Commonwealth Numbered Regulations - Explanatory Statements

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AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION AMENDMENT REGULATIONS 2004 (NO. 3) 2004 NO. 397

Subsection 251(1) of the Australian Securities and Investments Commission Act 2001 (the ASIC Act) provides that the Governor-General may make regulations prescribing matters required or permitted by the ASIC Act to be prescribed or necessary or convenient to be prescribed for carrying out or giving effect to the ASIC Act.

Section 11 of the ASIC Act provides that the Australian Securities and Investments Commission (ASIC) has certain functions and powers conferred on it by or under the corporations legislation.

Chapter 7 of the Corporations Act 2001 (Corporations Act) provides for the regulation of financial services and markets, including the licensing of financial markets (Part 7.2) and clearing and settlement facilities (CS facility) (Part 7.3).

Part 7 of the ASIC Act includes in Division 2 provisions which require the ASIC to keep information confidential. However, it also provides some exceptions, including for the disclosure by ASIC of confidential information to a body corporate that conducts, or is involved in the supervision of a financial market, or a body corporate that holds a CS facility licence. Schedule 3 to the Australian Securities and Investments Commission Regulations 2001 (Principal Regulations) prescribes bodies corporate for this purpose.

Several bodies corporate have commenced, or expect to commence operating a financial market.

The Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004 (CLERP Act) inserts new Part 13 into the ASIC Act. Part 13 is in relation to the Financial Reporting Panel and does not commence until 1 January 2005. Under Part 13, a member of the Financial Reporting Panel may issue written summons requiring specified persons to appear before the Panel to give evidence and/or produce documents and to attend Panel proceedings unless or until they are excused or released from attendance.

The purpose of the Regulations is to:

•       prescribe these additional bodies corporate so that ASIC can provide them with the information necessary for them to perform their supervisory functions; and

•       prescribe the form to be used where a member of the Financial Reporting Panel issues a written summons under Part 13 of the ASIC Act.

The Regulations also prescribe a body corporate that already holds a CS facility licence and update one body corporate to reflect a change in its name.

Details of the Regulations are in the Attachment.

Details of the Australian Securities and Investments Commission Amendment Regulations 2004 (No. 3)

Regulation 1:       Name of Regulations

Regulation 1 provides that the Regulations are to be known as the Australian Securities and Investments Commission Amendment Regulations 2004 (No. 3).

Regulation 2:       Commencement

Regulation 2 provides that Schedule 1 of the Regulations commences on the date of their notification in the Gazette, and Schedule 2 of the Regulations commences on 1 January 2005. The reason for the different commencement date for Schedule 2 of the Regulations is that it relates to the Financial Reporting Panel. The Financial Reporting Panel is constituted under Schedule 2 Part 3 of the Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act 2004 (CLERP Act). Schedule 2 Part 3 does not commence until 1 January 2005.

Regulation 3:       Amendment of Australian Securities and Investments Commission Regulations 2001

Regulation 3 provides that Schedules 1 and 2 amend the Australian Securities and Investments Commission Regulations 2001 (the Principal Regulations).

Schedule 1

Section 127 of the Australian Securities and Investments Commission Act 2001 (ASIC Act) imposes confidentiality obligations in relation to information that is given to ASIC in confidence or in connection with the performance of its functions or the exercise of its powers under the corporations legislation. It also includes some exceptions. One is included in subsection 127(4B) which authorises disclosure of this information under certain circumstances to a body corporate specified in regulations under subsection 127(4C). This includes a body corporate that is a foreign company.

Subsection 127(4C) allows the regulations to specify a body corporate for the purposes of subsection 127(4B) if the body corporate conducts, or is involved in the supervision of a financial market, or holds an Australian CS facility licence. Regulation 8A of the Principal Regulations provides that the bodies corporate listed in Schedule 3 are specified for that purpose.

Item [1] - additional Australian bodies corporate

Item [1] substitutes the revised table in item [1] for the existing table in Part 1 of Schedule 3 to the Principal Regulations.

The revised table includes all of the Australian bodies corporate that are currently specified for the purposes of subsection 127(4C) of the ASIC Act. These bodies are as follows:

•       ASX Settlement and Transfer Corporation Pty Limited (The name has been corrected from ASX Settlement and Transfer Corporation Pty Ltd);

•       Australian Clearing House Pty Limited (The name of the Options Clearing House Pty Limited has been changed to Australian Clearing House Pty Limited. The reason for the change of name is that this body now provides services in relation to a wider class of financial products than options.)

•       Australian Stock Exchange Limited;

•       Bendigo Stock Exchange Limited;

•       Stock Exchange of Newcastle Limited;

•       SFE Clearing Corporation Pty Ltd; and

•       Sydney Futures Exchange Limited.

All of these bodies corporate are holders of either an Australian market licence or a CS facility licence.

The revised table also includes several Australian bodies corporate which are not currently specified for the purposes of subsection 127(4C) of the ASIC Act. These bodies are as follows:

•       Austraclear Limited;

•       Australia Pacific Exchange Limited;

•       Golden Circle Limited;

•       ICAP Brokers Pty Limited;

•       IMB Ltd; and

•       Yieldbroker Pty Limited.

The first holds a CS (clearing and settlement) facility licence, while the others operate financial markets.

Item [2] - correction of a name

Item [2] corrects the name in Item 22 of Schedule 3 from `Chicago Mercantile Exchange' to `Chicago Mercantile Exchange Inc'.

Items [3]-[6] - additional bodies corporate which are foreign companies

Items [3]-[6] amend the table in Part 2 of Schedule 3 to insert the following bodies corporate which are foreign companies:

•       EBS Service Company Limited (EBS);

•       New York Mercantile Exchange Inc.;

•       Reuters Transaction Services Limited;

•       Eurex Frankfurt AG; and

•       ICAP Europe Limited.

Each of these bodies operates a financial market.

The reason for this amendment is to enable ASIC to disclose confidential information to operators of financial markets or CS facility licensees to enable them to perform their functions under the appropriate corporations legislation.

Schedule 2

Item 1 - Prescription of Form 4

This item inserts Part 6 regarding the Financial Reporting Panel after Part 5 in the Principal Regulations. Regulation 48 prescribes the contents of Form 4, which is the form to be used in circumstances where a member of the Financial Reporting Panel issues a written summons under subsection 239CE(1) of the ASIC Act. Subsection 239CE(1) will commence on 1 January 2005.

Item 2       - Form 4

This item inserts Form 4 after Form 3 in Schedule 1 of the Principal Regulations.