Corporations Amendment Regulations 2004 (No. 3)

(26 of 2004)

26 February 2004

Corporations Act 2001.

1 Name of Regulations

These Regulations are the Corporations Amendment Regulations 2004 (No. 3).

2 Commencement

These Regulations commence as follows:

(a) on the date of their notification in the Gazette - regulations 1 to 3 and Schedule 1;

(b) on 11 March 2004 - Schedule 2.

3 Amendment of Corporations Regulations 2001

Schedules 1 and 2 Corporations Regulations 2001.

Schedule 1 Amendments commencing on gazettal

[1] After regulation 7.5.01

insert

7.5.01A Modification of Act: compensation regimes

For subsection 893A (1) of the Act, Part 7.5 of the Act is modified in relation to a licensed market as set out in Schedule 8C.

[2] Part 10.2, after Division 51

insert

Division 52 Winding up of fidelity funds if market ceases to operate

10.2.215 ? Winding up of fidelity funds if market ceases to operate

(1) For subsection 1416 (1) of the Act, section 886B of the Act applies in relation to a fidelity fund kept by the operator of a financial market that, at a time in the transition period for the market, ceases to operate (otherwise than because of a merger).

(2) For paragraph 886B (c) of the Act, subsection (3) applies if, at a time during the transition period for a financial market on which derivatives are traded, a person (the first person ) ceases to operate the market (other than because of a merger), and another person (the second person ) that is a related body corporate operates a financial market:

(a) in relation to which, or a segment of which, there are required, after the end of the transition period, to be compensation arrangements approved in accordance with Division 3 of Part 7.5 of the Act; and

(b) on which derivatives are also traded.

(3) The assets of the fidelity fund held by the first person for the market it had operated may be:

(a) transferred to the fidelity fund held by the second person for the market, or segment of the market, that it operates; or

(b) held as, or as part of, the fidelity fund held for the market, or segment of the market, operated by the second person.

[3] After Schedule 8B

insert

Schedule 8C Modifications of Part 7.5 of the Act - compensation regimes

(regulation 7.5.01A)

1 Subsection 880B (1), definition of fidelity fund , subparagraph (b) (ii)

omit

markets;

insert

markets; or

2 Subsection 880B (1), definition of fidelity fund , after paragraph (b)

insert

3 Subsection 881A (2)

substitute

(1A) If:

(a) compensation arrangements under Division 4 apply to only some financial products acquired or disposed of through a licensed market; and

(b) paragraphs (1) (a) and (b) are satisfied for the other products acquired or disposed of through the licensed market;

there must be compensation arrangements in relation to the other products that are approved in accordance with Division 3.

(2) The compensation regime that applies to a financial market is:

(a) for a financial product to which Division 3 applies - the compensation regime constituted by Division 3; and

(b) for a financial product to which Division 4 applies - the compensation regime constituted by Division 4.

4 Paragraph 885C (1) (b)

substitute

(b) the money or other property, or the authority, was given to the participant in connection with effecting a transaction, or proposed transaction, that:

(i) was covered by provisions of the operating rules of the market relating to transactions effected through the market; and

(ii) related to a particular financial product that was not covered by the compensation regime constituted by Division 4; and

5 Section 885D, heading

substitute

885D Certain losses that are or are not Division 3 losses

6 Subsection 885D (2)

substitute

(2) If, in relation to a loss suffered by a person:

(a) the requirements of subsection 885C (1) are satisfied in relation to a participant and a financial market, except that it is not reasonably apparent whether the compensation regime constituted by Division 3 or by Division 4 covered the transaction, or proposed transaction; and

(b) the relevant financial market has both Division 3 and Division 4 arrangements; and

(i) the person did not (expressly or impliedly) instruct the participant to use the money or other property to enter into a transaction that would be covered by the compensation regime constituted by Division 3 or by Division 4; or

(ii) if the participant had authority to enter into transactions on the person's behalf without specific authority, there is no evidence that the participant decided to use the money or other property to enter into a transaction that would be covered by the compensation regime constituted by Division 3 or by Division 4; and

(d) the participant was permitted to trade in products that would be covered by the compensation regimes constituted by Division 3 and by Division 4; and

(e) it is not reasonably apparent from the usual business practice of the participant which of those transactions the participant proposed to undertake;

the loss is taken to be a Division 3 loss and not to be a loss that is connected with a financial market to which Division 4 applies.

