(1) For subsection 766C(7) of the Act, conduct is not taken to be dealing in a financial product if:
(a) the conduct is of a kind:
(i) mentioned in paragraph 766C(1)(a), (d) or (e) of the Act; or
(ii) mentioned in paragraph 766C(1)(b) of the Act, where it is the issue of a beneficial interest in a financial product, that arises from conduct that would constitute providing a custodial or depository service but for the operation of regulation 7.1.40; and
(b) the conduct is carried out by a person ( person 1 ) in relation to a product that person 1 holds on trust for, or on behalf of, another person ( person 2 ) and the holding of that financial product would not constitute the provision of a custodial or depository service because of paragraphs 7.1.40(a), (b), (c), (d), (g) and (i).
(2) Subregulation (1) does not apply to conduct carried out by person 1 in relation to a financial product that is held under a custodial arrangement as defined in section 1012IA of the Act unless:
(a) person 2 is an associate of person 1; or
(b) the financial product is held in the manner mentioned in paragraph 7.1.40(d).