THE CORPORATIONS LAW

CHAPTER 7 - SECURITIES

PART 7.10 - THE NATIONAL GUARANTEE FUND

Division 6 - Contract guarantees

SECTION 949   CLAIM BY SELLING DEALER IN RESPECT OF DEFAULT BY BUYING DEALER  

949(1)  [Claim by selling dealer]  

Where, as at the end of the completion period in relation to a reportable transaction that is a sale by a dealer to another dealer:

(a)  the first-mentioned dealer:

(i) if a transfer of the securities concerned pursuant to the sale would be an SCH-regulated transfer - has done, or is ready, willing and able to do, all things that that dealer is required to do under the SCH business rules to effect a transfer of the securities pursuant to the sale; or

(ii) in any other case - has supplied, or is ready, willing and able to supply, to the other dealer, under the agreement for the sale, settlement documents in relation to the sale; and

(b)  the other dealer has not paid to the first-mentioned dealer, under that agreement, the consideration for the sale;

the first-mentioned dealer may make a claim in respect of the sale.

949(2)  [Dealer may make single claim]  

A dealer may make a single claim under this section in respect of the total amount of the unpaid consideration in respect of 2 or more sales.

949(3)  [Exchange body entitled to make claim]  

If the business rules of an Exchange body purport to authorise that body to make under this section on behalf of a dealer who is a member organisation of the Exchange a claim that the dealer is entitled to make, that body is entitled to make that claim on behalf of that dealer.

949(4)  [Exchange body entitled to make single claim]  

If an Exchange body is entitled under subsection (3) to make claims under this section on behalf of 2 or more dealers, that body is entitled to make a single claim under this section on behalf of both or all of those dealers in respect of the sum of the amounts in respect of which it is entitled to make separate claims on behalf of each of those dealers.

949(4A)  [Securities clearing house may claim on behalf of dealer]  

If the SCH business rules purport to authorise the securities clearing house to make under this section on behalf of a dealer who is or was an SCH participant a claim that the dealer is entitled to make, the securities clearing house is entitled to make that claim on behalf of that dealer.

949(4B)  [Multiple claims]  

If the securities clearing house is entitled under subsection (4A) to make claims under this section on behalf of 2 or more dealers, the securities clearing house is entitled to make a single claim under this section on behalf of both or all of those dealers in respect of the sum of the amounts in respect of which it is entitled to make separate claims on behalf of each of those dealers.

949(5)  [Board to be satisfied]  

Where a dealer, or an Exchange body or the securities clearing house on behalf of a dealer, makes a claim in respect of a sale of securities by the dealer to another dealer and the Board is satisfied that:

(a)  subsection (1), (3) or (4A) and entitles the claimant to make the claim; and

(aa)  if a transfer of the securities pursuant to the sale would be an SCH-regulated transfer - the dealer:

(i) has done all things that the dealer is required to do under the SCH business rules to effect a transfer of the securities pursuant to the sale; or

(ii) has, for the purposes of the claim, in accordance with the SCH business rules, transferred to SEGC or to an Exchange body securities of the same kind and number as the first-mentioned securities; and

(b)  if paragraph (aa) does not apply - the dealer has:

(i) for the purposes of the claim, supplied to SEGC; or

(ii) under the agreement for the sale, supplied to the other dealer;

settlement documents in relation to the sale; and

(c)  the consideration for the sale has not been paid to the dealer under the agreement for the sale; and

(d)  the agreement has not been discharged or otherwise terminated;

SEGC shall allow the claim and pay to the claimant an amount equal to the amount of the consideration.

949(6)  [Components of single claim treated separately]  

A claim made under subsection (2), (4) or (4B) shall be treated for the purposes of subsection (5) as if it consisted of a separate claim in respect of each of the sales to which it relates.

949(7)  [Exchange body to account to SEGC]  

If a dealer transfers securities to an Exchange body as mentioned in subparagraph (5)(aa)(ii), the Exchange body must account to SEGC for those securities in accordance with the SCH business rules.