Australian Securities and Investments Commission Market Integrity Rules (ASX Market) 2010 (Cth)

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ASIC Market Integrity Rules (ASX Market) 2010

About this compilation

Compilation No. 14

  1. This is a compilation of ASIC Market Integrity Rules (ASX Market) 2010 as in force on 27 October 2015.

    It includes any commenced amendment affecting the legislative instrument to that date.

This compilation was prepared by the Australian Securities and Investments Commission.

The notes at the end of this compilation (the endnotes) include information about amending instruments and the amendment history of each amended provision.

Contents

Chapter 1: Introduction

Part 1.1Preliminary

1.1.1Enabling legislation

ASIC makes this instrument under subsection 798G(1) of the Corporations Act.

1.1.2Title

This instrument is ASIC Market Integrity Rules (ASX Market) 2010.

1.1.3Commencement

This instrument commences on the later of:

  1. (a)

    the day the instrument is registered under the Legislative Instruments Act 2003; and

  2. (b)

    the commencement of Schedule 1 to the Corporations Amendment (Financial Market Supervision) Act 2010.

    Note: An instrument is registered when it is recorded on the Federal Register of Legislative Instruments (FRLI) in electronic form: see Legislative Instruments Act 2003, s 4 (definition of register). The FRLI may be accessed at of these Rules

    These Rules apply to:

    1. (a)

      the activities or conduct of the Market;

    2. (b)

      the activities or conduct of persons in relation to the Market;

    3. (c)

      the activities or conduct of persons in relation to Financial Products traded on the Market.

      Note: There is no penalty for this Rule.

    1.1.5Entities that must comply with these Rules

    The following entities must comply with these Rules:

    1. (a)

      the Market Operator;

    2. (b)

      Market Participants; and

    3. (c)

      Other Regulated Entities;

    as specified in each Rule.

    Note: There is no penalty for this Rule.

    1.1.6Conduct by officers, Employees or agents

    In these Rules, conduct engaged in on behalf of a person:

    1. (a)

      by an officer, Employee, or other agent of the person, and whether or not within the scope of the actual or apparent authority of the officer, Employee, or other agent; or

    2. (b)

      by any other person at the direction or with the consent or agreement (whether express or implied) of an officer, Employee, or other agent of the person, and whether or not the giving of the direction, consent or agreement is within the scope of the actual or apparent authority of the officer, Employee, or other agent,

    is deemed to have been engaged in by the person.

    Note: There is no penalty for this Rule.

    1.1.7State of mind of a person

    (1) If for the purposes of these Rules in respect of conduct engaged in by a person, it is necessary to establish the state of mind of the person, it is sufficient to show that an officer, Employee, or other agent of the person, being an officer, Employee, or other agent by whom the conduct was engaged in and whether or not the conduct was within the scope of the actual or apparent authority of that officer, Employee, or other agent, had that state of mind.

    (2) In subrule (1), a reference to the state of mind of a person includes a reference to the knowledge, intention, opinion, belief or purpose of the person and the person’s reasons for the person’s intention, opinion, belief or purpose.

    Note: There is no penalty for this Rule.

    Part 1.2Waiver

    1.2.1Waiver of Rules

    (1) Subject to Rule 1.2.3, ASIC may relieve any person or class of persons from the obligation to comply with a provision of these Rules, either generally or in a particular case or category, and either unconditionally or subject to such conditions as ASIC thinks fit.

    (2) If any conditions on a waiver given under subrule (1) are imposed, all of the conditions must be complied with for the waiver to be effective.

    (3) ASIC may withdraw, in writing, a waiver given under subrule (1) at any time.

    (4) Any request by a person for a waiver under subrule (1) must be in writing.

    (5) Any waiver given under subrule (1), and any conditions imposed on that waiver, must be in writing.

    (6) ASIC may publish notice of a waiver given under subrule (1).

    Note: There is no penalty for this Rule.

    1.2.2Compliance with conditions

    Failure to comply with a condition imposed under Rule 1.2.1 is a contravention of this Rule.

    Maximum penalty: $1,000,000

    1.2.3Period during which relief applies

    ASIC may specify the period or specific event during which any relief from an obligation to comply with a provision of these Rules may apply.

    Note: There is no penalty for this Rule.

    1.2.4Register

    (1) ASIC may establish and maintain a register for recording details of relief granted under Rule 1.2.1 and may enter the following details in the register:

    1. (a)

      the date that the relief takes effect;

    2. (b)

      the person or class of persons relieved from the obligation;

    3. (c)

      the provision to which the relief applies;

    4. (d)

      brief reasons for the relief; and

    5. (e)

      any conditions that apply to the relief.

    (2) ASIC may publish the register referred to in subrule (1).

    Note: There is no penalty for this Rule.

    Part 1.3Notice, notification and service of documents

    1.3.1Market Participant to have email

    A Market Participant must acquire and maintain an operating email system for the purposes of receiving notices under these Rules.

    Note: There is no penalty for this Rule.

    1.3.2Methods of giving notice in writing

    Unless otherwise specified in a Rule, ASIC may give a notice under these Rules by any of the following methods:

    1. (a)

      delivering it to the recipient personally;

    2. (b)

      leaving it at or by sending it by courier or post to the address of the recipient last notified to ASIC;

    3. (c)

      sending it by facsimile to the recipient’s facsimile number last notified to ASIC;

    4. (d)

      a circular or bulletin addressed to a class of persons and delivered or communicated by any means permitted under this Rule;

    5. (e)

      specific email by any method which identifies a person or person’s title as addressee and no notice of non-delivery has been received;

    6. (f)

      broadcast email by any method which identifies the addressee and which, having regard to all the relevant circumstances at the time, was as reliable as appropriate for the purposes for which the information was communicated.

      Note: There is no penalty for this Rule.

    Part 1.4Interpretation

    1.4.1References to time

    In these Rules a reference to time is to the time in Sydney, Australia.

    Note: There is no penalty for this Rule.

    1.4.2Words and expressions defined in the Corporations Act

    Words and expressions defined in the Corporations Act will unless otherwise defined or specified in these Rules or the contrary intention appears, have the same meaning in these Rules.

    Note: There is no penalty for this Rule.

    1.4.3Definitions

    “Accreditation Examination” means an examination approved by ASIC in accordance with subrule 2.4.7(4) or 2.4.8(4).

    “Accredited Adviser” means:

    1. (a)

      a Level One Accredited Derivatives Adviser;

    2. (b)

      a Level Two Accredited Derivatives Adviser; or

    3. (c)

      an Accredited Futures Adviser.

    “Accredited Futures Adviser” means a person who has been accredited under Rule 2.4.6 and whose accreditation is current.

    “AFSL” means an Australian financial services licence granted under section 913B of the Corporations Act.

    “AOP Annual Notification” has the meaning given by subrule 5.6.8B(1).

    “AOP Annual Review” has the meaning given by Rule 5.6.8A.

    “AOP Annual Review Date” means 1 November each calendar year.

    “AOP Initial Certification” has the meaning given by Rule 5.6.6.

    “AOP Material Change Review” has the meaning given by subrule 5.6.8(1).

    “Approved Ratings Agency” means a credit rating agency holding an AFSL authorising it to give general advice by issuing a credit rating.

    “AQUA Product” means a Financial Product which is:

    1. (a)

      a Managed Fund Product;

    2. (b)

      an ETF Security; or

    3. (c)

      a Structured Product;

    which is admitted to Trading Status as an AQUA Product or to the AQUA Quote Display Board.

    “AQUA Product Issuer” means an entity which issues, distributes or makes available AQUA Products and which has been admitted as an AQUA Product Issuer.

    “AQUA Quote Display Board” means the facility provided by the Market Operator for AQUA Product Issuers and Trading Participants to advertise their interest in acquiring or disposing of AQUA Products.

    “ASIC” means the Australian Securities and Investments Commission.

    “ASIC Act” means the Australian Securities and Investments Commission Act 2001 as amended from time to time.

    “ASX” means ASX Limited (ACN 008 624 691).

    “Auction” means an auction conducted in a Trading Platform in respect of Qualifying Bids or Offers pursuant to the following process:

    1. (a)

      the highest ranked Bid In Price/Time Priority is paired with the highest ranked Offer In Price/Time Priority so that either the Bid or the Offer is fully satisfied;

    2. (b)

      a new priority of Bids and Offers is established after deducting the quantity of Products paired under paragraph (a);

    3. (c)

      the pairing and re-establishment of priority set out in paragraphs (a) and (b) is repeated until the highest ranked Bid In Price/Time Priority is below the highest ranked Offer In Price/Time Priority;

    4. (d)

      all paired Bids and Offers are then matched at the Equilibrium Price;

    5. (e)

      where the highest Bid and lowest Offer prices respectively do not match or overlap, such Bids and Offers will not participate in the process outlined in paragraph (b);

    6. (f)

      any Bids or Offers which have not been matched at the completion of the process described in paragraph (b) will be carried through to the next session.

    “Australian ADI” has the meaning given by section 9 of the Corporations Act.

    “Authorised Person” means a person who:

    1. (a)

      is either:

      1. (i)

        a client of a Trading Participant;

      2. (ii)

        an agent of a client of a Trading Participant; or

      3. (iii)

        a Representative of a Trading Participant; and

    2. (b)

      is permitted by a Trading Participant to submit orders into the Trading Participant’s system.

    “Automated Client Order Processing” is the Automated Order Processing of an order submitted by an Authorised Person into a Trading Participant’s system.

    “Automated Order Processing” means the process by which orders are registered in a Trading Participant’s system and, if accepted for submission into a Trading Platform by the Trading Participant, submitted as corresponding Trading Messages without being keyed or rekeyed by a DTR.

    “Automated Order Processing Requirements” means the requirements of Part 5.6.

    “Bid” means:

    1. (a)

      in relation to a Cash Market Product, a price and quantity of the Cash Market Product to be purchased;

    2. (b)

      in relation to a Derivatives Market Contract, an offer to enter into a Derivatives Market Transaction in respect of the relevant Derivatives Market Contract as Buyer; and

    3. (c)

      in relation to a Combination, a price and quantity of the Combination.

    “Bid Class” means, in relation to a Takeover Bid, the class of Financial Products included in the bid class of Financial Products under the Corporations Act.

