Commonwealth Numbered Acts

CORPORATIONS ACT 1989 No. 109 of 1989 - SECT 1209

1209. (1) In this section:

"client", in relation to a futures broker, means a person on behalf of whom
the broker deals, or from whom the broker accepts instructions to deal, in
futures contracts, but does not include:

   (a)  the broker;

   (b)  a director, or an officer, of the broker;

   (c)  an employee of the broker;

   (d)  a body corporate that is related to the broker;

   (e)  a person who is associated with, or who is a partner of, the broker;
        or

   (f)  a body corporate in which the broker has, or the broker and partners
        of the broker together have, a controlling interest;

"credit facility" means a document evidencing the right of a person to obtain
money on credit from another person, and, without limiting the generality of
the foregoing, includes a letter of credit and a bank guarantee;

"property" includes credit facilities and securities;

"relevant credit balance", in relation to a client of a futures broker, means
the total of:

   (a)  the amounts deposited by the broker in respect of the client in a
        clients' segregated account, or clients' segregated accounts, of the
        broker, less so much of those amounts as has been withdrawn from the
        account or accounts; and

   (b)  the values of the items of property that:

        (i)    have, in respect of the client, been deposited by the broker in
               safe custody pursuant to subsection (3);

        (ii)   have not been withdrawn from safe custody; and

        (iii)  under the terms and conditions on which they were deposited
               with, or received by, the broker, are available to meet, or to
               provide security in connection with the meeting of,
               relevant liabilities of the client;

"relevant liabilities", in relation to a client of a futures broker, means
debts and liabilities of the client arising out of dealings in futures
contracts effected by the broker on behalf of the client;

"settling", in relation to a dealing in a futures contract, includes making
delivery, or taking delivery, of a commodity to which the futures contract
relates.
(2) For the purposes of the definition of "relevant credit balance" in
subsection (1), the value of an item of property at a particular time is:

   (a)  in the case of a credit facility-the amount of money that the person
        entitled to the right evidenced by the credit facility can, at that
        time or within a reasonable period after that time, obtain by virtue
        of that right; or

   (b)  in any other case-the market value of the property as at the end of
        the last business day before that time.

(3) Where, in connection with:

   (a)  dealings in futures contracts effected, or proposed to be effected, by
        a futures broker on behalf of a client of the broker; or

   (b)  instructions by a client of a futures broker to deal in futures
        contracts; money or property (other than property to which section
        1214 applies) is deposited with the broker by the client, or is
        received by the broker for, or on behalf of, the client, the broker
        shall:

   (c)  in the case of money-deposit the money in a clients' segregated
        account of the broker maintained in Australia or in the place where
        the money was deposited with, or received by, the broker; or

   (d)  in the case of property-deposit the property in safe custody, in
        Australia or in the place where the property was deposited with, or
        received by, the broker, in such a manner that the property is
        segregated from property other than property deposited by the broker
        in safe custody pursuant to this subsection; on or before the next day
        after the money or property is deposited with, or received by, the
        broker that is a day on which the money or property can be deposited
        as first mentioned in paragraph (c) or (d).

(4) Without limiting the generality of subsection (3), where, in connection
with dealings in futures contracts effected by a futures broker, the broker
receives from a person an amount of money some or all of which is attributable
to dealings in futures contracts so effected on behalf of clients of the
broker, the broker shall, on the next day on which the amount can be so
deposited, deposit the amount in a clients' segregated account of the broker
maintained in Australia or in the place where the broker receives the amount.

(5) Where, pursuant to this section, a futures broker deposits money in
respect of a client in a clients' segregated account of the broker, the broker
shall not withdraw any of the money except for the purpose of:

   (a)  making a payment to, or in accordance with the written direction of, a
        person entitled to the money;

   (b)  making a payment for, or in connection with, the entering into,
        margining, guaranteeing, securing, transferring, adjusting or settling
        of dealings in futures contracts effected by the broker on behalf of
        the client;

   (c)  defraying brokerage and other proper charges incurred in respect of
        dealings in futures contracts effected by the broker on behalf of the
        client;

   (d)  investing it:

        (i)    in any manner in which trustees are for the time being
               authorised by law to invest trust funds;

        (ii)   on deposit with an eligible money market dealer;

        (iii)  on deposit at interest with a banking corporation;

        (iv)   on deposit with a clearing house for a futures exchange; or

        (v)    in the purchase of cash management trust interests;

   (e)  paying to the broker the amount of a fee that the broker may charge,
        or an amount to which the broker is entitled, under an agreement with
        the client made under subsection (7); or

   (f)  making a payment that is otherwise authorised by law; or as permitted
        by subsection (11).

