A futures broker shall maintain, in accordance with the regulations, records that set out the prescribed particulars of:

(a)  instructions by a client to deal in futures contracts;

(b)  the date and time of receipt, transmission and execution of those instructions;

(c)  the person by whom those instructions are received, the person by whom they are transmitted and the person by whom they are executed;

(d)  the date and time of receipt, transmission and execution of instructions to deal in futures contracts on the broker's own account; and

(e)  the person by whom instructions of the kind referred to in paragraph (d) are received, the person by whom they are transmitted and the person by whom they are executed;

and shall retain those records for the prescribed period.

1266(8)  [Futures markets outside Australia]  

Where:

(a)  a futures broker transmits for execution on a futures market outside Australia and the external Territories instructions to deal in futures contracts; and

(b)  it is not reasonably practicable for the broker to set out in the records maintained by the broker pursuant to subsection (7) the prescribed particulars of the date and time of execution of those instructions;

the broker shall so set out those particulars as precisely as is reasonably practicable.