    “Bid Period”:

    1. (a)

      for an Off-Market Bid, means the period that commences when the Bidder’s statement is given to the Target and ends:

      1. (i)

        1 month later if no offers are made under the bid; or

      2. (ii)

        at the end of the Offer Period;

    2. (b)

      for a Market Bid, starts when the bid is announced to the Market by the Market Participant acting on behalf of the Bidder and ends at the end of the Offer Period; and

    3. (c)

      for a Scheme, starts when the announcement of intention to propose a Scheme is first received by the Market until the date on which the Scheme is effected.

    “Bidder” means:

    1. (a)

      in relation to an Off-Market Bid or Market Bid, a bidder within the meaning of the Corporations Act and, in respect of an Issuer incorporated or established outside Australia, the equivalent entity; and

    2. (b)

      in relation to a Scheme, the entity or entities in a similar position to a bidder.

    “Business Day” means a day other than a Saturday, Sunday, New Year’s Day, Good Friday, Easter Monday, Christmas Day or Boxing Day.

    “Buyer” means, in relation to a Derivatives Market Transaction, the Trading Participant whose purchase, bid or buy instruction, order or other Trading Message has resulted in the Derivatives Market Transaction being entered into, whether or not in connection with any Crossing, other Derivatives Market Transaction or any transaction in any Cash Market Product or Non-ASX Contract and includes the taker of an Options Market Contract.

    “Cash Market Product” means a Quoted Product, a Warrant admitted to Trading Status, an AQUA Product admitted to Trading Status or to the AQUA Quote Display Board, a CGS Depository Interest admitted to Trading Status and any other product that the Market Operator authorises for trading on a Trading Platform as a Cash Market Product.

    “Cash Market Transaction” means a transaction between Trading Participants for one or more Cash Market Products.

    “Cash Only Combination” means a transaction consisting of two or more component Cash Market Transactions, in a specific ratio, in respect of which:

    1. (a)

      entry into each component Cash Market Transaction is contingent on entry into each of the other component Cash Market Transactions;

    2. (b)

      the combined transaction has a net price; and

    3. (c)

      each transaction is for the same client.

    “Central Order book” means a part of a Trading Platform which is a facility for submitting Trading Messages and entering into transactions in respect of:

    1. (a)

      Derivatives Market Contracts;

    2. (b)

      Cash Market Products;

    3. (c)

      Tailor-Made Combinations;

    4. (d)

      Standard Combinations.

    “CGS Depository Interest” has the meaning given by section 761A of the Corporations Act.

    “CHESS Depository Interest” has the meaning given to the term “CDI” by Rule 2.13.1 of the Operating Rules of ASX Settlement Pty Limited (ACN 008 504 532).

    “Class” means, in relation to Derivatives Market Contracts, all Contract Series with the same Underlying Index, Underlying Commodity, Underlying Financial Product or Underlying Instrument, as applicable.

    “Clearing Facility” means, in relation to a Market Transaction, the clearing and settlement facility, within the meaning of section 761A of the Corporations Act, through which the Market Transaction has been or will be cleared.

    “Clearing Obligation” means an obligation imposed on a Clearing Participant under the Clearing Rules.

    “Clearing Participant” means a person admitted as a participant under the Clearing Rules.

    “Clearing Rules” means:

    1. (a)

      in relation to a particular Clearing Facility, the operating rules, procedures, practices, directions, decisions and requirements of that Clearing Facility;

    2. (b)

      in relation to a particular Clearing Participant, the rules of the Clearing Facility to which that Clearing Participant is subject.

    “Client Agreement” means an agreement between the Trading Participant and its client, entered into under Rule 3.1.6, 3.1.7, 3.1.8 or 3.1.9.

    “Combination” means a Cash Only Combination or a Derivatives Combination.

    “Commencement Date” means the date this instrument commences, as set out in Rule 1.1.3.

    “Company Announcements Office” means the office of the Market Operator that processes announcements regarding Listed Entities for release to the Market.

    “Competition Market Integrity Rules” means the ASIC Market Integrity Rules (Competition in Exchange Markets) 2011 as amended from time to time.

    “Compliance Education” means education or professional development directly related to compliance obligations, policies, procedures and ethics with specific relevance to the obligations of the Market Participant and the Responsible Executive under these Rules, the Market Operating Rules, the Clearing Rules and the Settlement Rules.

    “Compliance Education Requirements” means the successful completion of 8 hours of Compliance Education during the period from 1 July each year to 30 June in the following year.

    “Compliance Manager” means a person who has responsibility for all or part of the compliance function in the business of the Market Participant in connection with the Market.

    “Conditional Sale” means a sale which is subject to fulfilment of conditions and made on a market declared by the Market Operator to be a conditional market.

    “Continuing Professional Education Requirements” means the requirements of Rule 2.4.21.

    “Contract Series” means a Futures Series or an Option Series.

    “Controlled Trust” means a trust in relation to which an Employee, Immediate Family of an Employee or a company controlled by an Employee:

    1. (a)

      is a trustee;

    2. (b)

      holds more than 50% of the whole beneficial interest; or

    3. (c)

      controls the trust.

    “Controller” means:

    1. (a)

      a person holding 20% or more of the total votes attached to voting shares of a Market Participant or a person who, together with Related Parties, holds 20% or more of such votes; or

    2. (b)

      a person who has the power to control the Market Participant, whether that power is direct or indirect or is, or can be, exercised as a result of, by means of, in breach of, or by revocation of, trusts, relevant agreements and practices, or any of them, and whether or not they are enforceable,

    but for the purposes of Part 5.2 does not include an entity if the entity, a holding company of the entity, or a subsidiary of the entity through which the entity has an interest in the Market Participant is an entity listed on the Market or with any other Australian market licensee or a Recognised Overseas Stock Exchange.

    “Corporations Act” means the Corporations Act 2001 (Cth).

    “Cross” or “Crossing”, means a transaction in respect of which a Trading Participant acts:

    1. (a)

      on behalf of both buying and selling clients to that transaction; or

    2. (b)

      on behalf of a buying or selling client on one side of that transaction and as Principal on the other side.

    “Crossing System” means any automated service provided by a Market Participant which matches or executes client Orders with Orders of:

    1. (a)

      the Market Participant;

    2. (b)

      other clients of the Market Participant; or

    3. (c)

      any other person whose Orders access the automated service;

    otherwise than on an Order Book.

    “Cross-Market Combination” means a transaction consisting of one or more component Market Transactions and one or more transactions in Non-ASX Contracts, in a specific ratio, in respect of which:

    1. (a)

      entry into each component Market Transaction and each component transaction in a Non-ASX Contract is contingent on entry into each of the other component Market Transactions and transactions in Non-ASX Contracts;

    2. (b)

      the combined transaction has a net price; and

    3. (c)

      each transaction is for the same client.

    “CSPA Session State” means the session on the Trading Platform, known as the Closing Single Price Auction, during which the following parameters apply:

    1. (a)

      an Auction is conducted on commencement of the session;

    2. (b)

      no Bids and Offers may be entered, amended or cancelled in the Trading Platform;

    3. (c)

      Qualifying Bids and Offers that have not been matched in the Auction will be carried through to the next session In Price/Time Priority; and

    4. (d)

      no trades may be reported.

    “Dealing Rules” means the Rules and the Market Operating Rules that govern the submission of orders and the execution and reporting of Market Transactions on a Trading Platform.

    “Derivative” has the meaning given by section 761D of the Corporations Act.

    “Derivative/Cash Combination” means a transaction consisting of one or more component Cash Market Transactions and one or more component Derivatives Market Transactions, in a specific ratio, in respect of which:

    1. (a)

      entry into each component Cash Market Transaction and each component Derivatives Market Transaction is contingent on entry into each other component Cash Market Transaction and Derivatives Market Transaction;

    2. (b)

      the combined transaction has a net price; and

    3. (c)

      each transaction is for the same client.

    “Derivatives Combination” means a Derivatives Only Combination, a Derivative/Cash Combination or a Cross-Market Combination.

    “Derivatives Market Contract” means a Futures Market Contract, an Options Market Contract and any other contract that the Market Operator authorises for trading on a Trading Platform as a Derivatives Market Contract.

    “Derivatives Market Transaction” means a transaction between Trading Participants for one or more Derivatives Market Contracts.

    “Derivatives Only Combination” means a transaction which comprises at least two component Derivatives Market Transactions, in a specific ratio, in respect of which:

  1. (a)

    entry into each component Derivatives Market Transaction is contingent on entry into each of the other component Derivatives Market Transactions;

  2. (b)

    the combined transaction has a net price; and

  3. (c)

    each transaction is for the same client.

“DTR” means a Representative of the Trading Participant who has been authorised by the Trading Participant to submit Trading Messages to the Trading Platform on behalf of the Trading Participant.

“DTR identifier” means a unique code, allocated by the Trading Participant under Rule 2.5.6, that identifies a DTR.

“Employee” in relation to a Market Participant includes a director, employee, officer, agent, representative, consultant or adviser of that Market Participant, or an independent contractor who acts for or by arrangement with a Market Participant.

“Equilibrium Price” means, in relation to a Product, the price calculated by applying the principles below (to each Product) in the following order until a single price results:

  1. (a)

    maximum executable volume—this principle determines the price (or prices) at which the largest possible executable volume is achieved;

  2. (b)

    minimum surplus—this principle ascertains the price (or prices) at which the unfilled or unmatched quantity is at a minimum;

  3. (c)

    market pressure—this principle ascertains whether the result achieved under the previous principle exists on the buy or sell side of the market; and

  4. (d)

    reference price—this principle narrows the potential prices as calculated above and confirms one of the potential prices;

  5. (e)

    confirmation occurs by using either:

    1. (i)

      the price of the last on-market trade for that day; or

    2. (ii)

      if no on-market trades have occurred on the Trading Day, the official closing price from the previous Trading Day;

  6. (f)

    where a confirmation cannot be achieved (as no on-market trades have ever occurred) the lowest of the narrowed potential prices will become the relevant price.

“Equity Market” means a Financial Market, on or through which offers to acquire or dispose of Equity Market Products are made or accepted, the operator of which is licensed under subsection 795B(1) of the Corporations Act.

“Equity Market Operator” means an entity that is licensed under subsection 795B(1) of the Corporations Act to operate an Equity Market.

“Equity Market Product” means:

  1. (a)

    a share in a body;

  2. (b)

    a financial product referred to in subparagraph 764A(1)(b)(i) or subparagraph 764A(1)(ba)(i) of the Corporations Act; or

  3. (c)

    a right (whether existing or future and whether contingent or not) to acquire, by way of issue, the following under a rights issue:

    1. (i)

      a share covered by paragraph (a); or

    2. (ii)

      a financial product covered by paragraph (b); or

  4. (d)

    a CHESS Depository Interest,

admitted to quotation on ASX.

