Corporations Act 2001

CHAPTER 7 - FINANCIAL SERVICES AND MARKETS  

Note: This Chapter applies to a CCIV in a modified form: see Division 4 of Part 8B.7 .

PART 7.2 - LICENSING OF FINANCIAL MARKETS  

Division 1 - Preliminary  

SECTION 790A  

790A   MEANING OF CLEARING AND SETTLEMENT ARRANGEMENTS  


Clearing and settlement arrangements
for a transaction effected through a financial market are arrangements for the clearing and settlement of those transactions. The arrangements may be part of the market ' s operating rules or be separate from those operating rules.

Division 2 - Requirement to be licensed  

SECTION 791A   NEED FOR A LICENCE  

791A(1)    
A person must only operate, or hold out that the person operates, a financial market in this jurisdiction if:


(a) the person has an Australian market licence that authorises the person to operate the market in this jurisdiction; or


(b) the market is exempt from the operation of this Part.

Note 1: A market licensee may also provide financial services incidental to the operation of the market: see paragraph 911A(2) (d).

Note 2: Failure to comply with this subsection is an offence (see subsection 1311(1) ).


791A(2)    
For the purposes of an offence based on subsection (1), strict liability applies to paragraph (1)(b).

Note: For strict liability , see section 6.1 of the Criminal Code .


791A(3)    


A person contravenes this subsection if the person contravenes subsection (1).

Note: This subsection is a civil penalty provision (see section 1317E ).


SECTION 791B  

791B   OTHER PROHIBITIONS ON HOLDING OUT  


A person must not hold out:


(a) that the person has an Australian market licence; or


(b) that the operation of a financial market by the person in this jurisdiction is authorised by an Australian market licence; or


(c) that a financial market is exempt from the operation of this Part; or


(d) that the person is a participant in a licensed market;

if that is not the case.

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

SECTION 791C   EXEMPTIONS BY MINISTER  

791C(1)    
The Minister may exempt a particular financial market, or a class of financial market, from all or specified provisions of this Part. An exemption may be unconditional, or subject to conditions specified in the exemption.

Note: The provisions of this Part include regulations made for the purposes of this Part (see section 761H ).


791C(2)    
The Minister may, at any time:


(a) vary an exemption to:


(i) impose conditions, or additional conditions, on the exemption; or

(ii) vary or revoke any of the conditions on the exemption; or


(b) revoke an exemption.

791C(3)    
However, the Minister may only take action under subsection (2) after:


(a) giving notice, and an opportunity to make submissions on the proposed action, to the operator of each financial market known by the Minister to be covered by the exemption; and


(b) if the exemption covers a class of financial markets - a notice has been published on ASIC ' s website allowing a reasonable period within which the operator of each financial market covered by the exemption may make submissions on the proposed action, and that period has ended.

791C(4)    
If an exemption is expressed to apply in relation to a class of financial markets (whether or not it is also expressed to apply in relation to one or more financial markets otherwise than by reference to membership of a class), then the exemption, and any variation or revocation of the exemption, is a legislative instrument.

791C(5)    
If subsection (4) does not apply to an exemption, then the exemption, and any variation or revocation of the exemption, must be in writing and the Minister must publish notice of it in the Gazette.

SECTION 791D   MEANING OF OPERATED IN THIS JURISDICTION - FINANCIAL MARKET  

791D(1)    


A financial market is taken to be operated in this jurisdiction if it is operated by a body corporate that is registered under Chapter 2A .

791D(2)    


Subsection (1) does not limit the circumstancesin which a financial market is operated in this jurisdiction .

Division 3 - Regulation of market licensees  

Subdivision A - Licensee's obligations  

SECTION 792A   GENERAL OBLIGATIONS  

792A(1)    
A market licensee must:

(a)    to the extent that it is reasonably practicable to do so, do all things necessary to ensure that the market is a fair, orderly and transparent market; and

(b)    comply with the conditions on the licence; and

(c)    have adequate arrangements (which may involve the appointment of an independent person or related entity) for operating 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 (a); and

(ii) monitoring and enforcing compliance with the market ' s operating rules; and

(d)    have sufficient resources (including financial, technological and human resources) to operate the market properly; and

(e)    if section 881A requires there to be compensation arrangements in relation to the market that are approved in accordance with Division 3 of Part 7.5 - ensure that there are such approved compensation arrangements in relation to the market; and