7 Subsection 885J (1)

omit

adequate,

insert

adequate for the market, or segment of the market, for which the arrangements apply,

8 Section 887A

substitute

887A Markets to which this Division applies

(1) This Division applies to a financial market that is operated by:

(a) a body corporate that is a member of the SEGC; or

(b) a body corporate that is a subsidiary of such a member.

(2) However, this Division does not apply to a market mentioned in subsection (1):

[9] Subregulation 7.5.01 (1), definition of obligations,sub-subparagraphs (b) (iv) (B)

omit

Options Clearing House Pty Limited - the last-mentioned participant and the person.

insert

OCH - the last-mentioned participant and the person; and

[10] Subregulation 7.5.01 (1), definition of obligations , after paragraph (b)

insert

(c) in relation to a participant of the licensed CS facility operated by ASTC, in relation to a person, includes obligations arising under:

(i) a law; or

insert

(vii) a person who is a participant of the licensed CS facility operated by OCH.

[20] Subregulation 7.5.04 (1A)

omit

[21] Subregulation 7.5.06 (3)

substitute

(3) For this Part, an agreement to buy or sell securities, because of the exercise of an option contract over securities, if:

(a) the option contract was entered into on the financial market of a participating market licensee; and

(b) the agreement is required, by the operating rules of OCH or the participating market licensee, to be reported to the participating market licensee;

is taken to be a sale and purchase of securities .

[22] Subparagraph 7.5.16 (b) (i)

omit

Finance and Administration;

insert

the Treasury;

[23] Paragraphs 7.5.19 (3) (a) and (b)

omit

Options Clearing House Pty Limited

insert

OCH

[24] After subregulation 7.5.19 (3)

insert

(3A) For Subdivision 4.3, if:

(a) a participant of Australian Stock Exchange Limited (the transacting participant ) enters into a reportable transaction; and

(b) under the operating rules of Australian Stock Exchange Limited or OCH, a participant of the licensed CS facility operated by OCH (the clearing participant ) has the obligation to complete the transaction and all obligations ancillary to that completion;

regulations 7.5.24 to 7.5.27 (inclusive) apply in relation to the function of completing the transaction, as if the clearing participant, and not the transacting participant, had entered into the transaction.

[25] Paragraphs 7.5.19 (4) (a) and (b)

omit

Options Clearing House Pty Limited

insert

OCH

[26] After subregulation 7.5.19 (4)

insert

(5) For Subdivision 4.9, if:

(a) a participant of Australian Stock Exchange Limited (the transacting participant ) enters into a reportable transaction; and

regulation 7.5.66 applies in relation to the function of completing the transaction, as if the clearing participant, and not the transacting participant, had entered into the transaction.

[27] Subparagraph 7.5.24 (1) (d) (i)

omit

ASTC operating rules

insert

operating rules of a participating market licensee or OCH

[28] Subparagraph 7.5.24 (1) (d) (ii)

substitute

(ii) the dealer has been suspended by the participating market licensee concerned or OCH, that suspension has not been removed and the selling client has done, or is ready, willing and able to do, all things necessary to enable the dealer to do all things that the dealer is required to do under the operating rules of the participating market licensee or OCH to effect a transfer of the securities pursuant to the sale; and

[29] Subparagraphs 7.5.24 (5) (b) (i) and (ii)

omit

ASTC operating rules

insert

operating rules of OCH

[30] Subregulation 7.5.24 (7)

omit

ASTC operating rules.

insert

operating rules of OCH.