“Equity Securities” means:

  1. (a)

    shares in a body corporate or an unincorporated body other than redeemable preference shares which are Loan Securities in accordance with paragraph (c) of the definition of Loan Securities; or

  2. (b)

    interests in a managed investment scheme, except those referred to in paragraph (d) of the definition of Loan Securities; or

  3. (c)

    renounceable and non-renounceable rights to subscribe for Securities other than Loan Securities; or

  4. (d)

    options over unissued Securities other than Loan Securities; or

  5. (e)

    convertible notes; or

  6. (f)

    any Securities which are determined by the Market Operator to be Equity Securities,

but does not include Options Market Contracts, or Securities determined to be Loan Securities by the Market Operator.

“ETF” means a Managed Fund:

  1. (a)

    which is listed on the Market or admitted to Trading Status as an AQUA Product or to the AQUA Quote Display Board;

  2. (b)

    with power and approval to continuously issue and have quoted on the Market, Equity Securities in the Managed Fund;

  3. (c)

    which provides for the issue of new Equity Securities in return for the subscriber transferring to the Managed Fund a portfolio of Securities, cash, or a combination of Securities and cash; and

  4. (d)

    for which the price of the Underlying Instrument is continuously disclosed or can be immediately ascertained.

“ETF Security” means a Financial Product issued by or provided pursuant to an ETF.

“Family Company” means a corporation:

  1. (a)

    controlled by the person or the Immediate Family of the person; or

  2. (b)

    in respect of which the person is beneficially entitled to more than 50% of the issued capital.

“Family Trust” means a trust in which:

  1. (a)

    the person or the Immediate Family of the person is the sole or majority beneficiary; or

  2. (b)

    the person has the ability to remove the trustee of the trust and replace that trustee with his or her own nominee.

“Financial Market” has the meaning given by section 767A of the Corporations Act.

“Financial Product” has the meaning given by Division 3 of Part 7.1 of the Corporations Act.

“Financial Product Advice” has the meaning given by section 766B of the Corporations Act.

“Futures Market Contract” means a contract on the terms of a Futures Series.

“Futures Market Transaction” means a Market Transaction for one or more Futures Market Contracts.

“Futures Option” means an Options Market Contract in respect of which the Underlying Financial Product is a Futures Market Contract.

“Futures Series” means a set of contractual terms on which futures contracts are authorised for trading by the Market Operator.

“Immediate Family” in relation to a person, means that person’s spouse and any non-adult children.

“In Price/Time Priority” means, in respect of Bids and Offers, in accordance with the following order:

  1. (a)

    Bids entered into a Trading Platform are ranked from highest to lowest priced and Offers are ranked from lowest to highest priced;

  2. (b)

    Bids entered into a Trading Platform are ranked above Bids entered later at the same price and Offers entered into a Trading Platform are ranked above Offers entered later at the same price; and

  3. (c)

    an Order withdrawn from a Trading Platform loses its priority under (a) and (b) and, if re-entered, will be treated as a new Order.

“Initial Margin” means, in relation to an Open Contract, an amount of money determined by a Clearing Facility as the initial margin for the Open Contract, in accordance with the Clearing Rules.

“Issuer” means, in relation to a Cash Market Product, the legal entity which issues the Cash Market Product.

“Late Trading Session State” means the session on the Trading Platform, during which the following parameters apply:

  1. (a)

    no Bids and Offers may be entered or amended;

  2. (b)

    Bids and Offers remaining from the previous session may be cancelled;

  3. (c)

    no Bids or Offers will be automatically matched;

  4. (d)

    manual procedures for matching In Price/Time Priority apply;

  5. (e)

    allowable trades may be reported.

“LEPOs”, or Low Exercise Price Options, means options to:

  1. (a)

    buy an agreed number of shares at a specified future date at an exercise price of 1 cent;

  2. (b)

    notionally buy an Underlying Index at a specified future date at a strike price of 1 point.

“Level One Accredited Derivatives Adviser” means a person who has been accredited under Rule 2.4.7 and whose accreditation is current.

“Level Two Accredited Derivatives Adviser” means a person who has been accredited under Rule 2.4.8 and whose accreditation is current.

“Listed Entity” means an entity included in the Official List.

“Listing Rules” has the meaning given by section 761A of the Corporations Act.

“Loan Securities” means:

  1. (a)

    debentures, stocks or bonds issued or proposed to be issued by a government; or

  2. (b)

    debentures of a body corporate or an unincorporated body; or

  3. (c)

    redeemable preference shares which have a fixed and certain date for redemption, other than shares having a participating entitlement to rights or options referred to in paragraphs (c) and (d) of the definition of Equity Securities; or

  4. (d)

    interests in a managed investment scheme, relating to a financial or business undertaking or scheme, common enterprise or investment contract, the trustee or representative or responsible entity of which only invests in or acquires one or more of Loan Securities, mortgages and cash; or

  5. (e)

    any Securities which are determined by the Market Operator to be Loan Securities,

but does not include Options Market Contracts, or Securities determined to be Equity Securities by the Market Operator.

“Managed Discretionary Account” means a service with the following features:

  1. (a)

    a person makes client contributions;

  2. (b)

    the client agrees with the Market Participant that the client’s portfolio assets will:

    1. (i)

      be managed by the Market Participant at its discretion, subject to any limitation that may be agreed, for purposes that include investment;

    2. (ii)

      not be pooled with property that is not the client’s portfolio assets to enable an investment to be made or made on more favourable terms; and

    3. (iii)

      be held by the client unless a beneficial interest but not a legal interest in them will be held by the client; and

  3. (c)

    the client and the Market Participant intend that the Market Participant will use client contributions of the client to generate a financial return or other benefit from the Market Participant’s investment expertise.

“Managed Fund Product” means a Financial Product issued by or provided pursuant to a Managed Fund.

“Managed Fund” means:

  1. (a)

    a managed investment scheme which is a registered managed investment scheme pursuant to section 601EB of the Corporations Act or a managed investment scheme which ASIC has exempted from those registration requirements.; or

  2. (b)

    a foreign company which has the economic features of a managed investment scheme, namely:

    (i) investors contribute money or money’s worth to acquire rights to benefits produced by the collective investment;

    (ii) contributions of investors are to be pooled, or used in a common enterprise, to produce financial benefits, or benefits consisting of rights or interests in property, for investors holding Financial Products in the collective investment; and

    (iii) investors holding Financial Products issued in the collective investment do not have day to day control over the operation of the collective investment.

“Market” means the market operated by the Market Operator under Australian Market Licence (Australian Stock Exchange Limited) 2002.

“Market Bid” means a market bid within the meaning of the Corporations Act and, in respect of an Issuer incorporated or established outside Australia, any similar form of bid.

“Market Listing Rules” means the Listing Rules of the Market.

“Market Maker” means a Trading Participant registered by the Market Operator as a market maker, which has an obligation to make a market in assigned Classes of Derivatives Market Contracts.

“Market Operating Rules” means the Operating Rules of the Market, other than the Market Listing Rules.

“Market Operator” means ASX.

“Market Participant” means a participant in the Market admitted under the Market Operating Rules.

“Market Transaction” means a transaction for one or more Products, entered into on a Trading Platform or reported to the Market Operator under the Market Operating Rules.

“National Voiceline System” means a dedicated communications service supplied to subscribers by the Market Operator which provides access to voice announcements originating from the Market Operator.

“NGF” has the meaning given by section 880B of the Corporations Act.

“Non-ASX Contract” means a contract, Underlying Commodity, Underlying Instrument or Underlying Financial Product that is available for trading on a Non-ASX Market.

“Non-ASX Market” means a market operated by a person other than ASX.

“Off-Market Bid” means an off-market bid within the meaning of the Corporations Act and in respect of an Issuer incorporated or established outside Australia, any similar form of bid.

“Offer” means:

  1. (a)

    in relation to a Cash Market Product, a price and quantity of the Cash Market Products to be sold; and

  2. (b)

    in relation to a Derivatives Market Contract, means an offer to enter into a Derivatives Market Contract in respect of the relevant Contract Series as Seller.

“Offer Period” means:

  1. (a)

    in relation to a Takeover Bid, the period for which offers under the bid remain open; or

  2. (b)

    in relation to a Scheme, the period from the date an announcement of intention to propose a Scheme is first received by the Market until the date on which the Scheme is effected.

“Official List” means the official list of the Market.

“Official Quotation”, in relation to Financial Products, means admitted to quotation by the Market Operator under the Market Listing Rules.

“On-Market”, in relation to a transaction for the purpose of Chapter 6 of the Corporations Act, means a transaction by a Trading Participant for the acquisition of Cash Market Products which is:

  1. (a)

    effected during Trading Hours by matching of Trading Messages on a Trading Platform (other than a Crossing) in accordance with the Market Operating Rules; or

  2. (b)

    a Crossing effected during Trading Hours (excluding a time during which an auction is conducted on the Market) in accordance with the Market Operating Rules if:

    1. (i)

      the Crossing is arranged solely by a Trading Participant and is not prearranged between the principals to the transaction; and

    2. (ii)

      each principal is indifferent as to the identity of the other,

where:

  1. (iii)

    the expression “principal” includes the principal’s associates, advisers and advisers’ associates; and

  2. (iv)

    the expression “adviser” does not include a person only providing services to the principal as a broker,

but does not include:

  1. (c)

    Special Crossings; and

  2. (d)

    Crossings (other than Special Crossings) that are effected outside of Trading Hours.

“Open Contract” means a contract, on the terms of a Contract Series, which is registered with a Clearing Facility under the Clearing Rules and any contract which replaces that contract through the transfer, adjustment or settlement to market of that contract under the Clearing Rules.

“Operating Rules” has the meaning given by section 761A of the Corporations Act.

“Open Interface” means the electronic protocol and message structure used to provide a mechanism for Trading Participants to access a Trading Platform which enables a Trading Participant to submit Trading Messages.

“Open Interface Device” means a logical connection or session with the gateway using the Open Interface, and includes a session maintained by a Trader Workstation.

“Open Session State” means the session on the Trading Platform during which the following parameters apply:

  1. (a)

    an Auction is conducted on commencement of the session;

  2. (b)

    Qualifying Bids and Offers that have not been matched in the Auction on transition to the session retain their ranking In Price/Time Priority;

  3. (c)

    Bids and Offers may be entered, amended or cancelled in the Trading Platform;

  4. (d)

    Bids and Offers are matched In Price/Time Priority on a continuous basis; and

  5. (e)

    allowable trades may be reported.

