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Corporations Bill 2001

Part 8.2 Futures exchanges, clearing houses and futures associations

Division 1 Futures exchanges and exempt futures markets

1123   Conducting unauthorised futures markets

                   A person must not establish or conduct, assist in establishing or conducting, or hold out that the person conducts, an unauthorised futures market.

1126   Approval of futures exchange

             (1)  A body corporate may apply to ASIC in writing for approval by the Minister as a futures exchange.

             (2)  Where a body applies under subsection (1) of this section, the Minister may by writing approve the body as a futures exchange if, and only if, he or she is satisfied that:

                     (c)  the body’s business rules make satisfactory provision:

                              (i)  for the admission as members of persons licensed, or proposing to apply to be licensed, under Part 8.3, or of a specified class of such persons; and

                             (ii)  for the qualifications for membership, including the necessary standards of training and experience for:

                                        (A)  responsible officers of bodies corporate that; and

                                        (B)  natural persons who;

                                   are, or propose to be, members;

                            (iii)  for the manner in which members are to conduct their business of dealing in futures contracts so as to ensure efficiency, honesty and fair practice in relation to such dealing; and

                          (iiia)  for the exclusion of a body corporate from membership where a responsible officer of the body corporate would be excluded from membership; and

                            (iv)  for the exclusion of a person from membership where:

                                        (A)  if the person is a body corporate—a responsible officer, or an employee, of the body corporate; or

                                        (B)  otherwise—the person or an employee of the person;

                                   is not of good character and high business integrity; and

                             (v)  for the expulsion, suspension or disciplining of a member for conduct inconsistent with just and equitable principles in the transaction of business or for a contravention of the body’s business rules or of this Chapter; and

                            (vi)  for an appropriate mechanism whereby a person whose application for membership of the body is refused, or whose membership of the body is cancelled or suspended, in circumstances where the person does not have a right to appeal to the Court under subsection 1135(1) against the decision to refuse the application, or to cancel or suspend the membership, as the case may be, may appeal against the decision; and

                           (vii)  for an appropriate mechanism whereby a person who has been disciplined by the body otherwise than by way of cancellation or suspension of the person’s membership of the body may appeal against the decision to discipline the person; and

                          (viii)  for the inspection and audit of the financial records that this Chapter requires members to keep; and

                            (ix)  with respect to the classes of futures contracts that may be dealt in by members; and

                            (xi)  prohibiting a member from accepting or executing, otherwise than in accordance with the business rules, instructions from another person to deal in futures contracts; and

                           (xii)  prohibiting a member from dealing in futures contracts on behalf of another person otherwise than in accordance with instructions accepted by the member from the person; and

                          (xiii)  prohibiting a member from dealing in futures contracts, on behalf of another person, on a futures market of a futures exchange or of a recognised futures exchange, otherwise than in accordance with the business rules of the futures exchange or recognised futures exchange, as the case may be; and

                          (xiv)  prohibiting a member, except as permitted by the business rules, from executing the instructions of another person to deal in futures contracts unless the instructions are executed in such a manner that the dealing is effected on a futures market of a futures exchange or of a recognised futures exchange or on an exempt futures market; and

                           (xv)  with respect to the conditions under which members may deal in futures contracts; and

                          (xvi)  for the equitable and expeditious settlement of claims and grievances between members, being claims and grievances relating to the transaction of business by members in their capacity as members; and

                         (xvii)  for appropriate mechanisms for the conciliation and settlement of disputes between members and their clients, being disputes concerning dealings in futures contracts by members on behalf of their clients or concerning transactions between members and their clients in connection with such dealings; and

                        (xviii)  generally for carrying on the business of the proposed futures exchange with due regard for the interests and protection of the public; and

                     (d)  there will be enough money in the body’s fidelity fund to make the payments out of the fund that may reasonably be expected to be necessary for the purposes of Part 8.6; and

                     (e)  the interests of the public will be served by granting the application.

1127   Exempt futures market

             (1)  The Minister may by writing declare a specified futures market to be, subject to any specified conditions, an exempt futures market.

          (1A)  A person must not contravene a condition specified in a declaration in force under this section.