(6) A futures broker shall not deal with property deposited by the broker in
safe custody under subsection (3) otherwise than in accordance with the terms
and conditions on which the property was deposited with, or received by, the
broker.

(7) A futures broker who invests as mentioned in paragraph (5) (d) money that
was, in respect of a client of the broker, deposited by the broker under
subsection (3):

   (a)  may charge such fee (if any) for so investing the money; and

   (b)  is entitled to so much (if any) of the return on the money so
        invested; as the broker and the client agree in writing.

(8) A futures broker shall not invest an amount pursuant to paragraph (5) (d)
by depositing it with a person for that person to invest, unless the broker:

   (a)  has informed the person that the amount has been withdrawn from a
        clients' segregated account of the broker and is money to which
        clients of the broker are entitled; and

   (b)  has obtained from the person a written statement that is signed by the
        person, sets out the amount and acknowledges that the broker has
        informed the person as mentioned in paragraph (a).

(9) Where, at a particular time, the total amount of the relevant liabilities
of a client of a futures broker exceeds the relevant credit balance of the
client, the broker may, in respect of the client, deposit in a clients'
segregated account of the broker an amount of money not greater than the
amount of the excess, and, if the broker does so, the amount so deposited
shall, subject to subsection (10), be deemed to be money to which the client
is entitled.

(10) Where:

   (a)  a futures broker has, in respect of a client of the broker, deposited
        an amount pursuant to subsection (9) in a clients' segregated account
        of the broker; and

   (b)  the relevant credit balance of the client exceeds by a particular
        amount the total amount of the relevant liabilities of the client; the
        broker may withdraw from the account so much of the amount referred to
        in paragraph (a) as does not exceed the amount first referred to in
        paragraph (b).

(11) A futures broker shall keep in relation to the clients' segregated
account, or clients' segregated accounts, of the broker accounting records
that: (a) are separate from any other accounting records of the broker;

   (b)  record separately in respect of each client of the broker particulars
        of the amounts deposited in, and the amounts withdrawn from, the
        account or accounts in respect of the client; and

   (c)  record, separately from the particulars referred to in paragraph (b):

        (i)    particulars (including particulars of withdrawals) of so much
               of the amounts deposited as required by subsection (4) in the
               account or accounts as was not attributable to dealings in
               futures contracts effected by the broker on behalf of clients
               of the broker;

        (ii)   particulars of all amounts deposited in the account or accounts
               pursuant to subsection (9); and

        (iii)  particulars of all amounts withdrawn from the account or
               accounts pursuant to subsection (10).

(12) A futures broker shall keep records that:

   (a)  relate to deposits of property in safe custody by the broker pursuant
        to subsection (3); and

   (b)  record separately in respect of each client of the broker particulars
        of the property deposited in respect of the client.

(13) Section 1213 applies, so far as it is capable of application, in relation
to accounting records, and other records, that are required by subsections
(11) and (12), respectively, of this section to be kept by a futures broker,
and so applies as if those accounting records and other records were
accounting records required by that section to be kept by the broker.

(14) Subject to subsections (15) and (16), none of the following:

   (a)  money deposited by a futures broker pursuant to this section in a
        clients' segregated account of the broker;

   (b)  property in which money deposited by a futures broker as mentioned in
        paragraph (a) of this subsection has been invested pursuant to
        paragraph (5) (d);

   (c)  property deposited by a futures broker in safe custody pursuant to
        subsection (3); is available for the payment of a debt or liability of
        the broker or is liable to be attached, or taken in execution, under
        the order or process of a court at the instance of a person suing in
        respect of such a debt or liability.

(15) Nothing in subsection (14) affects the right of a client of a futures
broker to recover money or property to which the client is entitled.

(16) Where a futures broker is entitled to withdraw money from a clients'
segregated account of the broker for the purpose of making a payment to the
broker, subsection (14) does not apply in relation to that money.

(17) Where a futures broker invests money pursuant to paragraph (5) (d) by
depositing it with a person for the person to invest, neither that money, nor
any property in which the person invests any of that money, is available for
the payment of a debt or liability of the person or is liable to be attached,
or taken in execution, under the order or process of a court at the instance
of a person suing in respect of such a debt or liability.

(18) Nothing in this section affects a claim or lien that a futures broker has
against or on:

   (a)  money deposited by the broker pursuant to this section in a clients'
        segregated account of the broker;

   (b)  property in which such money has been invested pursuant toparagraph
        (5) (d); or

   (c)  property deposited by the broker in safe custody pursuant to
        subsection (3).