Commonwealth Consolidated Regulations

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CORPORATIONS REGULATIONS 2001 - REG 7.1.22

Retail clients and wholesale clients: value of derivatives

             (1)  This regulation makes arrangements about the value of a derivative:

                     (a)  that is a financial product under section 761A of the Act; and

                     (b)  to which section 765A of the Act does not apply.

Note:          Under paragraph 761G(7)(a) of the Act, if a financial product is not, or a financial service provided to a person does not relate to, a general insurance product, a superannuation product or an RSA product, the financial product or financial service is provided to the person as a retail client unless the price for the provision of the financial product, or the value of the financial product to which the financial service relates, equals or exceeds the amount specified in regulations made for the purposes of that paragraph as being applicable in the circumstances.

                   Under paragraph 761G(10)(a) of the Act, the regulations may also deal with how a price or value referred to in that paragraph is to be calculated, either generally or in relation to a specified class of financial products.

Value

             (2)  For paragraph 761G(7)(a) of the Act:

                     (a)  the amount applicable in relation to a single derivative is $500 000; and

                     (b)  if the derivative is included in 2 or more related financial products, the amount applicable in relation to the related financial products is $500 000.

Working out value: general rule

             (3)  For paragraph 761G(10)(a) of the Act, the value of a derivative is the face value, or the notional amount in respect of, the financial product (in dollar terms) as at the date on which the relevant arrangement is entered into by the parties.

Time of assessment

             (4)  If a financial services provider needs to assess the status of a client as either retail or wholesale at a particular time in order to ensure that the client complies with the Act, or for any related purpose, the value of a financial product may be assessed at any time, whether or not a financial service is being provided at that time in relation to that product.

Note:          Subregulation (4) will ensure that a provider of financial services may assess a client's status at any time (for example, the provider may need to ascertain whether ongoing disclosure of a significant event must be sent to the client under section 1017B of the Act because the client is a retail client).



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