          (1B)  If a person has contravened a condition specified in a declaration in force under this section, the Court may, on ASIC’s application, order the person to comply with the condition.

             (2)  Without limiting the matters to which the Minister may have regard in considering whether to vary or revoke a declaration in force under this section, he or she may, in so considering, have regard to a breach of a condition specified in the declaration.



 

Division 2 Clearing houses

1128   When a person may provide clearing house facilities

                   A person must not provide, or hold out that the person provides, clearing house facilities for a futures market (other than an exempt futures market) unless:

                     (a)  the futures market is conducted by a futures exchange; and

                     (b)  the person is a body corporate; and

                     (c)  an approval of the person under section 1131 as a clearing house for that futures exchange is in force.

1131   Approval of clearing house

             (1)  A body corporate that proposes to provide clearing house facilities for a futures market of a futures exchange may apply to ASIC in writing for approval by the Minister as a clearing house for that futures exchange.

             (2)  Where a body applies under subsection (1), the Minister may by writing approve the body as a clearing house for the futures exchange if, and only if, he or she is satisfied that:

                     (b)  the body’s business rules are satisfactory, in particular such of those business rules as relate to the registration of futures contracts made on a futures market of the futures exchange; and

                     (c)  the body’s business rules make satisfactory provision for the expulsion, suspension or disciplining of members for a contravention of the business rules or for a contravention of this Chapter; and

                     (d)  the interests of the public will be served by granting the application.

             (3)  Without limiting the matters to which the Minister may have regard in considering an application under subsection (1), he or she may, in considering the application, have regard to any business rules of the applicant that relate to the guaranteeing, to members of the applicant, of the performance of futures contracts made on a futures market of the futures exchange.



 

Division 3 Futures associations

1132   Approval of futures association

             (1)  A body corporate that proposes to be a futures association may apply to ASIC in writing for approval by the Minister as a futures association.

             (2)  Where a body applies under subsection (1), the Minister may by writing approve the body as a futures association if, and only if, he or she is satisfied:

                     (c)  that the body’s nature is such that the body may properly exercise its functions as a futures association, being the functions of:

                              (i)  regulating the association’s affairs in the interests of the public; and

                             (ii)  administering and enforcing the association’s business rules; and

                     (d)  that the body’s business rules make satisfactory provision:

                              (i)  for the admission as members of persons licensed, or proposing to apply to be licensed, under Part 8.3, or of a specified class of such persons; and

                             (ii)  for the qualifications for membership, including the necessary standards of training and experience for:

                                        (A)  responsible officers of bodies corporate that; and

                                        (B)  natural persons who;

                                   are, or propose to be, members; and

                            (iii)  for the manner in which members are to conduct their business of dealing in futures contracts so as to ensure efficient, honest and fair practices in relation to such dealing; and

                          (iiia)  for the exclusion of a body corporate from membership where a responsible officer of the body corporate would be excluded from membership; and

                            (iv)  for the exclusion of a person from membership where:

                                        (A)  if the person is a body corporate—a responsible officer, or an employee, of the body corporate; or

                                        (B)  otherwise—the person or an employee of the person;

                                   is not of good character and high business integrity; and

                             (v)  for the expulsion, suspension or disciplining of a member for conduct inconsistent with just and equitable principles in the transaction of business or for a contravention of the body’s business rules or of this Chapter; and

                            (vi)  for an appropriate mechanism whereby a person whose application for membership of the body is refused, or whose membership of the body is cancelled or suspended, in circumstances where the person does not have a right to appeal to the Court under subsection 1135(1) against the decision to refuse the application, or to cancel or suspend the membership, as the case may be, may appeal against the decision; and

                           (vii)  for an appropriate mechanism whereby a person who has been disciplined by the body otherwise than by way of cancellation or suspension of the person’s membership of the body may appeal against the decision to discipline the person; and

                          (viii)  for the inspection and audit of the financial records that this Chapter requires members to keep; and

                             (x)  prohibiting a member from accepting or executing, otherwise than in accordance with the business rules, instructions from another person to deal in futures contracts; and

                            (xi)  prohibiting a member from dealing in futures contracts on behalf of another person otherwise than in accordance with instructions accepted by the member from the person; and

