CORPORATIONS REGULATIONS 2001 - SCHEDULE 8C Modifications of Part 7.5 of the Act--compensation regimes

CORPORATIONS REGULATIONS 2001 - SCHEDULE 8C

(regulation   7.5.01A)

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

omit

markets;

insert

markets; or

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

insert

  (c)   the operator of the market or related body corporate of the operator of the market;

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   After subsection   885D(2)

Insert:

  (2A)   Despite subsection   (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

  (c)   either:

  (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.

  (2B)   Despite subsection   (2), if:

  (a)   the requirements of subsection   885C(1) are satisfied in relation to a participant and a financial market; and

  (b)   the loss is also connected (see section   888A) with a financial market to which Division   4 applies; and

  (c)   the person did not (expressly or impliedly) instruct the participant to use a particular one of those markets; and

  (d)   it is not reasonably apparent from the usual business practice of the participant which of those markets the participant would use when acting for the person; and

  (e)   the loss is connected with a transaction effected through a financial market to which Division   3 applies; and

  (f)   a claim cannot be made, or has been disallowed, under Division   4 (see subsection   888A(1));

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):

  (a)   that the regulations state is not covered by this Division; or

  (b)   to the extent that it involves financial products covered by the compensation regime constituted by Division   3.

9   After subsection   889J(1)

insert

  (1A)   However, a levy is payable only by an operator or a participant (including a participant who is suspended), in a financial market to which this Division applies, who is permitted to trade on that market a financial product to which this Division applies.

10   After subsection   889K(2)

insert

  (2A)   However, a levy is payable only by a participant (including a participant who is suspended), in a financial market to which this Division applies, who is permitted to trade on that market a financial product to which this Division applies.

10A   After subsection   892B(1), including the note

insert

  (1A)   Nothing in subsection   (1) prevents the Minister approving, in accordance with section   884C, a change to Division   3 arrangements that includes the withdrawal of money from an account or accounts holding a fidelity fund.

11   Paragraph   892K(1)(a)

after

report

insert

for a set of compensation arrangements