[31] Subparagraph 7.5.25 (1) (d) (ii)

omit

concerned,

insert

substitute

(D) a representative of OCH;

[43] Sub-subparagraph 7.5.81 (4) (d) (iii) (F)

omit

an officer or employee

insert

a representative

[44] Subparagraph 7.5.81 (4) (d) (iv)

omit

an officer or employee

insert

a representative

[45] Subparagraphs 7.5.83 (b) (i) and 7.5.84 (b) (i)

omit

Finance and Administration;

insert

the Treasury;

[46] Paragraph 7.5.85 (b)

substitute

(b) OCH.

[47] After regulation 7.6.02

insert

7.6.02AA Modification of section 912B of the Act: professional indemnity insurance and security instead of compensation arrangements

(1) For paragraph 926B (1) (c) of the Act, Part 7.6 of the Act applies as if section 912B of the Act were modified by substituting that section with the following:

' 912B Financial services provided to persons as retail clients - requirements in certain circumstances

(1) Subsection (2) applies in relation to a financial services licensee if the licensee's financial services licence authorises the licensee to carry on an activity:

(a) to which paragraph 19 (1) (b) or subparagraph 31B (1) (a) (ii) or (b) (ii) of the Insurance (Agents and Brokers) Act 1984 (the repealed Act ) would have applied if that Act were not repealed; and

(b) for which the licensee would have been required under those provisions to have in force an acceptable contract of professional indemnity insurance.

(2) The repealed Act, and any associated provisions, continue to apply in relation to the licensee to the extent necessary to require the licensee to have in force an acceptable contract of professional indemnity insurance in relation to the activity.

(3) Subsections (4) and (5) apply in relation to a financial services licensee if the licensee's financial services licence authorises the licensee to carry on an activity:

(a) to which Part 7.3 of the old Corporations Act would have applied if that Part were not repealed; and

(b) for which the licensee would have been required under that Part to have a dealers licence or investment advisers licence that could have been subject to the condition specified in paragraph 786 (2) (d) of the old Corporations Act.

(4) Section 914A of the Act is taken to authorise ASIC to impose the condition specified in paragraph 786 (2) (d) of the old Corporations Act as a condition of the licensee's financial services licence.

(5) If ASIC acts under subsection (4), Part 7.3 of the old Corporations Act, and any associated provisions, continue to apply to the extent necessary to specify the content of the condition specified in paragraph 786 (2) (d) of the old Corporations Act.'

(6) In this section:

associated provisions , in relation to provisions (the core provisions ) of a particular Act as in force at a particular time, include (but are not limited to):

(a) any regulations or other instruments that are or were in force for the purposes of any of the core provisions at that time; and

(b) any interpretation provisions that apply or applied in relation to any of the core provisions at that time (whether or not they also apply or applied for other purposes); and

(c) any provisions relating to liability (civil or criminal) that apply or applied in relation to any of the core provisions at that time (whether or not they also apply or applied for other purposes); and

(d) any provisions that limit or limited, or that otherwise affect or affected, the operation of any of the core provisions at that time (whether or not they also limit or limited, or affect or affected, the operation of other provisions).

old Corporations Act means this Act as in force immediately before the FSR commencement.'.

(2) This regulation ceases to apply at the end of 10 March 2005.

[48] Schedule 2, Form 719A

omit

dealer who is claimed to have executed the document of transfer of securities

insert

the dealer who is claimed to have transferred securities

[49] Schedule 2, Form 721

omit

/the TDS nominee

[50] Schedule 2, Form 721

omit

or the nominee

[51] Schedule 9, item 5A

substitute

5A	AXA Trustees Limited

[52] Schedule 9, item 17

omit

[53] Schedule 9, after item 47

insert

47AA	Tower Trust Limited

[54] Schedule 10B, sub-subparagraph 7.1 (b) (ii) (B)

omit

member's

insert

product holder's