Commonwealth Numbered Acts

FUTURES INDUSTRY ACT 1986 No. 72 of 1986 - SECT 4

4. (1) In this Act, unless the contrary intention appears-

"accounting records" includes invoices, receipts, orders for the payment of
money, bills of exchange, cheques, promissory notes, vouchers and other
documents of prime entry and also includes such working papers and other
documents as are necessary to explain the methods and calculations by which
accounts are made up;

"acquire", in relation to a futures contract, means-

   (a)  except in the case of a futures option or of a prescribed
        exchange-traded option-enter into, or take an assignment of, the
        futures contract; or

   (b)  in the case of a futures option or of a prescribed exchange-traded
        option-take, or take an assignment of, the futures option or
        prescribed exchange-traded option,
whether or not on behalf of another person;

"adjustment agreement" means a standardised agreement the effect of which is
that-

   (a)  a particular person will either be under an obligation to pay, or will
        have a right to receive, an amount of money;

   (b)  whether the person will be under an obligation to pay, or will have a
        right to receive, the amount of money will depend on a particular
        state of affairs existing at a particular future time, including,
        without limiting the generality of the foregoing, a state of affairs
        that relates to fluctuations in the value or price of a commodity or
        other property, or in an index or other factor; and

   (c)  the amount of money will be calculated in a particular manner by
        reference to that state of affairs,
whether or not the agreement has any other effect or is capable of being
varied or discharged before that future time;

"amount" includes a nil amount;

"banker's books" means-

   (a)  books of a banking corporation, including any documents used in the
        ordinary business of a banking corporation;

   (b)  cheques, orders for the payment of money, bills of exchange and
        promissory notes in the possession or under the control of a
        banking corporation; and

   (c)  documents that create or evidence futures contracts and are in the
        possession, or under the control, of a banking corporation;

"banking corporation" means-

   (a)  a bank as defined in section 5 of the Banking Act 1959; or

   (b)  a bank constituted under a law of a State or Territory;

"Board", in relation to a body corporate, means the board of directors,
committee of management, council or other governing body of the body
corporate;

"books" includes any register or other record of information and any accounts
or accounting records, however compiled, recorded or stored and also includes
any document;

"bought position" means-

   (a)  in relation to a commodity agreement, or in relation to a futures
        contract, being a commodity agreement-the position of a person who, by
        virtue of the agreement, is under an obligation to accept delivery in
        accordance with the agreement; or

   (b)  in relation to a futures contract, being an adjustment agreement-the
        position of a person who, by virtue of the agreement-

        (i)    will, if the value or worth of the agreement (as determined in
               accordance with the agreement) as at a particular future time
               is less by a particular amount than the value or worth of the
               agreement (as so determined) as at a particular earlier time,
               be under an obligation to pay that amount; and

        (ii)   will, if the value or worth of the agreement (as so determined)
               as at a particular future time exceeds by a particular amount
               the value or worth of the agreement (as so determined) as at a
               particular earlier time, have a right to receive that amount;

"broker" means futures broker;

"business day" means a day that is not a Saturday, a Sunday or a public
holiday or bank holiday in the Territory;

"business rules", in relation to a body corporate, means-

   (a)  in the case of a body corporate that provides, or proposes to provide,
        clearing house facilities for a futures market-rules, regulations and
        by-laws governing-

        (i)    the activities and conduct of the body corporate and its
               members; and

        (ii)   the activities and conduct of other persons in relation to the
               provision by the body corporate of clearing house facilities
               for a futures market,
being rules, regulations and by-laws made by the body corporate or contained
in its constituent documents;

   (b)  in the case of a body corporate that operates, or proposes to operate,
        as a futures association-rules, regulations and by-laws governing the
        activities and conduct of the body corporate and its members in
        relation to the operation of the body corporate as a
        futures association, being rules, regulations and by-laws made by the
        body corporate or contained in its constituent documents; or

   (c)  in the case of a body corporate that maintains or provides, or
        proposes to maintain or provide, a futures market-rules, regulations
        and by-laws governing-

        (i)    the activities and conduct of the body corporate and its
               members;

        (ii)   the activities and conduct of each clearing house for the body
               corporate; and

        (iii)  the activities and conduct of other persons in relation to each
               futures market maintained or provided by the body corporate,
being rules, regulations and by-laws made by the body corporate or contained
in its constituent documents;

