Financial Services Reform Act 2001 (122 of 2001)

Schedule 1   Financial Services and Markets

Part 1   Main amendments

Corporations Act 2001

1   Chapter 7 - Part 7.2 - Division 4

Division 4 - The Australian market licence

Subdivision A - How to get a licence

795A How to apply for a licence

(1) A body corporate may apply for an Australian market licence by lodging with ASIC an application that:

(a) includes the information required by regulations made for the purposes of this paragraph; and

(b) is accompanied by the documents (if any) required by regulations made for the purposes of this paragraph; and

(c) complies with the requirements of section 881B (relating to compensation arrangements).

Note: For fees in respect of lodging applications, see Part 9.10.

(2) ASIC must, within a reasonable time, give the application to the Minister with advice about the application.

795B When a licence may be granted

General

(1) The Minister may grant an applicant an Australian market licence if the Minister is satisfied that:

(a) the application was made in accordance with section 795A; and

(b) the applicant will comply with the obligations that will apply if the licence is granted; and

(c) the applicant has adequate operating rules, and procedures, (see Subdivision B of Division 3) to ensure, as far as is reasonably practicable, that the market will operate as mentioned in paragraph 792A(a); and

(d) the applicant has adequate arrangements (whether they involve a self-regulatory structure or the appointment of an independent person or related entity) for supervising the market, including arrangements for:

(i) handling conflicts between the commercial interests of the licensee and the need for the licensee to ensure that the market operates in the way mentioned in paragraph 792A(a); and

(ii) monitoring the conduct of participants on or in relation to the market; and

(iii) enforcing compliance with the market’s operating rules; and

(e) the applicant has adequate clearing and settlement arrangements for transactions effected through the market, if the Minister considers that the applicant should have such arrangements; and

(f) neither subsection 881D(2) nor 882A(2) (relating to compensation arrangements) requires the Minister to reject the application; and

(g) no unacceptable control situation (see Division 1 of Part 7.4) is likely to result if the licence is granted; and

(h) no disqualified individual appears to be involved in the applicant (see Division 2 of Part 7.4).

This subsection has effect subject to subsections (3) and (4).

Note: The Minister must also have regard to the matters in section 798A in deciding whether to grant a licence.

Alternative criteria for granting licence for overseas market

(2) If an applicant is authorised to operate a financial market in the foreign country in which its principal place of business is located, the Minister may grant the applicant an Australian market licence authorising the applicant to operate the same market in this jurisdiction. The Minister must be satisfied that:

(a) the application was made in accordance with section 795A; and

(b) the applicant will comply with the obligations that will apply if the licence is granted; and

(c) the operation of the market in that country is subject to requirements and supervision that are sufficiently equivalent, in relation to the degree of investor protection and market integrity they achieve, to the requirements and supervision to which financial markets are subject under this Act in relation to those matters; and

(d) the applicant undertakes to cooperate with ASIC by sharing information and in other appropriate ways; and

(e) no unacceptable control situation (see Division 1 of Part 7.4) is likely to result if the licence is granted; and

(f) no disqualified individual appears to be involved in the applicant (see Division 2 of Part 7.4); and

(g) any other requirements that are prescribed by regulations made for the purposes of this paragraph are satisfied.

This subsection has effect subject to subsections (3) and (4).

Note: The Minister must also have regard to the matters in section 798A in deciding whether to grant a licence.

Foreign bodies

(3) If the applicant is a foreign body corporate, the Minister:

(a) must not grant the applicant a licence unless the applicant is registered under Division 2 of Part 5B.2; and

(b) may otherwise grant a licence under either subsection (1) or (2) (if the relevant criteria are satisfied).

Disqualified individuals

(4) The Minister must not grant the applicant a licence unless:

(a) ASIC has notified the Minister that, as far as ASIC is aware, no disqualified individual is involved in the applicant (see Division 2 of Part 7.4); or

(b) 42 days have passed since the application was made and ASIC has not given a notice under subsection 853D(2) to the applicant within that 42 days.

795C Publication of notice of licence grant

If the Minister grants an Australian market licence, the Minister must publish a notice in theGazette stating:

(a) the name of the licensee; and

(b) when the licence was granted; and

(c) the conditions on the licence.

795D More than one licence in the same document

If the Minister grants a person 2 or more of the following:

(a) an Australian market licence;

(b) an Australian CS facility licence;

they may be included in the same document.

795E More than one market covered by the same licence

(1) The same Australian market licence may authorise the licensee to operate 2 or more financial markets.

(2) In that case, a reference in this Chapter to the market to which an Australian market licence relates is taken instead to be a reference to each of those financial markets severally.

(3) Before varying the conditions on an Australian market licence so as to add another market that the licensee is authorised to operate, the Minister must be satisfied of the matters listed in subsection 795B(1) or (2) (as appropriate) in relation to the market.

(4) An Australian market licence that authorises the licensee to operate 2 or more financial markets may be suspended or cancelled under Subdivision C in respect of one or some of those markets only, as if the licensee held a separate licence for each of the markets.