“Options Market Contract” means a contract on the terms of an Option Series.

“Options Market Transaction” means a Market Transaction for one or more Options Market Contracts.

“Option Series” means a set of contractual terms on which options are authorised for trading by the Market Operator.

“Order” means:

  1. (a)

    in relation to Cash Market Products, an instruction to purchase or sell Cash Market Products, or an instruction to amend or cancel a prior instruction to purchase or sell Cash Market Products; and

  2. (b)

    in relation to Derivatives Market Contracts, an instruction to enter into a Derivatives Market Transaction, or an instruction to amend or cancel a prior instruction to enter into a Derivatives Market Transaction.

“Order Book” means an electronic list of Orders, maintained by or on behalf of an Equity Market Operator, on which those Orders are matched with other Orders in the same list.

“Own Account” has the meaning given by Rule 5.1.1.

“Other Regulated Entities” means entities prescribed by regulations made for the purposes of paragraph 798H(1)(c) of the Corporations Act, that must comply with these Rules.

“Overseas Broker” means a broker whose principal place of business is located outside Australia.

“Partly Paid Security” means a Quoted Product for which the holder may be liable to pay a call or instalment in accordance with the terms of issue and for which an amount remains unpaid, but does not include a Quoted Product issued by a no liability company.

“Prescribed Person” means, in relation to a Market Participant:

  1. (a)

    an Employee, a director, a partner, or Responsible Executive of the Market Participant;

  2. (b)

    a Controller of the Market Participant or a Related Body Corporate of that Controller;

  3. (c)

    the Immediate Family of a person referred to in paragraphs (a) or (b);

  4. (d)

    a Family Company and a Family Trust of a person referred to in paragraphs (a) to (c); and

  5. (e)

    where a Market Participant or a person referred to in paragraphs (a) to (d) is a body corporate, anybody corporate or other entity controlled by that body corporate.

“Principal”, in the context of “as Principal” has the meaning given to that term in Rule 3.2.5.

“Principal Trader” means a Market Participant with Trading Permission for one or more Products which limits it to trading on its own behalf.

“Product” means a Cash Market Product or a Derivatives Market Contract, as applicable.

“Qualifying Bid or Offer” means, in relation to an Auction, a Bid or Offer in the Trading Platform at the commencement of the Auction.

“Quoted Product” means a Financial Product that has been granted Official Quotation.

“Recognised Overseas Stock Exchange” means a Recognised Stock Exchange whose principal place of business is located outside Australia.

“Recognised Stock Exchange” has the meaning given by the Market Operating Rules.

“Related Body Corporate” has the meaning given by section 50 of the Corporations Act.

“Related Party”:

  1. (a)

    in relation to a body corporate:

    1. (i)

      has the meaning given by section 228 of the Corporations Act; or

    2. (ii)

      means a Substantial Holder of the body corporate;

  2. (b)

    in relation to a trust, which is not a registered management investment scheme, means the management company, trustee and their related parties within the meaning of section 228 of the Corporations Act;

  3. (c)

    in relation to a trust which is a registered managed investment scheme, means the responsible entity and a related party of the responsible entity under section 228 of the Corporations Act, as modified by section 601LA of the Corporations Act;

  4. (d)

    in relation to a person, means:

    1. (i)

      his or her spouse, de facto spouse, parent, son, or daughter, or a spouse or de facto spouse of that person;

    2. (ii)

      an entity over which one or more of the persons referred to in subparagraph (i) has control;

    3. (iii)

      an entity that he or she controls, or its holding company or which is controlled by the holding company;

    4. (iv)

      a person who acts, or proposes to act, in concert with anyone referred to above;

    5. (v)

      a person who was a related party in the previous 6 months, or who would be a related party in the future, under the tests in section 228 of the Corporations Act (applied with any necessary adaptation).

“Relative”, in relation to a person, means the spouse, parent or remoter lineal ancestor, son or daughter or remoter issue, or brother or sister of that person.

“Relevant Activities” means, in relation to a particular Responsible Executive, the operations and processes of that part of the Market Participant’s business which the document given to ASIC under subrule 2.1.2(1) or (2), or notification given to ASIC under subrule 2.1.2(3), identifies as being under the supervision of that Responsible Executive, while that Responsible Executive remains responsible in respect of that part of the business.

“Relevant Clearing Participant” means, in relation to a Trading Participant:

  1. (a)

    where the Trading Participant is not itself a Clearing Participant and has a third party clearing arrangement with only one Clearing Participant to clear all of its Market Transactions in a class of Product, that Clearing Participant; and

  2. (b)

    where the Trading Participant is itself a Clearing Participant and clears all of its Market Transactions in a class of Products, itself; and

  3. (c)

    where the Trading Participant has third party clearing arrangements with more than one Clearing Participant, or is itself a Clearing Participant and has third party clearing arrangements with other Clearing Participants to clear its Market Transactions in a class of Product, the Clearing Participant which it has identified through the Open Interface Device in respect of the Market Transaction.

“Renewal Date” means the date notified by ASIC to the Market Participant under paragraph 2.4.9(2)(b), subrule 2.4.14(2) or paragraph 2.4.20(5)(b), as the date on which a person will cease to be an Accredited Adviser, unless their accreditation is renewed before that date under subrule 2.4.14(2) or 2.4.15(3).

“Renewal Period” means the period that commences 60 days prior to the Renewal Date and ends 7 days prior to the Renewal Date.

“Reportable Short Sale Order” means an Order to sell Section 1020B Products which, if executed, would result in a Reportable Short Sale Transaction.

“Reportable Short Sale Transaction” means a transaction for the sale of Section 1020B Products for which the seller is required to comply with subsection 1020AB(3) of the Corporations Act.

“Representative” has the meaning given by section 910A of the Corporations Act.

“Responsible Executive” means at any time, in relation to a Market Participant, an individual who is shown as having executive responsibility for the supervision and control of all or part of the business of that Market Participant in the document provided to ASIC under subrule 2.1.2(1) or (2) or the notification provided to ASIC under subrule 2.1.2(3).

“Retail Client” has the meaning given by section 761G of the Corporations Act.

“Rules” means these market integrity rules.

“Scheme” means:

  1. (a)

    a compromise or arrangement within the meaning of section 411 of the Corporations Act; and

  2. (b)

    in respect of an Issuer incorporated or established outside Australia, any similar form of compromise or arrangement under the law of the jurisdiction of incorporation or establishment,

which has a similar result to an Off-Market Bid or Market Bid.

“Section 1020B Products” has the meaning given by subsection 1020B(1) of the Corporations Act.

“Securities Lending Arrangement” has the meaning given by subsection 1020AA(1) of the Corporations Act.

“Security” or “security” means:

  1. (a)

    a “security” within the meaning of section 761A of the Corporations Act; or

  2. (b)

    a managed investment product.

“Seller” means, in relation to a Derivatives Market Transaction, the Trading Participant whose sell or offer instruction, order or other Trading Message has resulted in the Derivatives Market Transaction being entered into, whether or not in connection with any other Crossing, Derivatives Market Transaction or any transaction in any Cash Market Product or Non-ASX Contract and includes the writer of an Options Market Contract.

“Settlement Facility” means, in relation to a Market Transaction, the clearing and settlement facility, within the meaning of section 761A of the Corporations Act, through which the Market Transaction has been or will be settled.

“Settlement Participant” means a person admitted as a participant under the Settlement Rules.

“Settlement Rules” means the operating rules, procedures, practices, directions, decisions and requirements of a Settlement Facility.

“Special Crossing”:

  1. (a)

    in relation to an Equity Market Product, meansa block trade or a large portfolio trade, within the meaning of the Competition Market Integrity Rules, entered into other than by matching of Orders on an Order Book of an Equity Market; and

  2. (b)

    in relation to a Product other than an Equity Market Product, has the meaning given by the Market Operating Rules.

“Standard Combination” has the meaning given by the Market Operating Rules.

“Structured Product” means a Security or Derivative:

  1. (a)

    which gives the holder financial exposure to the performance of one or more Underlying Instruments;

  2. (b)

    the value of which is linked to the performance of those Underlying Instruments; and

  3. (c)

    whereby investors do not have day to day control over the operation of the entity which issues or provides the Security or Derivative.

“Substantial Holder”:

  1. (a)

    for the purposes of Rule 3.2.5, when used to refer to a Substantial Holder in a corporation, means a person who has or would have a substantial holding if Part 6C of the Corporations Act applied to that corporation; and

  2. (b)

    for the purposes of any other Rule includes a reference to:

    1. (i)

      a person who has a relevant interest in not less than 5% of a class of non-voting shares of the relevant company or its holding company; and

    2. (ii)

      each person who has a relevant interest in voting shares and non-voting shares of the relevant company or its holding company and whose aggregate holdings exceed 5% in number of the voting shares on issue of the relevant company or its holding company.

“Tailor-Made Combination” has the meaning given by the Market Operating Rules.

“Takeover Bid” means an Off-Market Bid or Market Bid.

“Takeover Offer” means:

  1. (a)

    an offer under a Takeover Bid and, in respect of an Issuer incorporated or established outside Australia, any similar form of offer; and

  2. (b)

    a Scheme.

“Target” means:

  1. (a)

    in relation to an Off-Market Bid or Market Bid, a target within the meaning of the Corporations Act and, in respect of an Issuer incorporated or established outside Australia, the equivalent entity; and

  2. (b)

    in relation to a Scheme, the entity or entities in a similar position to a target.

“Terms of Issue” means, in relation to Warrants, rights, conditions and obligations of the Warrant-Issuer and the holder of the Warrant.

“Trader Workstation” means a personal computer with Trader Workstation Software installed.

“Trader Workstation Software” means the software product provided by the Market Operator or a subsidiary for use by Trading Participants which provides a Trader Workstation with the functionality necessary to use the Open Interface for trading on a Trading Platform.

“Trading Day” means a day on which Market Transactions may be entered into by Trading Participants on a Trading Platform.

“Trading Hours”, in relation to the Market, means the times during which:

  1. (a)

    Orders may be entered, amended or cancelled on the Order Books of the Market; and

  2. (b)

    Orders are matched and transactions are executed on a continuous basis on the Market,

and includes a time during which an auction is conducted on the Market.

“Trading Messages” means those messages submitted into a Trading Platform relating to trading functions, such as Orders, amendment or cancellation of Orders and the reporting or cancellation of Market Transactions on the Trading Platform.

