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 5

Division 5 - Other matters

798A Matters to be taken into account by the Minister

(1) The Minister must have regard to certain matters in deciding whether to:

(a) grant an applicant an Australian market licence under section 795B; or

(b) impose, vary or revoke conditions on such a licence under section 796A; or

(c) suspend or cancel such a licence under section 797C; or

(d) disallow a change to the operating rules of a licensed market under section 793E.

(2) These are the matters the Minister must have regard to:

(a) the structure, or proposed structure, of the market;

(b) the nature of the activities conducted, or proposed to be conducted, on the market;

(c) the size, or proposed size, of the market;

(d) the nature of the financial products dealt with, or proposed to be dealt with, on the market;

(e) the participants, or proposed participants, in the market and:

(i) whether those participants, in effecting transactions through the market, are, or will be, providing financial services to other persons; and

(ii) whether those participants acquire or dispose, or will acquire or dispose, of financial products through the market as retail clients or as wholesale clients; and

(iii) whether those participants are also, or will also be, participants in any other financial markets;

(f) the technology used, or proposed to be used, in the operation of the market;

(g) whether it would be in the public interest to take the action referred to in subsection (1);

(h) any relevant advice received from ASIC.

The Minister may also have regard to any other matter that the Minister considers relevant.

(3) If the Minister is deciding whether to take the action referred to in paragraph (1)(a), (b) or (c) in respect of an Australian market licence granted under subsection 795B(2) (overseas markets), the Minister must also have regard to:

(a) the criteria that the licensee or applicant satisfied to obtain an authorisation to operate the same market in the foreign country in which their principal place of business is located; and

(b) the obligations they must continue to satisfy to keep the authorisation; and

(c) the level of supervision to which the operation of the market in that country is subject; and

(d) whether adequate arrangements exist for cooperation between ASIC and the authority that is responsible for that supervision.

798B ASIC may give advice to Minister

ASIC may give advice to the Minister in relation to:

(a) any matter in respect of which the Minister has a discretion under this Part; or

(b) any other matter concerning financial markets.

Note: In some cases, the Minister must have regard to ASIC’s advice: see paragraph 798A(2)(h).

798C Self-listing of markets

(1) A market licensee may be included in the market’s official list.

Note: There are certain matters that must be included in the market’s listing rules before the licensee is included in the official list: see subsection (4).

(2) In such a case, the financial products of the licensee may be traded on the market, if the licensee has entered into such arrangements as ASIC requires:

(a) for dealing with possible conflicts of interest that might arise from the licensee’s financial products being able to be traded on the market; and

(b) for the purposes of ensuring the integrity of trading in the licensee’s financial products.

Note: For fees in respect of ASIC performing functions under such arrangements, see Part 9.10.

(3) The licensee must comply with the arrangements.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).

(4) Before, and at all times while, the licensee is included in the market’s official list, the market’s listing rules must provide for ASIC, instead of the licensee, to make decisions and to take action (or to require the licensee to take action on ASIC’s behalf) in relation to these matters, and matters related to these matters:

(a) the admission of the licensee to the market’s official list;

(b) the removal of the licensee from that list;

(c) allowing, stopping or suspending the trading on the market of the licensee’s financial products.

Note: For fees in respect of ASIC performing this function, see Part 9.10.

(5) ASIC has the powers and functions that are provided for it in any listing rules or arrangements made for the purposes of this section.

(6) An Australian market licensee’s products must not be traded on the licensee’s own market otherwise than as allowed by this section.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).

(7) This section does not apply if the licence concerned was granted under subsection 795B(2) (overseas markets). Instead, the law of the country in which the market licensee’s principal place of business is located applies for all purposes connected with the inclusion of the licensee in the market’s official list.

798D Exemptions and modifications for self-listing licensees

(1) ASIC may:

(a) exempt a market licensee whose financial products are able to be traded on the market from a modifiable provision (see subsection (7)); or

(b) declare that a modifiable provision applies to a market licensee whose financial products are able to be traded on the market as if specified provisions were omitted, modified or varied as specified in the declaration.

(2) An exemption or declaration must be in writing and ASIC must publish notice of it in theGazette.

(3) An exemption may apply unconditionally or subject to specified conditions.

(4) If an exemption is granted subject to specified conditions, the market licensee must comply with those conditions.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).

(5) If an exemption is granted subject to specified conditions, the Court may, on ASIC’s application, order the licensee to comply with one or more of those conditions in a specified way.

(6) If conduct (including an omission) of a person would not have constituted an offence if:

(a) a particular condition had not been imposed on an exemption under paragraph (1)(a); or

(b) a particular declaration under paragraph (1)(b) had not been made;

that conduct does not constitute an offence unless, before the conduct occurred (in addition to complying with the gazettal requirement of subsection (2)), ASIC gave written notice setting out the text of the condition or the declaration to the person. In a prosecution for an offence to which this subsection applies, the prosecution must prove that this additional notification requirement was complied with before the conduct occurred.

(7) In this section:

modifiable provision means:

(a) section 205G and any of the provisions of Chapter 6, 6A, 6B, 6C, 6CA or 7; or

(b) regulations made for the purposes of that section or any of those provisions.

798E Other potential conflict situations

(1) The regulations may make provision in relation to the rules and procedures that are to apply in the case of conflicts, or potential 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).

(2) In particular, such regulations may deal with the following:

(a) identifying when such a conflict, or potential conflict, is taken to arise;

(b) empowering ASIC, instead of the licensee, to make decisions and to take action under the market’s operating rules in relation to such a conflict or potential conflict;

(c) empowering ASIC to require the licensee to take action under the market’s operating rules (whether or not on ASIC’s behalf) in relation to such a conflict or potential conflict.

Note: For fees in respect of ASIC performing this function, see Part 9.10.

(3) Subsection (2) does not limit the generality of subsection (1).