(f)    if the licensee is a foreign body corporate - be registered under Division 2 of Part 5B.2 ; and

(g)    if the licence was granted under subsection 795B(2) (overseas markets) - both:


(i) remain authorised to operate a financial market in the foreign country in which the licensee ' s principal place of business is located; and

(ii) get the Minister ' s approval under section 792H before that principal place of business becomes located in any other foreign country; and

(h)    

if the licensee, or a holding company of the licensee, is a widely held market body - take all reasonable steps to ensure that an unacceptable control situation does not exist in relation to the body; and

(i)    take all reasonable steps to ensure that no disqualified individual becomes, or remains, involved in the licensee (see Division 2 of Part 7.4 ).


792A(2)    


A person contravenes this subsection if the person contravenes paragraph (1)(a) , (c) , (d) , (e) , (f) , (g) , (h) or (i) .

Note: This subsection is a civil penalty provision (see section 1317E ).


SECTION 792B   OBLIGATION TO NOTIFY ASIC OF CERTAIN MATTERS  

792B(1)    
A market licensee must give written notice to ASIC, as soon as practicable, if it becomes aware that it may no longer be able to meet, or has breached, an obligation under section 792A . If ASIC considers it appropriate to do so, ASIC may give the Minister advice about the matter.

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


792B(2)    
A market licensee must give written notice to ASIC, as soon as practicable, as required by the following paragraphs:


(a) if the licensee provides a new class of financial service incidental to the operation of the market, the licensee must give notice that includes details of the new class;


(b) if the licensee takes any kind of disciplinary action against a participant in the market, the licensee must give notice that includes:


(i) the participant ' s name; and

(ii) the reason for and nature of the action taken;


(c) if the licensee has reason to suspect that a person has committed, is committing, or is about to commit a significant contravention of the market ' s operating rules or this Act, the licensee must give notice that includes:


(i) the person ' s name; and

(ii) details of the contravention or impending contravention; and

(iii) the licensee ' s reasons for that belief.

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


792B(3)    
If a market licensee becomes aware of:


(a) a matter that the licensee considers has adversely affected, is adversely affecting, or may adversely affect the ability of a participant in the market, who is a financial services licensee, to meet the participant ' s obligations as a financial services licensee; or


(b) a matter, concerning a participant in the market who is a financial services licensee, that is of a kind prescribed by regulations made for the purposes of this paragraph;

the market licensee must give a written report to ASIC on the matter and send a copy of it to the participant.

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


792B(4)    
A market licensee whose licence was granted under subsection 795B(2) (overseas markets) must, as soon as practicable, give written notice to ASIC if:


(a) 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


(b) there is a significant change to the regulatory regime applying in relation to the market in the foreign country in which the licensee ' s principal place of business is located.

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


792B(5)    
As soon as practicable after:


(a) a person becomes or ceases to be a director, secretary or senior manager of a market licensee or of a holding company of a market licensee (including when a person changes from one of those positions to another); or


(b) a market licensee becomes aware that a person has come to have, or has ceased to have, more than 15% of the voting power in the licensee or in a holding company of the licensee;

the licensee must give written notice of this to ASIC. The notice must include such other information about the matter as is prescribed by regulations made for the purposes of this subsection.

Note 1: To the extent that the licensee is required to give the notice and information under any other provision of this Act, the licensee may comply with this subsection by doing so. It need not provide the same information twice.

Note 2: Failure to comply with this subsection is an offence (see subsection 1311(1) ).


792B(7)    


A person contravenes this subsection if the person contravenes subsection (1) , (2) , (3) , (4) or (5) .

Note: This subsection is a civil penalty provision (see section 1317E ).


SECTION 792C   GIVING ASIC INFORMATION ABOUT A LISTED DISCLOSING ENTITY  

792C(1)    
If a market licensee makes information about a listed disclosing entity available to participants in the market (whether or not the licensee also makes the information available to anyone else), the licensee must give ASIC the same information as soon as practicable.

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


792C(2)    
However, the licensee is not required to give ASIC any information of a kind that is excluded by the regulations.


792C(3)    
ASIC may require the information to be given in a particular form.


SECTION 792D   OBLIGATION TO ASSIST ASIC  

792D(1)   [ Assistance to ASIC]  

A market licensee must give such assistance to ASIC, or a person authorised by ASIC, as ASIC or the authorised person reasonably requests in relation to the performance of ASIC's functions.