“Trading Participant” means a Market Participant which has Trading Permission in respect of one or more Products.

“Trading Permission” means the right to submit Trading Messages in a Trading Platform.

“Trading Platform” means a facility made available by the Market Operator to Trading Participants for the entry of Trading Messages, the matching of Orders, the advertisement of invitations to trade and the reporting of transactions.

“Trading Status” means authorisation by the Market Operator for a CGS Depository Interest, a Warrant or AQUA Product to be traded on the Market.

“Trading Suspension” means a halt or suspension in trading on an Equity Market pursuant to the exercise of a power by an Equity Market Operator under the Operating Rules of the Equity Market, during which Orders may not be matched or executed on the relevant Equity Market, but does not include a halt or suspension caused by a technical problem (including a power outage) affecting the technical infrastructure used by the operator of the Equity Market for the purposes of receiving Trading Messages, matching and executing Orders and reporting transactions.

“Training Register” means the list, published on ASIC’s website, of training courses and assessment services that meet ASIC’s training requirements under Regulatory Guide 146 Licensing: Training of financial product advisers (RG 146).

“Underlying Financial Product” means, in relation to a Derivatives Market Contract, the Financial Product underlying that contract.

“Underlying Commodity” means, in relation to a Derivatives Market Contract, the commodity which underlies that contract.

“Underlying Index” means, in relation to a Derivatives Market Contract, the index which underlies that contract.

“Underlying Instrument” means:

  1. (a)

    in relation to Option Series and Futures Series, the instrument which underlies that Option Series or Futures Series;

  2. (b)

    in relation to Warrants means the Financial Product, index, foreign or Australian currency or commodity which underlies that Warrant; and

  3. (c)

    in relation to AQUA Products means the Financial Product, index, foreign or Australian currency, commodity or other point of reference for determining the value of the AQUA Product.

“Underlying Market” means, in relation to a Derivatives Market Contract, a market in the instruments, commodities, securities or other things which underlie the Derivatives Market Contract.

“Unprofessional Conduct” includes:

  1. (a)

    conduct which amounts to impropriety affecting professional character and which is indicative of a failure either to understand or to practise the precepts of honesty or fair dealing in relation to other Market Participants, clients or the public;

  2. (b)

    unsatisfactory professional conduct, where the conduct involves a substantial or consistent failure to reach reasonable standards of competence and diligence; and

  3. (c)

    conduct which is, or could reasonably be considered as likely to be, prejudicial to the interests of the Market Operator or Market Participants,

by a Market Participant, or an Employee, whether in the conduct of the Market Participant’s business as a Market Participant or in the conduct of any other business, and need not involve a contravention of these Rules or any law.

“Warrant” means:

  1. (a)

    a financial instrument which gives the holder of the instrument the right:

    1. (i)

      to acquire the Underlying Instrument; or

    2. (ii)

      to require the Warrant-Issuer to acquire the Underlying Instrument;

    3. (iii)

      to be paid by the Warrant-Issuer an amount of money to be determined by reference to the amount by which a specified number is greater or less than the number of an index; or

    4. (iv)

      to be paid by the Warrant-Issuer an amount of money to be determined by reference to the amount by which the price or value of the Underlying Instrument is greater than or less than a specified price or value,

in accordance with the Terms of Issue and the Market Operating Rules that apply to Warrant-Issuers; or

  1. (b)

    any other Financial Product that is a “warrant” within the meaning given to that term in Corporations Regulation 1.0.02 and which the Market Operator notifies Trading Participants is a Warrant.

“Warrant-Issuer” means an entity approved by the Market Operator to issue Warrants.

“Wholesale Client” has the meaning given by subsection 761G(4) of the Corporations Act.

“Wholesale Client Agreement” means the agreement between a Trading Participant and a client lodged with a Clearing Facility in accordance with paragraph 3.1.12(d) and Rule 3.1.13.

Note: There is no penalty for this Rule.

Chapter 2: Participants and Representatives

Part 2.1Management requirements

2.1.1Management structure

(1) A Market Participant must, in relation to its conduct, and that part of its business that it conducts, on or in relation to the Market, wherever the conduct occurs or the business is located and regardless of the number of offices operated or intended to be operated by the Market Participant, have appropriate management structures in place to ensure that:

  1. (a)

    it has operations and processes in place that are reasonably designed, implemented, and that function, so as to achieve compliance by the Market Participant with these Rules and the Market Operating Rules;

  2. (b)

    the design, implementation, functioning and review of those operations and processes are subject to the supervision of one or more Responsible Executives; and

  3. (c)

    each Responsible Executive has sufficient seniority and authority within the Market Participant to exert control, leadership, influence and supervision over those operations and processes.

(2) A Market Participant must keep accurate records of its management structure and its allocation of responsibilities among its Responsible Executives.

Maximum penalty: $1,000,000

2.1.2Notification of management structure

(1) A Market Participant that is a Market Participant as at the Commencement Date must give to ASIC a document that sets out its management structure and its allocation of its responsibilities among its Responsible Executives, within 3 months of the Commencement Date.

(2) A Market Participant that was not a Market Participant as at the Commencement Date must give to ASIC a document that sets out its management structure and its allocation of its responsibilities among its Responsible Executives, within 10 Business Days of becoming a Market Participant.

(3) A Market Participant that has given to ASIC a document under subrule (1) or (2) must notify ASIC in writing, within 10 Business Days, of any significant change in the management structure or its allocation of its responsibilities among its Responsible Executives shown in that document.

Maximum penalty: $20,000

2.1.3Supervisory procedures

A Market Participant must have appropriate supervisory policies and procedures to ensure compliance by the Market Participant and each person involved in its business as a Market Participant with these Rules, the Market Operating Rules and the Corporations Act.

Maximum penalty: $1,000,000

2.1.4Persons involved in the business—Good fame and character requirement

(1) A Market Participant must ensure that any Employee or other person who is or will be involved in the business of the Market Participant in connection with the Market and, in the case of a body corporate, each director or Controller, is of good fame and character and high business integrity having regard to subrule (2).

(2) In assessing whether a person is of good fame and character and high business integrity for the purpose of subrule (1):

  1. (a)

    a person will not be of good fame and character if he or she is disqualified from managing a corporation under the Corporations Act or under the law of another country, or is an insolvent under administration or its equivalent in another country; and

  2. (b)

    a person may not be of good fame and character or high business integrity if the person has been:

    1. (i)

      convicted of any offence;

    2. (ii)

      disciplined or adversely mentioned in a report made by, or at the request of, any government or governmental authority or agency;

    3. (iii)

      adversely mentioned in a report made by, or at the request of, the Market Operator, a Clearing Facility, a Settlement Facility or any other exchange, market operator or clearing and settlement facility; or

    4. (iv)

      disciplined by the Market Operator, a Clearing Facility, a Settlement Facility or any other exchange, market operator or clearing and settlement facility.

Maximum penalty: $1,000,000

2.1.5Unprofessional Conduct

(1) A Market Participant must not engage in Unprofessional Conduct.

(2) A Market Participant must ensure that its Responsible Executives do not engage in Unprofessional Conduct.

Maximum penalty: $1,000,000

2.1.6Responsibility for individuals involved in business

A Market Participant is responsible for all actions and omissions of its Employees.

Note: There is no penalty for this Rule.

Part 2.2Insurance and information requirements

2.2.1Insurance requirements—Obligation to have insurance

(1) Subject to Rule 2.2.2, every Market Participant must, where the Market Participant acts for any person other than itself or a Related Body Corporate, take out and maintain, at all times, a professional indemnity (or equivalent) insurance policy that the Market Participant determines (acting reasonably) to be adequate having regard to the nature and extent of the business carried on by the Market Participant in connection with its business as a Market Participant and the responsibilities and risks assumed or which may be assumed by the Market Participant in connection with that business.

(2) The professional indemnity (or equivalent) insurance referred to in subrule (1) must include insurance against a breach of duty the Market Participant owes in a professional capacity, whether owed in contract or otherwise at law, arising from any act or omission of the Market Participant and its Employees.

Maximum penalty: $100,000

2.2.2Insurance requirements—Insurance with Related Body Corporate

If the insurance referred to in Rule 2.2.1 is provided by a Related Body Corporate, the Market Participant must provide ASIC with the following information by no later than 10 Business Days after the issue or renewal of the insurance:

  1. (a)

    the name of the Related Body Corporate and a copy of evidence sufficient to establish that it is a Related Body Corporate; and

  2. (b)

    confirmation from the Related Body Corporate that it is the insurer or the self-insurer covering and indemnifying the Market Participant against the liabilities referred to in Rule 2.2.1 and a copy of the certificate evidencing the insurance.

Maximum penalty: $20,000

2.2.4Insurance requirements—Notification of claims

In relation to any liability or potential liability of the type referred to in Rule 2.2.1, a Market Participant must immediately notify ASIC of any notification to its insurer of any claim, potential claim or circumstance that might give rise to a claim and must include the following details:

  1. (a)

    any circumstance which is likely to give rise to a claim or potential claim against the Market Participant;

  2. (b)

    the receipt of a notice from any person of any intention to make a claim or potential claim against the Market Participant; and

  3. (c)

    the details of any claim, potential claim or circumstance against the Market Participant, including the gross contingent liability, the net contingent liability, the full name of the Market Participant’s insurer and the date the Market Participant notified its insurer of the claim, potential claim or circumstance.

Maximum penalty: $20,000

2.2.5Information requirements—Obligation to notify of legal proceedings

If:

  1. (a)

    a Market Participant commences legal proceedings against, or has legal proceedings commenced against it by, another Market Participant, a Clearing Participant, a regulatory authority or a client in connection with their role as a Market Participant; and

  2. (b)

    those legal proceedings may affect the operations of the Market Operator, or the interpretation of these Rules or the Market Operating Rules,

the Market Participant must, upon commencing or upon becoming aware of the proceedings, immediately notify ASIC and the Market Operator in writing of the particulars of the proceedings.

Maximum penalty: $100,000

Part 2.3Responsible Executives

2.3.1Appointment or resignation of Responsible Executives

(1) A Market Participant must notify ASIC within 10 Business Days if the Market Participant appoints a new Responsible Executive, or if a person ceases to be a Responsible Executive of the Market Participant.

