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 7.5 - Division 2

Division 2 - When there must be a compensation regime

881A Licensed markets through which participants provide services for retail clients must generally have a compensation regime

(1) If:

(a) any of the participants in a licensed market, in effecting transactions through the market, provide financial services for persons as retail clients; and

(b) in connection with the provision of those financial services, those persons will or may give money or other property, or authority over property, to those participants; and

(c) the market is not a financial market to which Division 4 applies;

there must be compensation arrangements in relation to the market that are approved in accordance with Division 3.

(2) The compensation regime applicable in relation to financial markets to which Division 4 applies is as constituted by that Division.

881B Additional requirements for the licence application

(1) A person who is applying for an Australian market licence must state in their application:

(a) whether any of the participants in the market, in effecting transactions through the market, will provide financial services for persons as retail clients; and

(b) if any participants will so provide financial services to persons as retail clients - whether, in connection with the provision of those financial services, those persons will or may give money or other property, or authority over property, to those participants.

(2) If:

(a) participants in the market will provide financial services to persons as retail clients as mentioned in paragraph (1)(a); and

(b) in connection with the provision of those financial services, those persons will or may give money or property, or authority over property, to those participants;

the application must:

(c) contain the information, in relation to the proposed compensation arrangements, required by regulations made for the purposes of this paragraph and be accompanied by a copy of the proposed compensation rules; or

(d) state that the market is or will be covered by Division 4, and set out evidence, in accordance with the requirements (if any) of the regulations, in support of that statement.

881C What happens if an application contains information in accordance with paragraph 881B(2)(c)

If a licence application contains information in relation to proposed compensation arrangements as required by paragraph 881B(2)(c), the Minister must deal with the application in accordance with section 882A.

881D What happens if an application contains a statement in accordance with paragraph 881B(2)(d)

(1) If a licence application contains a statement in accordance with paragraph 881B(2)(d), the Minister must consider whether he or she is satisfied that the market will be covered by Division 4.

(2) If the Minister is not so satisfied, the application for the licence must be rejected.

(3) If the Minister is so satisfied, the Minister may (subject to the other provisions about granting licences) grant the licence.

Note: The other provisions about granting licences are in Subdivision A of Division 4 of Part 7.2.