                           (xii)  prohibiting a member from dealing in futures contracts, on behalf of another person, on a futures market of a futures exchange or of a recognised futures exchange, otherwise than in accordance with the business rules of the futures exchange or recognised futures exchange, as the case may be; and

                          (xiii)  prohibiting a member, except as permitted by the business rules, from executing the instructions of another person to deal in futures contracts unless the instructions are executed in such a manner that the dealing is effected on a futures market of a futures exchange or of a recognised futures exchange or on an exempt futures market; and

                          (xiv)  for the equitable and expeditious settlement of claims and grievances between members, being claims and grievances relating to the transaction of business by members in their capacity as members; and

                           (xv)  for appropriate mechanisms for the conciliation and settlement of disputes between members and their clients, being disputes concerning dealings in futures contracts by members on behalf of their clients or concerning transactions between members and their clients in connection with such dealings;

                     (e)  if the body is expected to be a futures organisation within the meaning of Part 8.6—that:

                              (i)  there will be enough money in the body’s fidelity fund to make the payments out of the fund that may reasonably be expected to be necessary for the purposes of Part 8.6; or

                             (ii)  the body will enter into a contract, in a form approved by the Minister, with an insurer approved by the Minister, under which the insurer undertakes to supplement the fund, if a claim is made on the fund, so that the total amount available to satisfy the claim will be not less than an amount so approved; and

                      (f)  that the interests of the public will be served by granting the application.

1133   Suspension or cancellation of approval

             (1)  The Minister may cause to be served on a body corporate a written notice requiring the body to show cause, at a hearing before a specified person, why the body’s approval as a futures association should not be suspended or cancelled on specified grounds.

             (2)  A notice under subsection (1) must specify, and give reasonable notice of, the time and place at which the hearing is to occur, but the specified person may, with the body’s consent, fix a different time, a different place, or both, for the hearing.

             (3)  Where a notice is served under subsection (1), the specified person must, after giving the body an opportunity to be heard at the hearing, submit to the Minister a report about the hearing and a recommendation about the matters to which the notice related.

             (4)  After considering a report and recommendation under subsection (3), the Minister may:

                     (a)  decide to take no further action in relation to the matter; or

                     (b)  by writing, suspend for a specified period, or cancel, the body’s approval as a futures association.

             (5)  A body corporate is taken not to be a futures association at any time during a period for which the body’s approval as a futures association is suspended.

             (6)  A body corporate’s approval as a futures association must not be suspended or cancelled except under this section.



 

Division 4 General

1134   Publication of certain instruments

                   ASIC must cause a copy of an instrument executed under subsection 1126(2), 1127(1), 1131(2), 1132(2) or 1133(4) to be published in the Gazette .

1135   Appeal to the Court against certain decisions of futures exchanges and futures associations

             (1)  Where a body corporate, being a futures exchange or futures association:

                     (a)  decides, at a time when a person is a member of no futures organisation, to refuse an application by the person for membership of the body corporate; or

                     (b)  decides, at a time when a person is a member of no other futures organisation, to suspend or cancel the person’s membership of the body corporate;

the body corporate must, within 14 days after so deciding, give to the person, and to ASIC, a notice in writing setting out the decision and the reasons for the decision, and the person may, within the period of 21 days beginning when the notice is so given or within that period as extended by the Court, appeal to the Court against the decision by filing a written notice of appeal.

             (2)  A person whose membership of a futures organisation is suspended for a period:

                     (a)  is taken, for the purposes of paragraph (1)(a), to be a member of that futures organisation throughout that period; and

                     (b)  is taken, for the purposes of paragraph (1)(b), not to be a member of that futures organisation at any time during that period.

             (3)  A person must, on the day on which the person files a notice of appeal with the Court under subsection (1), lodge a copy of the notice.