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

792D(2)   [ Type of assistance]  

Such assistance may include showing ASIC the licensee's books or giving ASIC other information.

SECTION 792E  

792E   OBLIGATION TO GIVE ASIC ACCESS TO MARKET FACILITIES  


A market licensee must give a person authorised by ASIC such reasonable access to the market's facilities as the person requests for any of the purposes of this Chapter.

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

SECTION 792F   ANNUAL REPORT  

792F(1)   [ Annual report]  

A market licensee must, within 3 months after the end of its financial year, give ASIC an annual report on the extent to which the licensee complied with its obligations as a market licensee under this Chapter.

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

792F(2)   [ Content of annual report]  

The licensee must ensure that the annual report is accompanied by any information and statements prescribed by regulations made for the purposes of this subsection.

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

792F(3)   [ Audit report]  

The licensee must also ensure that the annual report is accompanied by any audit report that the Minister requires under subsection (4).

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

792F(4)   [ Minister may require audit report]  

The Minister may, by giving written notice to a market licensee, require the licensee to obtain an audit report on the annual report and on any information or statements accompanying it. The Minister must nominate to prepare the audit report:


(a) ASIC; or


(b) a specified person or body that is suitably qualified.

792F(5)   [ Report to Minister]  

ASIC must give the annual report and accompanying material to the Minister.

SECTION 792G   OBLIGATIONS TO NOTIFY PEOPLE ABOUT CLEARING AND SETTLEMENT ARRANGEMENTS IN CERTAIN CIRCUMSTANCES  

792G(1)   [ Notice of no CS facilities]  

If, in relation to a category of transactions, being all transactions or a class of transactions effected through a licensed market, the market licensee:


(a) does not have any clearing and settlement arrangements for transactions in that category; or


(b) has clearing and settlement arrangements for transactions in that category, but they are not arrangements with the operator of a clearing and settlement facility for the clearing and settlement of such transactions through the facility;

the market licensee must, before a person becomes a participant in the market, give the person written advice:


(c) if paragraph (a) applies - that the licensee does not have any clearing and settlement arrangements for transactions in that category, and that it is the responsibility of the parties to such transactions to make their own arrangements for the clearing and settlement of such transactions; or


(d) if paragraph (b) applies - setting out particulars of the clearing and settlement arrangements for transactions in that category.

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

792G(2)   [ Notice of impending cessation]  

Within a reasonable time before a market licensee ceases, in relation to a category of transactions, being all transactions or a class of transactions effected through a licensed market, to have clearing and settlement arrangements (the terminating arrangements ) with the operator of a particular clearing and settlement facility for the clearing and settlement of such transactions through the facility, the market licensee must give the participants in the market written advice:


(a) if the terminating arrangements are not being replaced by any other clearing and settlement arrangements - that the licensee will no longer have clearing and settlement arrangements for that category of transactions, and that it will be the responsibility of the parties to such transactions to make their own arrangements for the clearing and settlement of such transactions; or


(b) if the terminating arrangements are being replaced by new clearing and settlement arrangements - setting out particulars of the new arrangements.

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

SECTION 792H   CHANGE OF COUNTRY BY FOREIGN LICENSEE  

792H(1)   [ Ministerial approval for change of location of foreign licensee]  

In the case of a licence granted under subsection 795B(2) , the Minister may approve the location of the licensee's principal place of business in a new country only if:


(a) the new country is not Australia; and


(b) the operation of the market in that country will be 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.

792H(2)   [ Effect where place of business becomes Australia]  

If, in relation to a licence granted under subsection 795B(2) , the licensee's principal place of business changes to become a place in Australia:


(a) the licence ceases to be in force from the time of the change; and


(b) if the licensee wishes the market to continue to be licensed, the licensee may apply for the grant of a new licence under subsection 795B(1) ; and


(c) the application must be assessed in accordance with Subdivision A of Division 4 , subject to such modifications (if any) of that Subdivision as are set out in regulations made for the purposes of this paragraph.

792H(3)   [ Application in advance]  

An application referred to in paragraph (2)(b) may be made in advance of the change of location of the principal place of business, and a decision on the application may bemade before that time. However, any licence granted pursuant to the application does not come into force until the change occurs.