(2) A Market Participant must not appoint a person as a Responsible Executive unless:

  1. (a)

    the person has skills, knowledge and experience that are appropriate having regard to the supervisory role that the person will perform as a Responsible Executive in the business of the Market Participant; and

  2. (b)

    if the person was a Responsible Executive prior to the Commencement Date:

    1. (i)

      the person had satisfied the requirements of rule 3.6.5 of the operating rules in effect on the day immediately preceding the Commencement Date; and

    2. (ii)

      the Market Participant is satisfied on reasonable grounds that the person has completed an appropriate level of Compliance Education from the date the person passed the examination as required under the rule referred to in subparagraph (i) to the date the Market Participant appoints the person as Responsible Executive;

  3. (c)

    if the person becomes a Responsible Executive for the first time on or after the Commencement Date, the person has:

    1. (i)

      attained a mark of at least 65% in an examination approved by ASIC under subrule (3), in the 12 months preceding the date the Market Participant appoints the person as a Responsible Executive; and

    2. (ii)

      satisfied the Compliance Education Requirements from the date the person passed the examination as referred to in subparagraph (i) to the date the Market Participant appoints the person as a Responsible Executive, pro-rata to the number of full months in that period.

(3) For the purposes of subparagraph (2)(c)(i), ASIC may approve, in writing, one or more examinations that, in the opinion of ASIC, assess knowledge and competency in the application of the provisions of these Rules, the Market Operating Rules and the Corporations Act that govern the operation of the Market and are relevant to the role performed by Responsible Executives.

Maximum penalty: $20,000

2.3.2Ongoing responsibilities of Market Participants in relation to Responsible Executives

A Market Participant must ensure that each of its Responsible Executives:

  1. (a)

    supervises the design and implementation activities and the functioning and review of the operations and processes referred to in Rule 2.1.1 for the Relevant Activities of that Responsible Executive;

  2. (b)

    is accountable to the Market Participant for the effective design, implementation, functioning and review of the operations and processes referred to in paragraph (a).

Maximum penalty: $20,000

2.3.3Annual review and representation to Market Participant

(1) A Market Participant must ensure that each of its Responsible Executives:

  1. (a)

    maintains the currency of his or her knowledge of these Rules, the Market Operating Rules and the Corporations Act related to the business that the Market Participant conducts in the Market;

  2. (b)

    by 10 July each year, performs a review as at 30 June of that year, including all matters reasonably considered by the Responsible Executive to be necessary in the circumstances, of the supervision and control procedures involved in the business of the Market Participant and other relevant documentation concerning the Market Participant’s compliance with these Rules and the Market Operating Rules for the 12 month period ending on 30 June that year;

  3. (c)

    by 10 July each year, determines whether, based on the enquiries referred to in paragraph (b), the controls over the operations and processes of the Relevant Activities have been, during the period referred to in paragraph (b), and continue to be, reasonably designed, implemented and functioning to achieve compliance by the Market Participant with these Rules and the Market Operating Rules;

  4. (d)

    by 10 July each year, provides a signed and dated representation to the Market Participant as to whether:

    1. (i)

      the requirements of paragraphs (a) and (b) have been met for the period referred to in paragraph (b); and

    2. (ii)

      the controls over the operations and processes of the Relevant Activities have been, for the period referred to in paragraph (b), and continue to be, reasonably designed, implemented and functioning to achieve compliance by the Market Participant with the Market Operating Rules and these Rules.

(2) The Market Participant must retain copies of the representation referred to at paragraph (1)(d), and of the documentation concerning the Market Participant’s compliance with these Rules and the Market Operating Rules on which the representation is based, for 7 years from the date the representation is provided to the Market Participant.

Maximum penalty: $20,000

2.3.4Continuing education requirements for Responsible Executives

(1) Subject to subrule (2), a Market Participant must ensure that, during the period from 1 July each year until 30 June the following year, each of its Responsible Executives meets the Compliance Education Requirements pro-rata to the number of complete months during that period in which that person is a Responsible Executive of the Market Participant.

(2) For the period that commences on the Commencement Date and ends on 1 July in the following year, the Market Participant must ensure that each person that was a Responsible Executive of the Market Participant on the Commencement Date meets the Compliance Education Requirements pro-rata to the number of complete months in that period.

Maximum penalty: $20,000

2.3.5Annual continuing education and compliance self-assessment

(1) Subject to subrule (2), a Market Participant must provide a written notification to ASIC by 31 July each year that contains the following information:

  1. (a)

    the name of each person who was a Responsible Executive of the Market Participant during the period from 1 July in the preceding calendar year to 30 June in the calendar year in which the notification is provided;

  2. (b)

    if the person was a member of a professional body or bodies during the period referred to in paragraph (a), the name of that body or those bodies;

  3. (c)

    a statement in relation to each person that the Market Participant confirms that, during the period referred to in paragraph (a), the person:

    1. (i)

      has satisfied; or

    2. (ii)

      has not satisfied,

as the case may be, each of the requirements of subrule 2.1.4(1) (good fame and character), paragraphs 2.3.1(2)(a) and (b) or (c) (skills, knowledge, experience and qualifications), subrule 2.1.5(2) (Unprofessional Conduct), paragraph 2.3.3(1)(d) (annual representation) and Rule 2.3.4 (continuing education), while the person was a Responsible Executive of the Market Participant during that period;

  1. (d)

    if subparagraph (c)(ii) applies, an explanation of the reason that the person has not satisfied the requirement.

(2) A notification provided under subrule (1) prior to 1 August 2011 need only relate to the period from the Commencement Date to 30 June 2011.

(3) The Market Participant must retain copies of the records upon which the notification referred to in subrule (1) is based for 7 years from the end of the period to which the notification relates.

Maximum penalty: $20,000

Part 2.4Retail Client Adviser Accreditation

2.4.1Accreditation required

(1) A Market Participant must ensure that each of its Representatives who provides Financial Product Advice to a Retail Client in relation to:

  1. (a)

    Options Market Contracts;

  2. (b)

    Futures Market Contracts; or

  3. (c)

    Warrants,

holds the relevant accreditation required by these Rules.

(2) A Market Participant must not, and must ensure that a Representative does not, hold himself or herself out as holding a type of accreditation under these Rules if they do not hold that type of accreditation.

(3) A person:

  1. (a)

    accredited as a Level One Accredited Derivatives Adviser under the Rule 2.4.7 of the ASIC Market Integrity Rules (Chi-X Australia Market) 2011 holds the relevant accreditation required by these Rules for the provision of Financial Product Advice to a Retail Client in relation to subscribing for, buying, selling and exercising Warrants;

  2. (b)

    accredited as a Level Two Accredited Derivatives Adviser under the Rule 2.4.8 of the ASIC Market Integrity Rules (Chi-X Australia Market) 2011 holds the relevant accreditation required by these Rules for the provision of Financial Product Advice to a Retail Client in relation to subscribing for, buying, selling and exercising Warrants, and in relation to all trading strategies relating to Warrants.

Maximum penalty: $100,000

2.4.2Extent of advice to clients—Level One Accredited Derivatives Adviser

(1) A Market Participant must ensure that each of its Representatives who provides Financial Product Advice to a Retail Client in relation to:

  1. (a)

    taking Options Market Contracts (other than Futures Options);

  2. (b)

    writing Options Market Contracts (other than Futures Options), but only for the purpose of closing out a position or writing Covered Call Options under paragraph (e);

  3. (c)

    subscribing for and buying and selling Warrants;

  4. (d)

    exercising Warrants and Options Market Contracts (other than Futures Options); and

  5. (e)

    the Covered Call Option writing strategies as set out in Rule 2.4.3,

is accredited as a Level One Accredited Derivatives Adviser or a Level Two Accredited Derivatives Adviser.

(2) A Market Participant must ensure that each of its Representatives who is only accredited as a Level One Accredited Derivatives Adviser does not advise or make recommendations in relation to LEPOs.

Maximum penalty: $100,000

2.4.3Covered Call Option Strategy

(1) For the purposes of Rule 2.4.2, “a Covered Call Option” writing strategy entails either:

  1. (a)

    a client who already owns Underlying Financial Products in a particular Class writing Call Options over those Underlying Financial Products up to the number of Underlying Financial Products which the client owns and either prior to, or simultaneously with writing the Call Options, providing to the Clearing Facility those Underlying Financial Products as cover for the written Call Option obligations; or

  2. (a)

    a client buying a particular Class of Underlying Financial Products and simultaneously writing Call Options over those Underlying Financial Products on the understanding that the client will provide, to the Clearing Facility, within 3 Trading Days of entering into the strategy, the simultaneously purchased Underlying Financial Products as cover for the written Call Option obligations.

(2) For the purposes of subrule (1), “Call Option” means an Options Market Contract that gives the taker a right, but not an obligation, to buy the Underlying Financial Products.

Note: There is no penalty for this Rule.

2.4.4Extent of advice to clients—Level Two Accredited Derivatives Adviser

(1) A Market Participant must ensure that each of its Representatives who provides Financial Product Advice to a Retail Client in relation to:

  1. (a)

    taking, writing and exercising all Derivatives Market Contracts (other than Futures Market Contracts and Futures Options);

  2. (b)

    subscribing for, buying, selling and exercising Warrants;

  3. (c)

    all trading strategies relating to Derivatives Market Contracts (other than Futures Market Contracts and Futures Options); and

  4. (d)

    all trading strategies relating to Warrants,

is accredited as a Level Two Accredited Derivatives Adviser.

(2) For the avoidance of doubt, a person accredited as a Level Two Accredited Derivatives Adviser may advise and make recommendations in relation to the Products and strategies set out in Rules 2.4.2 and 2.4.3.

Maximum penalty: $100,000

2.4.5Extent of advice to clients—Accredited Futures Adviser

A Market Participant must ensure that each of its Representatives who provides Financial Product Advice to Retail Clients in relation to:

  1. (a)

    taking, writing and exercising Futures Market Contracts;

  2. (b)

    taking, writing and exercising Futures Options;

  3. (c)

    all trading strategies relating to Futures Market Contracts; and

  4. (d)

    all trading strategies relating to Futures Options,

is accredited as an Accredited Futures Adviser.

Maximum penalty: $100,000

2.4.6Accreditation—Accredited Futures Adviser

(1) ASIC may, subject to any conditions ASIC considers appropriate, accredit a person as an Accredited Futures Adviser for a period of time if:

  1. (a)

    the person is a Representative of a Market Participant and the Market Participant nominates the person to be an Accredited Futures Adviser under subrule (2);

  2. (b)

    the person:

    1. (i)

      is a Level Two Accredited Derivatives Adviser;

    2. (ii)

      has successfully completed an educational module or subject, or series of educational modules or subjects, approved by ASIC in accordance with subrule (4);

  3. (c)

    the person has read and understood:

    1. (i)

      these Rules;

    2. (ii)

      the Market Operating Rules; and

    3. (iii)

      other reading materials approved by ASIC in accordance with subrule (4); and

  4. (d)

    ASIC has no reason to believe that the person does not have the requisite skill, knowledge and integrity to give Financial Product Advice of the kind covered by Rule 2.4.5.