             (4)  Where a body corporate decides as mentioned in paragraph (1)(b), then:

                     (a)  subject to paragraph (c) of this subsection and to subsection (6), the decision takes effect at the end of the day on which a notice relating to the decision is given by the body corporate in accordance with subsection (1); and

                     (b)  if the person to whom the decision relates appeals to the Court under subsection (1) against the decision—the Court may, at any time before it determines the appeal, make such order as it thinks fit concerning the effect, pending determination of the appeal, of the decision, including, without limiting the generality of the foregoing, an order that is subject to conditions specified in the order; and

                     (c)  an order made by the Court under paragraph (b) has effect accordingly.

             (5)  The Court may, after hearing an appeal under subsection (1), dismiss the appeal or:

                     (a)  in the case of an appeal against a decision to refuse an application for membership—decide that the application should be granted, or should be granted subject to specified conditions; or

                     (b)  in the case of an appeal against a decision to suspend for a period a person’s membership—decide that the person’s membership:

                              (i)  should not be suspended; or

                             (ii)  should be suspended for a specified lesser period; or

                     (c)  in the case of an appeal against a decision to cancel a person’s membership—decide that the person’s membership:

                              (i)  should not be cancelled; or

                             (ii)  should not be cancelled, but should be suspended for a specified period.

             (6)  Where, on an appeal against a decision of a body corporate, the Court decides as mentioned in paragraph (5)(a), (b) or (c), then, as from the day on which the appeal is decided:

                     (a)  the first-mentioned decision ceases to have effect; and

                     (b)  the decision of the Court has effect, except for the purposes of subsection (1), as a decision of the body corporate and takes effect accordingly.

1136   ASIC to be notified of amendments of business rules

             (1)  Where an amendment is made by way of rescission or alteration of, or addition to, the business rules of a futures exchange, of a clearing house for a futures exchange, or of a futures association, the futures exchange, clearing house or futures association, as the case may be, must, forthwith after the making of the amendment, give written notice of the amendment to ASIC.

             (2)  A notice under subsection (1) must:

                     (a)  set out the text of the amendment to which it relates; and

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

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

             (3)  If a notice required by subsection (1) to be given in relation to an amendment is not given within 21 days after the making of the amendment, the amendment ceases to have effect.

             (4)  Where ASIC receives a notice under this section, ASIC must forthwith send a copy of the notice to the Minister.

             (5)  The Minister may, within 28 days after the receipt by ASIC of a notice under this section, disallow the whole or a specified part of the amendment to which the notice relates.

             (6)  Where the Minister disallows under this section the whole or a part of an amendment of the business rules of a body corporate, ASIC must forthwith give notice of the disallowance to the body corporate and, upon receipt by the body corporate of the notice of disallowance, the amendment ceases, to the extent of the disallowance, to have effect.

1137   Orderly markets in futures contracts—functions and powers of futures exchanges and clearing houses

             (1)  A futures exchange, and a clearing house for a futures exchange, must, to the extent that it is reasonably practicable to do so, take all steps, and do all things, necessary to ensure an orderly and fair market for dealings in futures contracts on a futures market of the futures exchange.

             (2)  A futures exchange may, for the purpose of performing its functions under subsection (1), give to a person who is not a member of the futures exchange but in whose name a futures contract entered into on a futures market of the futures exchange is registered a direction:

                     (a)  to do a particular act or thing; or

                     (b)  to refrain from doing a particular act or thing.

             (3)  A person must comply with a direction given to the person in accordance with subsection (2), but a person who contravenes this subsection is not guilty of an offence.

1138   Orderly markets in futures contracts—ASIC’s powers

             (1)  Subject to subsections (2) and (6), ASIC may, in relation to a futures market of a futures exchange, give a direction in writing to the futures exchange:

                     (a)  to close the futures market; or

                     (b)  to suspend dealing on the futures market in a specified class of futures contracts; or

                     (c)  to limit transactions on the futures market to the closing out of futures contracts; or

                     (d)  to defer for a specified period the completion date for all futures contracts, or for a specified class of futures contracts, made on the futures market; or

                     (e)  to cause a specified futures contract made on the futures market, or each futures contract included in a specified class of futures contracts so made, to be:

                              (i)  closed out forthwith as the result of the matching up of the futures contract with a futures contract of the same kind whose price or value is equal to a price or value determined by the futures exchange; or

                             (ii)  invoiced back to a specified date at a price or value determined by the futures exchange; or