SECTION 792I  

792I   MAKING INFORMATION ABOUT COMPENSATION ARRANGEMENTS PUBLICLY AVAILABLE  


A market licensee must take reasonable steps to ensure that information about the compensation arrangements that are in place under Part 7.5 is available to the public free of charge.

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

Subdivision B - The market's operating rules and procedures  

SECTION 793A   CONTENT OF THE OPERATING RULES AND PROCEDURES  

793A(1)   [ Operating rules of licensed market]  

The operating rules of a licensed market must deal with the matters prescribed by regulations made for the purposes of this subsection.

793A(2)   [ Written procedures]  

The regulations may also prescribe matters in respect of which a licensed market must have written procedures.

793A(3)   [ Exclusion]  

However, subsections (1) and (2) do not apply if the licensee is also authorised to operate the market in the foreign country in which its principal place of business is located and the licence was granted under subsection 795B(2) (overseas markets).

793A(4)   [ ASIC determination on exclusion]  

In a subsection (3) case, ASIC may determine, by giving written notice to the licensee, matters in respect of which the licensed market must have written procedures.

SECTION 793B   LEGAL EFFECT OF OPERATING RULES  

793B(1)    
The operating rules (other than listing rules) of a licensed market have effect as a contract under seal:


(a) between the licensee and each participant in the market; and


(b) between a participant and each other participant;

under which each of those persons agrees to observe the operating rules to the extent that they apply to the person and to engage in conduct that the person is required by the operating rules to engage in.


793B(2)    


However, if there is an inconsistency between the operating rules of a financial market, and any of the following other rules:


(a) the market integrity rules;


(b) the derivative transaction rules;


(c) the derivative trade repository rules;


(d) the client money reporting rules;

those other rules prevail over the operating rules to the extent of the inconsistency.

Note 1: If there is an inconsistency between the market integrity rules and the derivative transaction rules or the derivative trade repository rules, the market integrity rules prevail: see subsection 798H(3) .

Note 2: If there is an inconsistency between the derivative transaction rules and the derivative trade repository rules, the derivative transaction rules prevail: see subsection 901E(2) .

Note 3: If there is an inconsistency between the market integrity rules, the derivative transaction rules or the derivative trade repository rules and the client money reporting rules, the market integrity rules, the derivative transaction rules or the derivative trade repository rules prevail: see subsection 981M(2) .


793B(3)    
Subsection (2) does not apply in relation to a financial market the operator of which is licensed under subsection 795B(2) (overseas markets).


SECTION 793C   ENFORCEMENT OF OPERATING RULES  

793C(1)    
If a person who is under an obligation to comply with or enforce any of a licensed market ' s operating rules fails to meet that obligation, an application to the Court may be made by:

(a)    ASIC; or

(b)    the licensee; or

(c)    the operator of a clearing and settlement facility with which the licensee has clearing and settlement arrangements; or

(d)    a person aggrieved by the failure.

793C(2)    
After giving an opportunity to be heard to the applicant and the person against whom the order is sought, the Court may make an order giving directions to:

(a)    the person against whom the order is sought; or

(b)    

if that person is a body corporate (other than a notified foreign passport fund) - the directors of the body corporate;

about compliance with, or enforcement of, the operating rules.


793C(3)    
For the purposes of this section, a body corporate (other than a notified foreign passport fund) that is, with its agreement, consent or acquiescence, included in the official list of a licensed market, or an associate of such a body corporate, is taken to be under an obligation to comply with the operating rules of that market to the extent to which those rules purport to apply to the body corporate or associate.


793C(4)    
For the purposes of this section, if a disclosing entity that is an undertaking to which interests in a registered scheme relate is, with the responsible entity ' s agreement, consent or acquiescence, included in the official list of a licensed market, the responsible entity, or an associate of the responsible entity, is taken to be under an obligation to comply with the operating rules of that market to the extent to which those rules purport to apply to the responsible entity or associate.


793C(4A)    


For the purposes of this section, if a disclosing entity that is an undertaking to which interests in a notified foreign passport fund relate is, with the agreement, consent or acquiescence of the operator of the fund, included in the official list of a licensed market, the operator of the fund, or an associate of the operator, is taken to be under an obligation to comply with the operating rules of that market to the extent to which those rules purport to apply to the operator or associate.