"clearing house", except in Division 1 of Part II, means-

   (a)  in relation to a body corporate-

        (i)    in any case-a person who provides, or proposes to provide,
               clearing house facilities for a futures market maintained or
               provided by that body corporate; or

        (ii)   in the case of a futures exchange-a body corporate in relation
               to which an approval as a clearing house for that
               futures exchange is in force under sub-section 48 (1); and

   (b)  in relation to a futures market-

        (i)    in any case-a person who provides, or proposes to provide,
               clearing house facilities for that futures market; or

        (ii)   in the case of a futures market of a futures exchange-a body
               corporate in relation to which an approval as a clearing house
               for that futures exchange is in force under sub-section 48 (1);

"clearing house facilities", in relation to a futures market, means facilities
for the registration of futures contracts made on that futures market;

"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;

"close out", in relation to a futures contract, means-

   (a)  discharge the obligations of the person in the bought position, or
        sold position, under the futures contract as a result of the matching
        up of the futures contract with a futures contract of the same kind
        under which the person has assumed an offsetting sold position, or
        offsetting bought position, as the case may be; or

   (b)  otherwise discharge the obligations of a party to the futures
        contract;

"commodity" means-

   (a)  any thing that is capable of delivery pursuant to an agreement for its
        delivery; or

   (b)  without limiting the generality of paragraph (a), an instrument
        creating or evidencing a thing in action;

"commodity agreement" means a standardised agreement the effect of which is
that-

   (a)  a person is under an obligation to make delivery; or

   (b)  a person is under an obligation to accept delivery,
at a particular future time of a particular quantity of a particular commodity
for a particular price or for a price to be calculated in a particular manner,
whether or not-

   (c)  the subject matter of the agreement is in existence;

   (d)  the agreement has any other effect; or

   (e)  the agreement is capable of being varied or discharged before that
        future time;

"director", in relation to a body corporate, includes-

   (a)  any person occupying or acting in the position of director of the body
        corporate, by whatever name called, and whether or not validly
        appointed to occupy, or duly authorised to act in, the position;

   (b)  any person in accordance with whose directions or instructions the
        directors of the body corporate are accustomed to act; and

   (c)  in the case of a body corporate incorporated or formed outside the
        Territory-

        (i)    a member of the committee of management, council or other
               governing body of the body corporate;

        (ii)   any person occupying or acting in the position of member of the
               committee of management, council or other governing body of the
               body corporate, by whatever name called and whether or not
               validly appointed to occupy or duly authorised to act in the
               position; and

        (iii)  any person in accordance with whose instructions the members of
               the committee of management, council or other governing body of
               the body corporate are accustomed to act;

"dispose of", in relation to a futures contract, means-

   (a)  except in the case of a futures option or of a prescribed
        exchange-traded option-take, or cause to be taken, such action as
        closes out the futures contract; or

   (b)  in the case of a futures option or of a prescribed exchange-traded
        option-

        (i)    grant, assign or exercise the futures option or prescribed
               exchange-traded option;

        (ii)   take, or cause to be taken, such action as releases the futures
               option or prescribed exchange-traded option; or

        (iii)  allow the futures option or prescribed exchange-traded option
               to lapse,
whether or not on behalf of another person;

"eligible commodity agreement" means a commodity agreement (in this
definition referred to as the "relevant agreement"), where, at the time when
the relevant agreement-

   (a)  unless paragraph (b) applies-is entered into; or

   (b)  if the relevant agreement is not a commodity agreement at the time
        when it is entered into-becomes a commodity agreement,
it appears likely, having regard to all relevant circumstances (other than the
respective intentions of the person in the sold position, and the person in
the bought position, under the relevant agreement), including, without
limiting the generality of the foregoing-

   (c)  the provisions of any agreement;

   (d)  the rules and practices of any market; and

   (e)  the manner in which the respective obligations of persons in sold
        positions, and persons in bought positions, under agreements of the
        same kind as the first-mentioned agreement are generally discharged,
that-

   (f)  the obligation of the person in the sold position under the relevant
        agreement to make delivery in accordance with the relevant agreement
        will be discharged otherwise than by the person so making delivery;

   (g)  the obligation of the person in the bought position under the
        relevant agreement to accept delivery in accordance with the relevant
        agreement will be discharged otherwise than by the person so accepting
        delivery; or

