Corporations Regulations 2001

CHAPTER 7 - FINANCIAL SERVICES AND MARKETS  

PART 7.8 - OTHER PROVISIONS RELATING TO CONDUCT ETC CONNECTED WITH FINANCIAL PRODUCTS AND FINANCIAL SERVICES, OTHER THAN FINANCIAL PRODUCT DISCLOSURE  

Division 4A - Special provisions relating to margin lending facilities  

Subdivision A - Responsible lending conduct for margin lending facilities  

REGULATION 7.8.08A   LIMIT OF MARGIN LENDING FACILITY TAKEN TO BE INCREASED  

7.8.08A(1)    
For paragraph 985E(3)(a) of the Act, the limit of a margin lending facility is taken to be increased, despite subsection 985E(2) of the Act, if:

(a)    the increase is a result of a contribution of further secured property or transferred securities that occurs without the prior knowledge or agreement of the provider; and

(b)    the provider permits the increase to continue; and

(c)    

the increase is no more than 5% of the current limit of the margin lending facility.

7.8.08A(2)    
If the limit of a margin lending facility is taken to be increased in the circumstances mentioned in subregulation (1) , subsection 985E(1) of the Act is modified by omitting ' before the critical day: ' and inserting ' after the critical day: ' .

Note: Paragraph 992C(1)(c) of the Act provides that the regulations may provide that Part 7.8 of the Act applies as if specified provisions were omitted, modified or varied as specified in the regulations.

7.8.08A(3)    
For subregulation (1) , if:

(a)    more than one contribution of further secured property or transferred securities under the margin lending facility occurs on a day; and

(b)    each of the contributions is taken to increase the limit of the facility; and

(c)    either:

(i) the cumulative increase is no more than 5% of the current limit of the margin lending facility; or

(ii) if the cumulative increase is more than 5% of the current limit of the margin lending facility, the provider ensures that the increases are reduced so that the cumulative increase becomes no more than 5% of the current limit of the margin lending facility;

the increases are taken to be one increase for this regulation.

Increase prior to assessment only to occur once

7.8.08A(4)    
Subregulation (5) applies if:

(a)    the limit of a margin lending facility is taken to be increased in the circumstances mentioned in subregulation (1) ; and

(b)    an assessment has not yet been made in accordance with section 985F of the Act.

7.8.08A(5)    
If the limit of the margin lending facility would be taken to increase further in accordance with subregulation (1) :

(a)    the limit is taken not to be further increased until:

(i) an assessment has been made in accordance with section 985F of the Act; and

(ii) it is assessed that the facility will not be unsuitable for the client if the limit is increased; and

(b)    the provider must ensure that the increase does not continue unless paragraph (a) permits it.

If facility assessed as unsuitable

7.8.08A(6)    
If:

(a) the limit of a margin lending facility is taken to be increased in the circumstances mentioned in subregulation (1) ; and

(b) the assessment made in accordance with section 985F of the Act assesses that the facility is unsuitable for the client because of the increased limit;

the limit is taken to be reduced to the limit of the margin lending facility before the increase, and the provider must ensure that the limit is reduced within 90 days of the day the assessment is made.

Facility not unsuitable for subsection 985K(4) of the Act

7.8.08A(7)    
For subsection 985K(4) of the Act, a margin lending facility is taken not to be unsuitable if:

(a)    the limit of the margin lending facility is taken to be increased in the circumstances mentioned in subregulation (1) ; and

(b)    the assessment made in accordance with section 985F of the Act assesses that the facility:

(i) is not unsuitable for the client; or

(ii) is unsuitable for the client because of the increased limit; and

(c)    in the case of subparagraph (b)(ii), the provider ensures that the limit is reduced, within 90 days of the day the assessment is made, to the limit of the margin lending facility before the increase.