793C(4B)    


For the purposes of this section, if:

(a)    subsection (3) does not apply to a CCIV; and

(b)    a sub-fund of the CCIV is, with the agreement, consent or acquiescence of the CCIV, included in the official list of a licensed market;

the CCIV, or an associate of the CCIV, is taken to be under an obligation to comply with the operating rules of that market to the extent to which those rules purport to apply to the CCIV or associate.

Note: Subsection (3) may apply to a CCIV instead of this subsection if the CCIV, and not a sub-fund, is included in the official list of a licensed market.


793C(5)    
For the purposes of this section, if a body corporate fails to comply with or enforce provisions of the operating rules of a licensed market, a person who holds financial products of the body corporate that are able to be traded on the market is taken to be a person aggrieved by the failure.

793C(6)    
There may be other circumstances in which a person may be aggrieved by a failure for the purposes of this section.


SECTION 793D   CHANGING THE OPERATING RULES  


Licensed markets other than subsection 795B(2) markets

793D(1)    


As soon as practicable after a change is made to the operating rules of a licensed market, other than a market licensed under subsection 795B(2) (overseas markets), the licensee must lodge with ASIC in a prescribed form written notice of the change. The notice must:

(a)    set out the text of the change; and

(b)    specify the date on which the change was made; and

(c)    contain an explanation of the purpose of the change.


793D(2)    
If no notice is lodged as required by subsection (1) with ASIC within 21 days after the change is made, the change ceases to have effect at the end of that period.

Subsection 795B(2) markets

793D(3)    


As soon as practicable after a change is made to the operating rules of a market the operation of which is licensed under subsection 795B(2) (overseas markets), the licensee must lodge with ASIC in a prescribed form written notice of the change. The notice must:

(a)    set out the text of the change; and

(b)    specify the date on which the change was made; and

(c)    contain an explanation of the purpose of the change.

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


SECTION 793E   DISALLOWANCE OF CHANGES TO OPERATING RULES  

793E(1)    
This section does not apply in respect of an Australian market licence granted under subsection795B(2) (overseas markets).

793E(2)    
As soon as practicable after receiving a notice under section 793D from a market licensee, ASIC must send a copy of the notice to the Minister.

793E(3)    
Within 28 days after ASIC receives the notice from the licensee, the Minister may disallow all or a specified part of the change to the operating rules.

793E(4)    


In deciding whether to do so, the Minister must have regard to the consistency of the change with the licensee ' s obligations under this Part (including in particular the obligation mentioned in paragraph 792A(1)(a) ).

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


793E(5)    
As soon as practicable after all or a part of a change is disallowed, ASIC must give notice of the disallowance to the licensee. The change ceases to have effect, to the extent of the disallowance, when the licensee receives the notice.

Subdivision C - Powers of the Minister and ASIC  

SECTION 794A   MINISTER'S POWER TO GIVE DIRECTIONS  

794A(1)   [ Ministerial direction to comply]  

If the Minister considers that a market licensee is not complying with its obligations as a market licensee under this Chapter, the Minister may give the licensee a written direction to do specified things that the Minister believes will promote compliance by the licensee with those obligations.

794A(2)   [ Obligation to comply]  

The licensee must comply with the direction.

794A(3)   [ Failure to comply]  

If the licensee fails to comply with the direction, ASIC may apply to the Court for, and the Court may make, an order that the licensee comply with the direction.

794A(4)   [ Variation or revocation of direction]  

The Minister may vary or revoke a direction at any time by giving written notice to the licensee.

SECTION 794B   MINISTER'S POWER TO REQUIRE SPECIAL REPORT  

794B(1)   [ Power to require special report]  

The Minister may give a market licensee a written notice requiring the licensee to give ASIC a special report on specified matters. ASIC must give the report to the Minister.

794B(2)   [ Audit report on special report]  

The notice may also require the licensee to give ASIC an audit report on the special report. The Minister must nominate to prepare the audit report:


(a) ASIC; or


(b) a specified person or body that is suitably qualified.

794B(3)   [ Deadline]  

The licensee must give the special report, and audit report (if any), to ASIC within the time required by the notice.

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

SECTION 794C   ASIC ASSESSMENT OF LICENSEE ' S COMPLIANCE  

794C(1)    
ASIC may do an assessment of how well a market licensee is complying with any or all of its obligations as a market licensee under this Chapter. In doing the assessment, ASIC may take account of any information and reports that it thinks appropriate, including information and reports from an overseas regulatory authority.