   (h)  the person in the sold position, or bought position, under the
        relevant agreement will assume an offsetting bought position, or
        offsetting sold position, as the case may be, under an agreement of
        the same kind as the relevant agreement;

"exchange member", in relation to a futures exchange, means-

   (a)  a person who is a member of the futures exchange;

   (b)  a partnership that is a member of the futures exchange; or

   (c)  a member of such a partnership;

"executive officer", in relation to a body corporate, means any person, by
whatever name called, and whether or not a director of the body corporate, who
is concerned in, or takes part in, the management of the body corporate;

"exempt futures market" means a futures market in relation to which, or a
futures market included in a class of futures markets, being a class in
relation to which, a declaration under sub-section 45 (2) is in force;

"function" includes a duty;

"futures adviser" means-

   (a)  a person who carries on, or 2 or more persons who together carry on, a
        business of advising other persons concerning futures contracts; or

   (b)  a person who issues or publishes, or 2 or more persons who together
        issue or publish, in the course of carrying on a business, analyses or
        reports concerning futures contracts,
whether or not that business is part of, or is carried on in conjunction with,
any other business but does not include a person who is the proprietor or
publisher of a newspaper or periodical that is generally available to the
public otherwise than only on subscription and who, only in such a newspaper
or periodical of which the person is the proprietor or publisher, advises
other persons concerning futures contracts or issues or publishes analyses or
reports concerning futures contracts, not being the proprietor or publisher of
a newspaper or periodical whose principal or only object is to advise other
persons concerning futures contracts or to issue or publish analyses or
reports concerning futures contracts;

"futures adviser's licence" means a futures adviser's licence granted under
Part IV;

"futures adviser's representative" means a person who is employed by, or acts
for or by arrangment with, a futures adviser (other than a futures adviser who
is the holder of a futures broker's licence or is an exempt broker) in
connection with a business that is carried on by the futures adviser of
advising other persons, or in the course of which analyses or reports are
issued or published, concerning futures contracts;

"futures adviser's representative's licence" means a futures adviser's
representative's licence granted under Part IV;

"futures association" means a body corporate that is approved by the
Ministerial Council under section 50;

"futures broker" means-

   (a)  a person who carries on, or 2 or more persons who together carry on, a
        business of dealing in futures contracts on behalf of others, whether
        or not the person, or any of the persons, as the case may be, also
        deals in futures contracts on the person's own account, and whether or
        not the business is part of, or is carried on in conjunction with, any
        other business; or

   (b)  the holder of a futures broker's licence;

"futures broker's licence" means a futures broker's licence granted under Part
IV;

"futures broker's representative" means a person who is employed by, or acts
for or by arrangement with, a futures broker other than an exempt broker in
connection with a business of dealing in futures contracts carried on by the
futures broker;

"futures broker's representative's licence" means a futures broker's
representative's licence granted under Part IV;

"futures contract" means-

   (a)  an agreement that is, or has at any time been, an eligible commodity
        agreement or an adjustment agreement;

   (b)  a futures option; or

   (c)  a prescribed exchange-traded option,
but does not include-

   (d)  an agreement-

        (i)    that is-

   (a)  a currency swap;

   (b)  an interest rate swap;

   (c)  a forward exchange rate contract; or

   (d)  a forward interest rate contract; and

        (ii)   to which a banking corporation or a merchant bank is a party;
               or

   (e)  an agreement that, at the time when it is entered into, is included in
        a class of agreements prescribed for the purposes of this paragraph;

"futures exchange" means a body corporate that is approved by the Ministerial
Council under section 46;

"futures market" means a market, exchange or other place at which, or a
facility by means of which, futures contracts are regularly made;

"futures option" means an option or right to assume, at a specified price or
value and within a specified period, a bought position, or a sold position, in
relation to an eligible commodity agreement or in relation to an adjustment
agreement;

"insolvent under administration" means a person who-

   (a)  under the Bankruptcy Act 1966 or the law of an external Territory, is
        a bankrupt under a bankruptcy from which he has not been discharged;
        or

   (b)  under the law of a country other than Australia or the law of an
        external Territory, has the status of an undischarged bankrupt,
and includes-

   (c)  a person who has executed a deed of arrangement under Part X of the
        Bankruptcy Act 1966 or the corresponding provisions of the law of an
        external Territory or of the law of a country other than Australia
        where the terms of the deed have not been fully complied with; and

