Commonwealth Consolidated Regulations

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CORPORATIONS REGULATIONS 2001 - REG 7.8.20

Dealings with non-licensees

             (1)  For subsection 991E(1) of the Act:

                     (a)  section 991E does not apply in relation to the sale or purchase of financial products mentioned in paragraph 764A(1)(a) of the Act by the body corporate by which the financial products were made available if the financial products are made available in accordance with Chapters 5C and 6D of the Act; and

                     (b)  section 991E does not apply to the sale or purchase of financial products mentioned in paragraph 764A(1)(b) of the Act by the body corporate by which the financial products were made available if the financial products are made available in accordance with Chapters 5C and 7 of the Act.

          (1A)  Subject to subregulation (1B), for subsection 991E(1) of the Act, the subsection does not apply to a transaction if, at the time of the transaction, the financial services licensee is not a participant in the licensed market on which the particular financial product is being traded.

          (1B)  Subregulation (1A) does not apply if:

                     (a)  the financial services licensee deals, or has dealt, in a financial product traded on that market:

                              (i)  on the licensee's own behalf (whether directly or through an agent or other representative); or

                             (ii)  on behalf of a client; or

                     (b)  an associate of the financial services licensee is a participant in the market mentioned in that subregulation.

             (2)  For subsection 991E(2) of the Act:

                     (a)  a disclosure referred to in paragraph 991E(1)(c) of the Act must be given by the financial services licensee to the non-licensee:

                              (i)  in writing; and

                             (ii)  if the transaction is an on-market transaction--in relation to the particular transaction, a class of on-market transactions which includes the transaction, or all on-market transactions; and

                     (b)  a consent referred to in paragraph 991E(1)(d) of the Act:

                              (i)  may be given orally, or in writing, by the non-licensee; and

                             (ii)  is effective until it is revoked, either orally or in writing, by the non-licensee; and

                     (c)  if the non-licensee gives an oral consent to the financial services licensee, or revokes a consent orally, the financial services licensee must:

                              (i)  make a written record of the consent or revocation; and

                             (ii)  provide a copy of the written record to the non-licensee within 10 business days after the day on which the consent is given or revoked.

             (3)  For subsection 991E(3) of the Act, a brokerage, commission or other fee is permitted in respect of a transaction between a financial services licensee and a non-licensee only if:

                     (a)  the financial services licensee is a participant in a licensed market; and

                     (b)  the financial services licensee has complied with all of the financial services licensee's obligations in relation to the transaction under the market integrity rules and the operating rules of the relevant licensed market; and

                     (c)  the market integrity rules or the operating rules permit a brokerage, commission or fee to be charged to non-licensees of the same kind as the non-licensee; and

                     (d)  the non-licensee has authorised the financial services licensee to charge the non-licensee in respect of the transaction; and

                     (e)  the financial services licensee discloses to the non-licensee the amount of the brokerage, commission or fee, or the basis on which it will be calculated, before the non-licensee gives the authorisation mentioned in paragraph (d); and

                      (f)  the amount of the brokerage, commission or fee is reasonable having regard to the amount that would have been charged by the financial services licensee to the non-licensee if the financial services licensee had entered the transaction with the non-licensee as agent and not on its own behalf.

             (4)  For subregulation (3):

                     (a)  an authorisation given to the financial services licensee by the non-licensee:

                              (i)  may be given orally, or in writing, by the non-licensee; and

                             (ii)  is effective until it is revoked, either orally or in writing, by the non-licensee; and

                     (b)  if the non-licensee gives an oral authorisation to the financial services licensee, or revokes an authorisation orally, the financial services licensee must:

                              (i)  make a written record of the authorisation or revocation; and

                             (ii)  provide a copy of the written record to the non-licensee within 10 business days after the day on which the authorisation is given or revoked; and

                     (c)  a disclosure of the amount of the brokerage, commission or fee, or the basis on which it will be calculated must be given by the financial services licensee to the non-licensee:

                              (i)  in writing: and

                             (ii)  if the transaction is an on-market transaction--in relation to the particular transaction, a class of on-market transactions that includes the transaction, or all on-market transactions.

             (5)  For subsection 991E(7) of the Act, a financial services licensee must:

                     (a)  keep records of the following matters relating to each financial products transaction entered into by the financial services licensee on the financial service licensee's own behalf:

                              (i)  a description of the financial products transaction;

                             (ii)  the date and time of receipt of the instructions for the financial products transaction;

                            (iii)  the date and time of transmission of the instructions to the licensed market concerned;

                            (iv)  the date and time of execution of the instructions;

                             (v)  the source of the funds, or financial products, used to effect the financial products transaction; and

                     (b)  keep the records in a manner that makes the records identifiable separately from records of the financial services licensee.

Note:          Other requirements for record-keeping are in Division 6 of Part 7.8 of the Act.



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