794C(2)    


If the market licensee is prescribed by the regulations for the purpose of this subsection, ASIC must, in respect of the obligation in paragraph 792A(1)(c) , do such an assessment at least once a year.

794C(3)    
As soon as practicable after doing an assessment under this section, ASIC must give a written report on the assessment to the licensee and to the Minister.


794C(4)    
If an assessment, or part of an assessment, relates to any other person ' s affairs to a material extent, ASIC may, at the person ' s request or of its own motion, give the person a copy of the written report on the assessment or the relevant part of the report.


794C(5)    
If an assessment, or part of an assessment, relates to a serious contravention of a law of the Commonwealth or of a State or Territory, ASIC may give a copy of the written report on the assessment, or the relevant part of the report, to:


(a) the Australian Federal Police; or


(b) the Chief Executive Officer of the Australian Crime Commission or a member of the staff of the ACC (within the meaning of the Australian Crime Commission Act 2002 ); or


(c) the Director of Public Prosecutions; or


(d) an agency prescribed by regulations made for the purposes of this paragraph.


794C(6)    
Either the Minister or ASIC may cause the written report on an assessment, or part of the report on an assessment, to be printed and published.


SECTION 794D   ASIC'S POWER TO GIVE DIRECTIONS  

794D(1)   [ Power to give directions to market licensee]  

If ASIC is of the opinion that it is necessary, or in the public interest, to protect people dealing in a financial product or class of financial products by:


(a) giving a direction to a market licensee to suspend dealings in the financial product or class of financial products; or


(b) giving some other direction in relation to those dealings;

ASIC may give written advice to the licensee of that opinion and the reasons for it.

Example:

Under paragraph (b), ASIC could give a direction to limit the kinds of dealings that are allowed in the financial product or class of financial products or to require a participant in the market to act in a specified manner in relation to dealings in the financial product or class of financial products.

794D(2)   [ Further direction]  

If, after receiving ASIC's advice and reasons, the licensee does not take:


(a) in the case of a proposed direction to suspend dealings in the financial products - action to prevent such dealings; or


(b) in any other case - such other action as in ASIC's view is adequate to address the situation raised in the advice;

and ASIC still considers that it is appropriate to give the direction to the licensee, ASIC may give the licensee the written direction with a statement setting out its reasons for making the direction.

794D(3)   [ Compliance with direction]  

The direction has effect for the period specified in it (which may be up to 21 days). During that period, the licensee must comply with the direction and must not allow any dealings to take place contrary to it.

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

794D(4)   [ Enforcement of direction]  

If the licensee fails to comply with the direction, ASIC may apply to the Court for, and the Court may make, an order that the licensee comply with the direction.

794D(5)   [ Notice to CS facility operator and Minister]  

As soon as practicable after making or varying (see subsection (7)) a direction, ASIC must:


(a) give a copy of the direction or variation to the operator of each clearing and settlement facility with which the market licensee has clearing and settlement arrangements for transactions effected through the market; and


(b) give a written report to the Minister setting out ASIC's reasons for making the direction or variation; and


(c) give a copy of the report to the licensee.

794D(6)   [ Referral to Minister]  

If, at any time after the licensee receives ASIC's advice under subsection (1), the licensee requests in writing that ASIC refer the matter to the Minister, ASIC must do so immediately. In that event, the Minister may, if he or sheconsiders it appropriate, require ASIC not to make, or to revoke, the direction. ASIC must immediately comply with such a requirement.

794D(7)   [ Variation of direction]  

ASIC may vary a direction by giving written notice to the licensee if ASIC is of the opinion that the variation is necessary, or in the public interest, to protect people dealing in a financial product or class of financial products.

794D(8)   [ Revocation of direction]  

ASIC may revoke a direction by giving written notice to the licensee. ASIC must also give written notice of the revocation to the operator of each clearing and settlement facility with which the market licensee has clearing and settlement arrangements for transactions effected through the market.