(2) A Market Participant may nominate a person to be an Accredited Futures Adviser by submitting a written application to ASIC that includes:

  1. (a)

    the full name and date of birth of the applicant, a statement that the applicant is a Representative of the Market Participant, and a description of the nature of the relationship of the applicant to the Market Participant (for example, employee);

  2. (b)

    the name, business address and AFSL number of the Market Participant nominating the applicant to be an Accredited Futures Adviser;

  3. (c)

    the name, position and contact telephone number of the person referred to in subrule (3);

  4. (d)

    a declaration, signed by the applicant, that the applicant has met the requirements of paragraphs (1)(b) and (c); and

  5. (e)

    if subparagraph (1)(b)(ii) applies, evidence that the applicant has met the requirements of that subparagraph.

(3) A director, partner, Responsible Executive or Compliance Manager of the Market Participant must sign and date the application referred to in subrule (2).

(4) For the purposes of paragraphs (1)(b) and (c), ASIC may approve, in writing, educational modules, subjects and reading materials that are relevant to Financial Product Advice of the kind covered by Rule 2.4.5.

Note: There is no penalty for this Rule.

2.4.7Accreditation—Level One Accredited Derivatives Adviser

(1) ASIC may, subject to any conditions ASIC considers appropriate, accredit a person as a Level One Accredited Derivatives Adviser for a period of time if:

  1. (a)

    the person is a Representative of a Market Participant and the Market Participant nominates the person to be a Level One Accredited Derivatives Adviser under subrule (2);

  2. (b)

    the person:

    1. (i)

      unless the person is applying for, or has been granted, an exemption under subrule 2.4.11(1), has obtained a score of 80% or more for an Accreditation Examination for Level One Accredited Derivatives Advisers approved by ASIC in accordance with subrule (4);

    2. (ii)

      has successfully completed an educational module or subject, or a series of educational modules or subjects, approved by ASIC in accordance with subrule (4); and

  3. (c)

    ASIC has no reason to believe that the person does not have the requisite skill, knowledge and integrity to provide Financial Product Advice of the kind covered by Rules 2.4.2 and 2.4.3.

(2) A Market Participant may nominate a person to be a Level One Accredited Derivatives Adviser by submitting a written application to ASIC that includes:

  1. (a)

    the full name, date of birth, business address and email address of the applicant, a statement that the applicant is a Representative of the Market Participant and a description of the nature of the relationship of the applicant to the Market Participant (for example, employee);

  2. (b)

    the name, business address and AFSL number of the Market Participant nominating the person to be a Level One Accredited Derivatives Adviser;

  3. (c)

    the name, position and contact telephone number of the director, partner, Responsible Executive or Compliance Manager of the Market Participant referred to in subrule (3);

  4. (d)

    unless the person has been granted, or is applying for, an exemption under subrule 2.4.11(1), a declaration by the Market Participant that the applicant meets the requirements of paragraph (1)(b);

  5. (e)

    if subparagraph (1)(b)(ii) applies, evidence that the applicant has successfully completed the educational subject or module, or series of educational subjects or modules, referred to in that subparagraph; and

  6. (f)

    an acknowledgement by the Market Participant that accreditation as a Level One Accredited Derivatives Adviser will only authorise the applicant to provide Financial Product Advice of the kind covered by Rules 2.4.2 and 2.4.3.

(3) A director, partner, Responsible Executive or Compliance Manager of the Market Participant must sign and date the application referred to in subrule (2).

(4) For the purposes of subrule (1), ASIC may approve examinations, educational modules or subjects, or a series of educational modules or subjects, that are relevant to Financial Product Advice of the kind covered by Rules 2.4.2 and 2.4.3.

Note: There is no penalty for this Rule.

2.4.8Accreditation—Level Two Accredited Derivatives Adviser

(1) ASIC may, subject to any conditions ASIC considers appropriate, accredit a person as a Level Two Accredited Derivatives Adviser for a period of time if:

  1. (a)

    the person is a Representative of a Market Participant and the Market Participant nominates the person as a Level Two Accredited Derivatives Adviser in accordance with subrule (2);

  2. (b)

    unless the person is applying for, or has been granted, an exemption under subrule 2.4.11(1), the person has obtained a score of 80% or more for each of the Accreditation Examinations for Level One Accredited Derivatives Advisers and Level Two Accredited Derivatives Advisers approved by ASIC in accordance with subrule (4); and

  3. (c)

    ASIC has no reason to believe that the person does not have the requisite skill, knowledge and integrity to provide Financial Product Advice of the kind covered by Rules 2.4.2, 2.4.3 and 2.4.4.

(2) A Market Participant may nominate a person to be a Level Two Accredited Derivatives Adviser by submitting a written application to ASIC that includes:

  1. (a)

    the full name, date of birth, business address, email address and contact telephone number of the applicant, a statement that the applicant is a Representative of the Market Participant and description of the nature of the relationship of the applicant to the Market Participant (for example, employee);

  2. (b)

    the name, business address and AFSL number of the Market Participant nominating the person to be a Level Two Accredited Derivatives Adviser;

  3. (c)

    the name, position and contact telephone number of the director, partner, Responsible Executive or Compliance Manager of the Market Participant referred to in subrule (3);

  4. (d)

    unless the person has been granted, or is applying for, an exemption under subrule 2.4.11(1), a declaration by the Market Participant that the applicant meets the requirements of paragraph (1)(b); and

  5. (e)

    an acknowledgement by the Market Participant that accreditation as a Level Two Accredited Derivatives Adviser will only authorise the applicant to provide Financial Product Advice of the kind covered by Rules 2.4.2, 2.4.3 and 2.4.4.

(3) A director, partner, Responsible Executive or Compliance Manager of the Market Participant must sign and date the application referred to in subrule (2).

(4) For the purposes of subrule (1), ASIC may approve, in writing one or more examinations that are relevant to Financial Product Advice of the kind covered by Rules 2.4.2, 2.4.3 and 2.4.4.

Note: There is no penalty for this Rule.

2.4.9Acceptance of application

(1) If ASIC is satisfied that:

  1. (a)

    an application for accreditation made by a Market Participant; and

  2. (b)

    the person in respect of which the application for accreditation is made,

under Rule 2.4.6, 2.4.7 or 2.4.8, meets the applicable requirements of the Rule, ASIC will accredit the person in the relevant category of accreditation.

(2) ASIC will give the Market Participant a written notice that a person has been accredited under subrule (1), specifying:

  1. (a)

    any conditions to which the accreditation is subject;

  2. (b)

    the Renewal Date.

(3) Nothing in subrule (1) prevents ASIC from seeking further information from the Market Participant for the purposes of satisfying itself that the person or the application meets the requirements of the relevant Rule.

Note: There is no penalty for this Rule.

2.4.10Rejection of application

(1) Subject to subrule (2), if ASIC is not satisfied that:

  1. (a)

    an application for accreditation made by a Market Participant; or

  2. (b)

    the person in respect of which the application for accreditation is made,

under Rule 2.4.6, 2.4.7 or 2.4.8, meets the applicable requirements of the Rule, ASIC will reject the application.

(2) ASIC will give the Market Participant a written notice that an application for accreditation has been rejected under subrule (1), specifying the reason or reasons why the application is rejected.

(3) Nothing in subrule (1) prevents ASIC from seeking further information from the Market Participant for the purposes of satisfying itself that the person or the application meets the requirements of the relevant Rule.

Note: There is no penalty for this Rule.

2.4.11Exemption for other accreditation and experience

(1) ASIC may exempt a person, in writing, from the requirement to sit an Accreditation Examination if the person has:

  1. (a)

    completed a course listed on ASIC’s Training Register as a specialist course and which, in the opinion of ASIC, provides appropriate coverage of these Rules, the Market Operating Rules, the Trading Platform and the relevant Products;

  2. (b)

    completed relevant training, other than a course listed on ASIC’s Training Register, and can demonstrate, to the satisfaction of ASIC, their knowledge of these Rules, the Market Operating Rules, the Trading Platform and the relevant Products; or

  1. (a)

    they first inform the clients concerned of the closing date of the issue or offering of the Cash Market Products and the reasons for the acquisition; or

  2. (b)

    the offer to the client is made more than 90 days from the closing date.

Maximum penalty: $100,000

5.10.6Expenses—Reimbursement for out-of-pocket expenses

Where a Trading Participant seeks out-of-pocket expenses involved in the purchase or sale of Cash Market Products, the Trading Participant must not cover that charge by an increase or reduction in the price of the Cash Market Products.

Maximum penalty: $100,000

5.10.7Nominee holdings—Restrictions on when an Equity Security can be recorded in the name of a nominee company

(1) A Market Participant must not cause the ownership of an Equity Security of which it is not the beneficial owner to be registered in its own name or in the name of its partners, directors or Employees.

(2) A Market Participant may only cause the ownership of an Equity Security referred to in subrule (1) to be registered in the name of a nominee company which:

  1. (a)

    unless otherwise agreed by ASIC, is incorporated in Australia with a name which contains the word “nominee”;

  2. (b)

    has a constitution which precludes the nominee company from owning any Equity Security or other property except cash beneficially; and

  3. (c)

    is a directly legally and beneficially wholly owned subsidiary of the Market Participant which is operated by the Market Participant unless the Market Participant is a Clearing Participant who appoints a Settlement Participant as its agent in accordance with the Clearing Rules.