Subdivision B - The conditions on the licence

796A The conditions on the licence

(1) The Minister may, at any time:

(a) impose conditions, or additional conditions, on an Australian market licence; or

(b) vary or revoke conditions imposed on such a licence;

by giving written notice to the licensee. The Minister must also publish a notice in theGazette with details of the action and when it took effect.

Note: As well as the requirements in this section, the Minister must also have regard to the matters in section 798A.

(2) The Minister may do so:

(a) on his or her own initiative, subject to subsection (3); or

(b) if the licensee lodges with ASIC an application for the Minister to do so, which is accompanied by the prescribed documents, if any.

Note: For fees in respect of lodging applications, see Part 9.10.

(3) The Minister may only impose conditions or additional conditions, or vary the conditions, on the licence on his or her own initiative if:

(a) he or she considers it appropriate to do so having regard to:

(i) the licensee’s obligations as a market licensee under this Chapter; and

(ii) any change in market operations or the conditions in which the market is operating; and

(b) the Minister gives the licensee written notice of the proposed action and an opportunity to make a submission before it takes effect.

This subsection does not apply to the Minister imposing conditions when a licence is granted.

(4) The Minister must ensure that each Australian market licence is subject to conditions that specify:

(a) the particular market that the licensee is authorised to operate; and

(b) the class or classes of financial products that can be dealt with on the market; and

(c) if the Minister considers that the licensee should have clearing and settlement arrangements for transactions effected through the market - the type of clearing and settlement arrangements that are adequate.

Note: If compensation arrangements in relation to the market are approved under Division 3 of Part 7.5, there must also be conditions as required by subsection 882A(4) or paragraph 882B(4)(b).

(6) ASIC must give the Minister any application and documents lodged under subsection (2).

Subdivision C - When a licence can be varied, suspended or cancelled

797A Varying licences

(1) The Minister may vary an Australian market licence to take account of a change in the licensee’s name if the licensee lodges with ASIC an application for the variation, accompanied by the prescribed documents, if any.

Note 1: The conditions on the licence can be varied under section 796A.

Note 2: For fees in respect of lodging applications, see Part 9.10.

(2) The Minister must give written notice of the variation to the licensee.

(3) ASIC must give the Minister any application and documents lodged under subsection (1).

797B Immediate suspension or cancellation

The Minister may, by giving written notice to a market licensee, suspend the licence for a specified period, or cancel it, if:

(a) the licensee ceases to carry on the business of operating the market; or

(b) the licensee becomes an externally-administered body corporate; or

(c) the licensee asks the Minister to do so; or

(d) in the case of a licence granted under subsection 795B(2) (overseas markets):

(i) the licensee ceases to be authorised to operate a financial market in the foreign country in which the licensee’s principal place of business is located; or

(ii) there is a change to the regulatory regime applying in relation to the market to which the licence relates in the country in which the licensee’s principal place of business is located, and, because of that change, the Minister is no longer satisfied as mentioned in paragraph 795B(2)(c).

797C Suspension or cancellation following hearing and report

(1) If the Minister considers that a market licensee has breached, or is in breach of, one or more of its obligations as a market licensee under this Chapter, the Minister may give the licensee a written notice that requires the licensee to show cause, at a hearing before a specified person, why the licence should not be suspended or cancelled.

(2) The notice must specify:

(a) the grounds on which it is proposed to suspend or cancel the licence; and

(b) a reasonable time and place at which the hearing is to be held.

However, if the licensee consents, the person conducting the hearing may fix a different time or place.

(3) The person conducting the hearing must:

(a) give the licensee an opportunity to be heard at the hearing; and

(b) give the Minister:

(i) a report about the hearing; and

(ii) a recommendation about the grounds in the notice on which it is proposed to suspend or cancel the licence.

(4) After considering the report and recommendation, the Minister may:

(a) decide to take no further action in relation to the matter and give written advice of that decision to the licensee; or

(b) suspend the licence for a specified period, or cancel the licence, by giving written notice to the licensee.

Note: The Minister must also have regard to the matters in section 798A.

797D Effect of suspension

(1) A person whose Australian market licence is suspended is taken not to hold that licence while it is suspended.

(2) However, the Minister may specify in the written notice to the licensee that subsection (1) does not apply for specified purposes.

797E Variation or revocation of suspension

The Minister may at any time vary or revoke a suspension of an Australian market licence by giving written notice to the licensee.

797F Publication of notice of licence suspension or cancellation

(1) If the Minister:

(a) suspends, or varies or revokes a suspension of, an Australian market licence; or

(b) cancels an Australian market licence;

the Minister must publish a notice in theGazette to that effect.

(2) The notice must state when the action took effect.

797G Suspension and cancellation only in accordance with this Subdivision

An Australian market licence cannot be varied, suspended or cancelled otherwise than in accordance with this Subdivision.

Note: The conditions on the licence can be varied under section 796A.