SECTION 794E   ADDITIONAL DIRECTIONS TO CLEARING AND SETTLEMENT FACILITIES  

794E(1)   [ Power to give directions to CS facility operator]  

If ASIC gives a direction under section 794D , it may also give a written direction to the operator of each clearing and settlement facility with which the market licensee has clearing and settlement arrangements for transactions effected through the market:


(a) prohibiting the operator from acting in a manner inconsistent with the section 794D direction; and


(b) requiring the operator to do all that the operator is reasonably capable of doing to give effect to the section 794D direction.

794E(2)   [ Compliance with direction]  

The operator must comply with the direction given to it under this section.

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

794E(3)   [ Enforcement of direction]  

If the operator fails to comply with the direction, ASIC may apply to the Court for, and the Court may make, an order that the operator comply with the direction.

Division 4 - The Australian market licence  

Subdivision A - How to get a licence  

SECTION 795A   HOW TO APPLY FOR A LICENCE  

795A(1)    


A body corporate may apply for an Australian market licence by lodging with ASIC in a prescribed form 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 .


795A(2)    
ASIC must, within a reasonable time, give the application to the Minister with advice about the application.


SECTION 795B   WHEN A LICENCE MAY BE GRANTED  


General

795B(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(1)(a) ; and


(d) the applicant has adequate arrangements (which may involve the appointment of an independent person or related entity) for operating 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(1)(a) ; and

(ii) monitoring and 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

795B(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

795B(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

795B(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.


SECTION 795C  

795C   PUBLICATION OF NOTICE OF LICENCE GRANT  


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


(a) the name of the licensee; and


(b) when the licence was granted; and


(c) the conditions on the licence.

SECTION 795D  

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.

SECTION 795E   MORE THAN ONE MARKET COVERED BY THE SAME LICENCE  

795E(1)    
The same Australian market licence may authorise the licensee to operate 2 or more financial markets.

795E(2)    


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

795E(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.

795E(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  

SECTION 796A   THE CONDITIONS ON THE LICENCE  

796A(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 the Gazette 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 .


796A(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 in a prescribed form 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 .


796A(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.


796A(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) .


796A(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  

SECTION 797A   VARYING LICENCES  

797A(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 in a prescribed form 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 .


797A(2)    
The Minister must give written notice of the variation to the licensee.

797A(3)    
ASIC must give the Minister any application and documents lodged under subsection (1) .


SECTION 797B  

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 a Chapter 5 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); or


(e) in the case of a licensee that is a leviable entity (within the meaning of the ASIC Supervisory Cost Recovery Levy Act 2017 ) - the following have not been paid in full at least 12 months after the due date for payment:


(i) an amount of levy (if any) payable in respect of the licensee;

(ii) an amount of late payment penalty payable (if any) in relation to the levy;

(iii) an amount of shortfall penalty payable (if any) in relation to the levy.

SECTION 797C   SUSPENSION OR CANCELLATION FOLLOWING HEARING AND REPORT  

797C(1)   [ Ministerial power to issue show cause notice]  

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.

797C(2)   [ Contents of show cause notice]  

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.

797C(3)   [ Conduct of hearing]  

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.

797C(4)   [ Ministerial power to cancel or suspend licence]  

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 .

SECTION 797D   EFFECT OF SUSPENSION  

797D(1)   [ Effect of suspension]  

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

797D(2)   [ Exemption]  

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

SECTION 797E  

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.

SECTION 797F   PUBLICATION OF NOTICE OF LICENCE SUSPENSION OR CANCELLATION  

797F(1)   [ Notice of suspension or cancellation]  

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 the Gazette to that effect.

797F(2)   [ Contents of notice]  

The notice must state when the action took effect.

SECTION 797G  

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 .

Division 5 - Other matters  

SECTION 798A   MATTERS TO BE TAKEN INTO ACCOUNT BY THE MINISTER  

798A(1)   [ Ministerial criteria for decision-making]  

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 .

798A(2)   [ Relevant criteria]  

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.

798A(3)   [ Additional criteria]  

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.

SECTION 798B  

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).

SECTION 798C   MARKET LICENSEE OR RELATED BODY CORPORATE ETC. LISTING ON MARKET  

798C(1)    


Any of the following kinds of entity, scheme or fund (the listed entity ) may be included in a market ' s official list:


(a) the market licensee for the market;


(b) a related body corporate of the market licensee;


(c) a registered scheme whose responsible entity is a related body corporate of the market licensee;


(ca) a notified foreign passport fund whose operator is a related body corporate of the market licensee;


(d) a trust whose trustee is a related body corporate of the market licensee.