                      (f)  to require a futures contract made on the futures market, or each futures contract included in a specified class of futures contracts so made, to be discharged by:

                              (i)  the tendering of a merchantable lot of a commodity determined by the futures exchange, being a commodity of a quality or standard that is:

                                        (A)  different from the quality or standard of the commodity specified in the futures contract; and

                                        (B)  determined by the futures exchange; and

                             (ii)  the tendering of a price adjusted by an amount that is:

                                        (A)  appropriate having regard to the quality or standard of the commodity referred to in subparagraph (i); and

                                        (B)  determined by the futures exchange; or

                     (g)  to require a member of the futures exchange to act in a specified manner in relation to dealings in futures contracts on the futures market, or in relation to a specified class of such dealings.

             (2)  ASIC must not give a direction under subsection (1) in relation to a futures market of a futures exchange unless:

                     (a)  it has determined that a direction should be so given because it is of the opinion that:

                              (i)  subsection 1137(1) has not been complied with in relation to that futures market; and

                             (ii)  it is necessary to protect the interests of persons on behalf of whom futures contracts are or may be dealt with on that futures market; and

                            (iii)  it would be in the public interest for a direction to be so given; and

                     (b)  it has given to the futures exchange a notice in writing stating that it has formed that opinion and specifying:

                              (i)  its reasons for forming that opinion; and

                             (ii)  the direction that it considers should be so given; and

                            (iii)  a time, or a date and time, before which it will not so give the direction; and

                     (c)  it has given a copy of the notice to each clearing house for that futures market; and

                     (d)  the direction is so given after the time, or date and time, as the case may be, specified pursuant to subparagraph (b)(iii).

             (3)  ASIC must, before determining in relation to a futures market of a futures exchange as mentioned in paragraph (2)(a), consult the futures exchange and each clearing house for that futures market.

             (4)  A failure by ASIC to comply with subsection (3) does not affect the validity of:

                     (a)  a determination under paragraph (2)(a); or

                     (b)  a direction given under subsection (1) pursuant to such a determination.

             (5)  ASIC must, as soon as practicable after giving a notice under paragraph (2)(b) in relation to a futures market of a futures exchange:

                     (a)  give to the Minister a copy of the notice and a written report setting out the reasons for the giving of the notice; and

                     (b)  give a copy of the report to the futures exchange; and

                     (c)  give a copy of the report to each clearing house for that futures market.

             (6)  ASIC must not give a direction under subsection (1) in relation to a futures market of a futures exchange if:

                     (a)  the Minister has directed ASIC not to give the direction; or

                     (b)  the futures exchange has acted as if the direction had been given.

             (7)  ASIC must, as soon as practicable after giving a direction under subsection (1) in relation to a futures market of a futures exchange:

                     (a)  give to the Minister a copy of the direction; and

                     (b)  give to each clearing house for that futures market:

                              (i)  a copy of the direction; and

                             (ii)  a direction in writing prohibiting the clearing house from acting in a manner inconsistent with, and requiring the clearing house to do all that it is reasonably capable of doing to give effect to, the direction under subsection (1) while the last-mentioned direction remains in force.

             (8)  The Minister may determine in writing the period throughout which a particular direction under subsection (1) is to remain in force.

             (9)  A direction given under subsection (1) remains in force:

                     (a)  in a case where a determination under subsection (8) is in force—throughout the period specified in the determination; or

                     (b)  in any other case—unless sooner revoked, until the end of the period of 21 days, or such shorter period (if any) as is specified in the direction, commencing when the direction is given.

           (10)  A futures exchange must not, while a direction given under subsection (1) in relation to a futures market of the futures exchange remains in force, fail to comply with the direction.

           (11)  A clearing house for a futures exchange must not fail to comply with a direction given to the clearing house under subparagraph (7)(b)(ii).

           (12)  A document may be given to a person under this section by sending to the person, by telegraph, telex, facsimile service or other similar means of communication, a message to the effect of the document.

1139   Futures exchanges and others to assist ASIC

             (1)  A futures exchange, a clearing house for a futures exchange, and a futures association, must each provide such assistance to ASIC, or to a person acting on behalf of, or with the authority of, ASIC, as ASIC reasonably requires for the performance of its functions under this Chapter.