   (d)  a person whose creditors have accepted a composition under Part X of
        the Bankruptcy Act 1966 or the corresponding provisions of the law of
        an external Territory or of the law of a country other than Australia
        where a final payment has not been made under that composition;

"licence" means-

   (a)  a futures broker's licence;

   (b)  a futures broker's representative's licence;

   (c)  a futures adviser's licence; or

   (d)  a futures adviser's representative's licence;

"liquidating trade" means a transaction whereby, for the purpose of closing
out a futures contract, the person in the bought position, or sold position,
under the futures contract assumes an offsetting sold position, or offsetting
bought position, as the case may be, under another futures contract;

"local recognised futures exchange" means a body corporate that-

   (a)  is a futures exchange for the purposes of a corresponding law of a
        participating State or participating Territory; or

   (b)  is, by virtue of a law of a participating State or participating
        Territory, to be deemed to be a futures exchange for the purposes of
        the corresponding law of that State or Territory;

"obligation" includes an obligation enforceable neither at law nor in equity;

"officer", in relation to a body corporate, includes-

   (a)  a director, secretary, executive officer or employee of the body
        corporate;

   (b)  a receiver and manager of property of the body corporate appointed
        under a power contained in an instrument;

   (c)  an official manager or deputy official manager of the body corporate;

   (d)  a liquidator of the body corporate appointed in a voluntary winding up
        of the body corporate; and

   (e)  a trustee or other person administering a compromise or arrangement
        made between the body corporate and another person or other persons,
but does not include-

   (f)  a receiver who is not also a manager;

   (g)  a receiver and manager appointed by a court; or

   (h)  a liquidator appointed by a court;

"on", in relation to a futures market, means at or by means of;

"on behalf of" includes on the instructions of;

"prescribed exchange-traded option" means a contract entered into on a
futures market of a futures exchange or of a local recognised futures
exchange, being a contract under which a party to the contract acquires from
another party to the contract an option or right, exercisable at or before a
specified time-

   (a)  to purchase from, or to sell to, that other party a specified quantity
        of a specified commodity at a price specified in, or to be determined
        in accordance with, the contract; or

   (b)  to be paid by that other party an amount of money to be determined by
        reference to the amount by which a specified number is greater or less
        than the number of a specified index, being the Australian Stock
        Exchanges All Ordinaries Price Index or a prescribed index, as at the
        time when the option or right is exercised;

"price" includes any amount payable for the delivery of a commodity under an
agreement;

"recognised futures adviser" means, subject to sub-section 11 (1), a person
who is the holder of a futures adviser's licence under the provisions of a law
of a participating State or participating Territory that correspond with Part
IV;

"recognised futures adviser's representative" means, subject to sub-section 11
(2), a person who is the holder of a futures adviser's representative's
licence under the provisions of a law of a participating State or
participating Territory that correspond with Part IV;

"recognised futures broker" means, subject to sub-section 11 (1), a person who
is the holder of a futures broker's licence under the provisions of a law of a
participating State or participating Territory that correspond with Part IV;

"recognised futures broker's representative" means, subject to sub-section 11
(2), a person who is the holder of a futures broker's representative's licence
under the provisions of a law of a participating State or participating
Territory that correspond with Part IV;

"recognised futures exchange" means-

   (a)  a local recognised futures exchange; or

   (b)  a body corporate that-

        (i)    maintains or provides a futures market elsewhere than in the
               Territory, in a participating State or in a participating
               Territory; and

        (ii)   is prescribed, or is included in a class of bodies corporate
               that is prescribed, for the purposes of this paragraph;

"recognised licensee" means, subject to sub-sections 11 (1) and (2), a person
who is a recognised futures broker, recognised futures broker's
representative, recognised futures adviser or recognised futures adviser's
representative;

"registered company auditor" has the same meaning as that expression has in
the Companies Act 1981;

"relevant organisation", except in Part VII, means a futures exchange, a
local recognised futures exchange or a futures association;

"representative's licence" means a futures broker's representative's licence
or a futures adviser's representative's licence;

"right" includes a right enforceable neither at law nor in equity;

"sold position" means-

   (a)  in relation to a commodity agreement, or in relation to a futures
        contract, being a commodity agreement-the position of a person who, by
        virtue of the agreement, is under an obligation to make delivery in
        accordance with the agreement; or

   (b)  in relation to a futures contract, being an adjustment agreement-the
        position of a person who, by virtue of the agreement-