Note: There are certain matters that must be included in the market ' s listing rules before such an entity, scheme or fund is included in the official list (see subsection (4)).


798C(2)    
In such a case, the financial products of the listed entity may be traded on the market, if either or both the listed entity and the market licensee have entered into such arrangements as ASIC requires:


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


(b) for the purposes of ensuring the integrity of trading in the listed entity ' s financial products.

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


798C(3)    
The listed entity, and the market licensee (if applicable), with whom ASIC has entered into arrangements for the purposes of subsection (2) must comply with the arrangements.

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


798C(4)    
Before, and at all times while, the listed entity is included in the market ' s official list, the market ' s listing rules must provide for ASIC, instead of the market licensee, to make decisions and to take action (or to require the market licensee to take action on ASIC ' s behalf) in relation to these matters, and matters related to these matters:


(a) the admission of the listed entity to the market ' s official list; and


(b) the removal of the listed entity from that list; and


(c) allowing, stopping or suspending the trading on the market of the listed entity ' s financial products.

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


798C(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.

798C(6)    


The products of an entity, scheme or fund referred to in subsection (1) must not be traded on the market licensee ' s market otherwise than as allowed by this section.

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


798C(7)    
This section does not apply if the licence of the market licensee 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 listed entity in the market ' s official list.

SECTION 798D   EXEMPTIONS AND MODIFICATIONS FOR SELF-LISTING LICENSEES OR RELATED BODIES CORPORATE ETC.  

798D(1)    
ASIC may:


(a) exempt an entity, scheme or fund referred to in subsection 798C(1) 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 an entity, scheme or fund referred to in subsection 798C(1) 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.


798D(2)    
An exemption or declaration must be in writing and ASIC must publish notice of it in the Gazette .


798D(3)    
An exemption may apply unconditionally or subject to specified conditions.


798D(4)    


If an exemption is granted subject to specified conditions, the entity, scheme or fund must comply with those conditions.

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


798D(5)    


If an exemption is granted subject to specified conditions, the Court may, on ASIC's application, order the entity, scheme or fund to comply with one or more of those conditions in a specified way.

798D(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.


798D(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.


SECTION 798DA   MARKET LICENSEE, RELATED BODY CORPORATE ETC. OR COMPETITOR PARTICIPATING IN MARKET  

798DA(1)   [ Application]  

This section applies if any of the following is a participant (the participant ) in a market:


(a) the market licensee;


(b) a related body corporate of the market licensee;


(c) a partnership if a partner in the partnership is a related entity of the market licensee;


(d) an entity if:


(i) the entity conducts, or participates in, a business that is in competition with a business conducted by the market licensee, or by a related body corporate of the market licensee; and

(ii) the entity requests that ASIC make decisions and take action in relation to the matters referred to in subsection (2).

798DA(2)   [ Regulation of participant]  

Before, and at all times while, the participant is participating in the market, the market ' s operating rules must provide for ASIC, instead of the market licensee, to make decisions and to take action (or to require the market licensee to take action on ASIC ' s behalf) in relation to these matters, and matters related to these matters:


(a) the admission of the participant to the market; and


(b) the expulsion and suspension of the participant from the market; and


(c) the disciplining of the participant; and


(d) the participant ' s compliance with the operating rules or this Act, including:


(i) the method of determining whether the participant has complied with those rules or this Act; and

(ii) any action (including the imposition of a fine or penalty) to be taken in respect of contraventions of those rules or this Act.

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

798DA(3)   [ Powers and functions of ASIC]  

ASIC has the powers and functions that are provided for it in any operating rules made for the purposes of this section.

798DA(4)   [ Prohibition on market licensee]  

A participant referred to in subsection (1) must not participate in the market licensee ' s market otherwise than as allowed by this section.

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

798DA(5)   [ Limitation on application]  

This section does not apply if the licence of the market licensee 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 participation of the participant in the market.

798DA(6)   [ Prohibition on participation in own market]  

To avoid doubt, subsection (1) does not authorise a market licensee to participate in its own market.

SECTION 798E   OTHER POTENTIAL CONFLICT SITUATIONS  

798E(1)    


The regulations may make provision in relation to the rules and procedures that are to apply inthe 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(1)(a) .

798E(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 .


798E(3)    
Subsection (2) does not limit the generality of subsection (1).