             (2)  Where:

                     (a)  a body corporate, being a futures exchange, a clearing house for a futures exchange, or a futures association, decides to reprimand, fine, suspend, expel or otherwise take disciplinary action against, a member of the body corporate; and

                     (b)  subsection 1135(1) does not require the body corporate to give to ASIC a notice relating to the decision;

the body corporate must, within 14 days after so deciding, give to ASIC a notice in writing setting out particulars of the name of the member, the decision, the reasons for the decision and, in the case of a decision to fine a member, the amount of the fine.

          (2A)  A futures exchange, a clearing house for a futures exchange or a futures association that believes that a person has committed, is committing or is about to commit a serious contravention of its business rules, or this Act, must, as soon as practicable, lodge a statement setting out:

                     (a)  particulars of the contravention that it believes the person has committed, is committing or is about to commit; and

                     (b)  its reasons for that belief.

             (3)  Where a clearing house for a futures exchange:

                     (a)  refuses to register a dealing in a futures contract; or

                     (b)  closes out a futures contract because of a failure to meet a call for deposit or margin;

it must forthwith give ASIC particulars of its action.

             (4)  A person authorised by ASIC is entitled at all reasonable times to full and free access for any of the purposes of this Act to the trading floor of a futures market of a futures exchange.

             (5)  A person who refuses or fails, without lawful excuse, to allow a person authorised by ASIC access in accordance with subsection (4) to the trading floor of a futures market of a futures exchange contravenes this subsection.

1140   Power of Court to order observance or enforcement of business rules of futures exchange, clearing house or futures association

                   Where a person who is under an obligation to comply with, observe, enforce or give effect to the business rules of a futures exchange, of a clearing house for a futures exchange, or of a futures association, fails to comply with, observe, enforce or give effect to those rules, the Court may, on the application of the futures exchange, clearing house or futures association, as the case may be, of ASIC, or of a person aggrieved by the failure, and after giving to the person against whom the order is sought an opportunity of being heard, make an order giving directions to the last-mentioned person concerning compliance with, observance or enforcement of, or giving effect to, those rules.

1141   Gaming and wagering laws not applicable to certain futures contracts and Chapter 8 agreements

             (1)  Despite any law of a State or Territory in this jurisdiction about gaming or wagering:

                     (a)  a person may enter into a futures contract:

                              (i)  on a futures market of a futures exchange or of a recognised futures exchange; or

                             (ii)  on an exempt futures market; or

                            (iii)  as permitted by the business rules of a futures association, of a futures exchange or of a recognised futures exchange; and

                     (b)  the contract is valid and enforceable.

             (2)  Despite any law of a State or Territory in this jurisdiction about gaming or wagering:

                     (a)  a person may enter into a Chapter 8 agreement of a kind prescribed for the purposes of paragraph 72A(1)(b); and

                     (b)  the agreement is valid and enforceable.

1141A   Qualified privilege in respect of disciplinary proceedings

             (1)  In this section:

disciplinary proceeding , in relation to a futures organisation, means:

                     (a)  a proceeding under the business rules of the futures organisation that may result in the disciplining of a member of the futures organisation; or

                     (b)  an appeal under the business rules of the futures organisation from a proceeding of a kind referred to in paragraph (a).

disciplining , in relation to a member of a futures organisation, includes expulsion from, or suspension of, membership of the futures organisation.

member , in relation to a futures organisation, includes a person who is under an obligation to comply with or enforce the business rules of the futures organisation.

             (2)  A futures organisation, or a member, officer or employee of a futures organisation, has qualified privilege in respect of a statement made by a person, orally or in writing, in the course of, or otherwise for the purposes of or in connection with, a disciplinary proceeding of the futures organisation.

             (3)  A person has qualified privilege in respect of the publication of:

                     (a)  a statement made by a person, orally or in writing, in the course of, or otherwise for the purposes of or in connection with; or

                     (b)  a document prepared, given or produced by a person, in the course of, or otherwise for the purposes of or in connection with;

a disciplinary proceeding of a futures organisation.