        (i)    will, if the value or worth of the agreement (as determined in
               accordance with the agreement) as at a particular future time
               exceeds by a particular amount the value or worth of the
               agreement (as so determined) as at a particular earlier time,
               be under an obligation to pay that amount; and

        (ii)   will, if the value or worth of the agreement (as so determined)
               as at a particular future time is less by a particular amount
               than the value or worth of the agreement (as so determined) as
               at a particular earlier time, have a right to receive that
               amount;

"standardised agreement" means an agreement that is one of 2 or more
agreements each of which is an agreement of the same kind as the other, or as
each of the others, as the case may be;

"trading floor", in relation to a futures market maintained or provided by a
body corporate, or in relation to a body corporate, means a place or facility
maintained or provided by the body corporate for the acquisition or disposal
of futures contracts by members of the body corporate, or by such members and
other persons.

(2) For the purposes of this Act, where a person acquires, or disposes of, a
futures contract on behalf of another person, the other person shall also be
deemed to acquire, or to dispose of, as the case may be, the futures contract.

(3) Where-

   (a)  because of instructions given, or any other act done, by a person (in
this sub-section referred to as the "relevant person"), the relevant person
is, by virtue of-

        (i)    an application of sub-section (2); or

        (ii)   an application of sub-section (2) and an application, or 2 or
               more applications, of this sub-section,
to be deemed to acquire, or to dispose of, a futures contract; and

   (b)  the relevant person gave the instructions, or did that other act, as
        the case may be, on behalf of another person, then, for the purposes
        of this Act (other than sub-section (2) of this section)-

   (c)  the relevant person shall be deemed to acquire, or to dispose of, as
        the case may be, the futures contract on behalf of the other person;
        and

   (d)  the other person shall also be deemed to acquire, or to dispose of, as
        the case may be, the futures contract.

(4) For the purposes of this Act, a person shall not be regarded as a person
in accordance with whose directions or instructions the directors of a body
corporate are accustomed to act by reason only that the directors act on
advice given by that person in the proper performance of the functions
attaching to the person's professional capacity or to the person's business
relationship with the directors or the body corporate.
(5) For the purposes of sub-paragraph (d) (ii) of the definition of "futures
contract" in sub-section (1), a body corporate is a merchant bank at a
particular time if, and only if, it is at that time a registered corporation
included in-

   (a)  the category for authorised money market dealers or, if there is at
        that time no such category, a prescribed category; or

   (b)  the category for money market corporations or, if there is at that
        time no such category, a prescribed category.

(6) An expression used in sub-section (5) of this section and in the
Financial Corporations Act 1974 has the same meaning in that sub-section as in
that Act.

(7) For the purposes of this Act (other than this sub-section), where an
agreement that was not a futures contract at the time when it was entered into
becomes a futures contract at a later time-

   (a)  the parties to the agreement shall be deemed to enter into a futures
        contract at the later time; and

   (b)  the agreement shall be deemed to constitute the futures contract
        referred to in paragraph (a).

(8) Where there is a reference in this Act to a class of futures contracts,
then, except so far as the contrary intention appears-

   (a)  nothing in this Act limits the manner in which the class may be
        determined; and

   (b)  the class may be determined according to any factors relevant to
        futures contracts.

(9) Except so far as the contrary intention appears, a reference in this Act
to a member, in relation to a body corporate, is, in a case where the body
corporate is, or proposes to become, a futures exchange, a futures
association, or both, and any of the rules, regulations or by-laws made by the
body corporate or contained in its constituent documents provide for-

   (a)  a separate class of membership for persons to whom the operation of
        the body corporate otherwise than as a futures exchange, otherwise
        than as a futures association, or otherwise than as a futures exchange
        or as a futures association, as the case may be, relates (whether or
        not such persons may be members within another class of membership);
        or

   (b)  2 or more such separate classes of membership, a reference to a person
        in the person's capacity as a member of the body corporate within a
        class of membership other than the class referred to in paragraph (a),
        or other than the classes referred to in paragraph (b), as the case
        may be.

(10) A reference in this Act to an obligation of a particular kind includes a
reference to alternative obligations one of which is an obligation of that
kind.

(11) For the purposes of this Act, the question whether bodies corporate are
related to each other shall be determined in the same manner as the question
whether corporations within the meaning of the Companies Act 1981 are related
to each other would be determined under that Act.