Maximum penalty: $100,000

Part 5.11Suspicious activity reporting

5.11.1Notification requirement

(1) Subject to subrules (2) and (3), if a Market Participant has reasonable grounds to suspect that:

  1. (a)

    a person (“the Insider”) has placed an order into or entered into a transaction on the Market in relation to a financial product while in possession of inside information (within the meaning of section 1042A of the Corporations Act), whether or not the Market Participant is aware of:

    1. (i)

      the identity of the Insider; or

    2. (ii)

      all of the details of the order or transaction; or

  2. (b)

    a transaction or an order transmitted to a Trading Platform has or is likely to have the effect of:

    1. (i)

      creating an artificial price for trading in financial products on the Market;

    2. (ii)

      maintaining at a level that is artificial (whether or not it was previously artificial) a price for trading in financial products on the Market;

    3. (iii)

      creating, or causing the creation of, a false or misleading appearance of active trading in financial products on the Market; or

    4. (iv)

      creating, or causing the creation of, a false or misleading appearance with respect to the market for, or the price for trading in, financial products on the Market,

whether or not the Market Participant is aware of:

  1. (v)

    the intention of any party to the transaction or order; or

  2. (vi)

    all of the details of the transaction or order,

the Market Participant must, as soon as practicable, notify ASIC in writing of the details of the transaction or order (to the extent known to the Market Participant)and the reasons it suspects the matter set out in paragraphs (a) and/or (b).

(2) A Market Participant is not required to notify ASIC under subrule (1) if the Market Participant has reported the information that would otherwise be required to be contained in the notification to ASIC under subrule (1) to the Australian Transaction Reports and Analysis Centre under section 41 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 or under section 16 of the Financial Transaction Reports Act 1988.

(3) A Market Participant is not required to comply with subrule (1) until 1 November 2012.

Maximum penalty: $20,000

5.11.2Confidentiality

A Market Participant who notifies ASIC under subrule 5.11.1(1) must not disclose that the notification was made, or the information contained in the notification, to any person other than:

  1. (a)

    for the purposes of seeking legal advice; or

  2. (b)

    as required by law.

Maximum penalty: $20,000

Chapter 6: Takeovers

Part 6.1Market Bid—Announcements by Market Participant

6.1.1Announcement of Market Bid

(1) A Market Participant acting on behalf of a Bidder in relation to a Market Bid must announce the bid to the Market in accordance with subrule (2).

(2) For the purposes of subrule (1), the announcement must include the following information:

  1. (a)

    a description of the Bid Class of Cash Market Products in the Target and the total number of Cash Market Products in that Bid Class;

  2. (b)

    the price offered for Cash Market Products in the Bid Class;

  3. (c)

    the date of the commencement and conclusion of the Offer Period;

  4. (d)

    the number of Cash Market Products in the Bid Class that the Bidder had a relevant interest in immediately prior to the announcement (expressed as a percentage of the total number of Cash Market Products in the Bid Class); and

  5. (e)

    a statement:

    1. (i)

      as to whether the Bidder will buy Cash Market Products in the Bid Class On-Market before the Offer Period commences and, if so, the maximum number of those Cash Market Products to be bought and the price that will be paid;

    2. (ii)

      that the Market Bid is an offer to buy all the Cash Market Products in the Bid Class that exist or will exist at any time during the Offer Period for the price offered; and

    3. (iii)

      that the Offer Period may be extended and the offer price may be increased in accordance with the Corporations Act.

Maximum penalty: $100,000

6.1.2Announcement of variations to Market Bid

A Market Participant acting on behalf of a Bidder in relation to a Market Bid must announce to the Market, in writing:

  1. (a)

    an increase to the price offered for Cash Market Products in the Bid Class;

  2. (b)

    an extension to the Offer Period;

  3. (c)

    a withdrawal of the Market Bid;

  4. (d)

    any other variation to the Market Bid in accordance with the Corporations Act; or

  5. (e)

    if the Market Participant ceases to act on behalf of the Bidder.

Maximum penalty: $100,000

Part 6.2Acquisition of Cash Market Products during the Bid Period

6.2.1Acquisition of Cash Market Products by Bidder

(1) This rule applies to both Market Bids and Off-Market Bids.

(2) A Market Participant acting on behalf of a Bidder must not offer to buy on behalf of the Bidder Cash Market Products in the Bid Class On-Market during the Bid Period for a price that varies from the consideration offered under the Takeover Bid unless and until an announcement has been made to the Market.

(3) For the purposes of subrule (2), the announcement must be made in writing, by facsimile or electronic delivery to the Market Operator.

Maximum penalty: $100,000

6.2.2Acquisition of Cash Market Products by another Bidder

(1) Where Cash Market Products are subject to a Market Bid, a Market Participant acting on behalf of another Bidder, must not buy the Cash Market Products in the Bid Class of the Target on behalf of that Bidder unless and until the Market Participant has announced in accordance with subrule (2):

  1. (a)

    a Market Bid on behalf of the person pursuant to Rule 6.1.1; or

  2. (b)

    an increase in the price offered under a Market Bid for the Cash Market Products pursuant to Rule 6.1.2.

(2) For the purposes of subrule (1), the announcement must be made in writing, by facsimile or electronic delivery to the Market Operator.

Maximum penalty: $100,000

Part 6.3Market Participant acting for Bidder or Issuer

6.3.1Market Participant to advise seller if acting for Bidder or Issuer

Where a Market Participant:

  1. (a)

    has an order from the Bidder in relation to an Off-Market Bid;

  2. (b)

    has made an announcement to the Market on behalf of a Bidder to acquire Cash Market Products under a Market Bid; or

  3. (c)

    acts for a company involved in a buy-back under Chapter 2J of the Corporations Act conducted On-Market,

the Market Participant must not accept, or transact, an order to sell Cash Market Products in the Bid Class referred to in paragraph (a) or subject to the announcement referred to in paragraph (b) or subject to the buy-back referred to in paragraph (c) unless the Market Participant:

  1. (d)

    advises the seller that it is acting for the Bidder or that it is acting for the company involved in the buy-back and is thus unable to give the seller advice in respect of the proposed sale; and

  2. (e)

    does not give the seller any advice in respect of the proposed sale.

Maximum penalty: $100,000

Chapter 7: Rules applying to Market Operators

Part 7.1Data feeds

7.1.1Provision of live electronic data from the Trading Platform

(1) The Market Operator must deliver, or procure delivery of, a live feed of the electronic data items set out in subrule (2) as generated on or by its Trading Platform to ASIC or to a service provider nominated by ASIC and notified to the Market Operator in accordance with Rule 7.1.2.

Order information from Trading Platform

(2) Electronic data provided pursuant to subrule (1) must contain such data items and fields which are generated on or by the Market Operator’s Trading Platform containing all Orders entered on the Market Operator’s Trading Platform, being:

  1. (a)

    order price and volume entries;

  2. (b)

    order amendments;

  3. (c)

    trade price and volume entries;

  4. (d)

    any special trade condition codes;

  5. (e)

    broker number and identifier code;

  6. (f)

    participant operator cross-reference data, where that data is available;

  7. (g)

    information comprising details of the Financial Products traded through the Trading Platform, being:

    1. (i)

      name of Issuer or publicly available issuer code;

    2. (ii)

      tick size;

    3. (iii)

      lot size;

    4. (iv)

      basis of quotation;

    5. (v)

      time stamps on all order entries, trades, amendments, cancellations and deletions; and

    6. (vi)

      unique order identifier or, if this is not available, unique order series identifier;

(ga) information for the order or trade recorded by the Market Operator in accordance with subrule 5A.2.2(1) of the Competition Market Integrity Rules; and

  1. (h)

    such additional data items or fields notified by ASIC to the Market Operator under Rule 7.1.2 which are generated on or by the Market Operator’s Trading Platform, provided that a Market Operator is not required to provide fields that are not generated on or by the Market Operator’s Trading Platform.

Format requirements

(3) The electronic data required by subrule (1) must be in such format as ASIC notifies the Market Operator in accordance with Rule 7.1.2.

Data security and redelivery

(4) The electronic data required by subrule (1) must:

  1. (a)

    comply with any data security requirements as notified by ASIC to the Market Operator under Rule 7.1.2; and

  2. (b)

    be redelivered by the Market Operator if there is disruption to the telecommunications link through which the data is provided or for any other reason ASIC does not receive the data, and ASIC notifies the Market Operator in accordance with Rule 7.1.2 that ASIC requires the data to be redelivered.

Delivery requirements

(5) The electronic data required by subrule (1) must be delivered by the Market Operator to ASIC or its nominated service provider in a manner and to a location notified by ASIC to the Market Operator in accordance with Rule 7.1.2.

Maximum penalty: $1,000,000

7.1.2Notification

A notification by ASIC to the Market Operator of:

  1. (a)

    a service provider under subrule 7.1.1(1);

  2. (b)

    additional data items under paragraph 7.1.1(2)(h);

  3. (c)

    data format requirements under subrule 7.1.1(3);

  4. (d)

    data security requirements or to redeliver data under subrule 7.1.1(4); or

  5. (e)

    a manner and, or, location of delivery under subrule 7.1.1(5),

must be in writing and allow the Market Operator a reasonable period to comply.

Note: There is no penalty for this rule.

Part 7.2Information

7.2.1Provision of information about Market Participants

The Market Operator must maintain the information specified below about each Market Participant and advise ASIC in writing of any changes which are made to the information (including any changes resulting from the admission of new Market Participants) within 2 Business Days of the change being made:

  1. (a)

    Market Participant name;

  2. (b)

    the unique identifier that is used by the Market Operator to identify the trading activities of the Market Participant on the Market Operator’s Trading Platform;

  3. (c)

    Market Participant type, being:

    1. (i)

      Trading Participant;

    2. (ii)

      Market Maker; or

    3. (iii)

      Principal Trader; and

  4. (d)

    the type of permissions provided to each Market Participant, being permissions to trade:

    1. (i)

      Cash Market Products; or

    2. (ii)

      Derivatives Market Contracts.

Maximum penalty: $100,000

Chapter 10: Futures Market Transactions

Part 10.A Interpretation

10.A.1Definitions

In this Chapter:

“Alternative Clearing Facility” means a CS Facility which, in the opinion of ASIC, has:

  1. (a)

    adequate rules or procedures relating to the operation of the facility, including effective risk management procedures;

  2. (b)

    adequate arrangements for supervision and regulation of the facility; and

  3. (c)

    sufficient resources to conduct the facility and perform its supervisory and regulatory functions, and which is recognised by ASIC as an Alternative Clearing Facility for the purposes of these Rules.

“Approved Clearing Facility” means ASX Clear Pty Limited (ACN 001 314 503).

“Clearing Agreement” means a separate written agreement between a Trading Participant which is not a Clearing Participant and a Clearing Participant setting out the terms and conditions which govern their relationship in compliance with the requirements of the Clearing Rules.

Note: There is no penalty for this Rule.

Part 10.1 Payment by client

10.1.1Application

Rules 10.1.2 to 10.1.7 apply only where the Market Participant is regarded as the client of a Clearing Participant and holds positions in Futures Market Transactions on an omnibus basis for its own clients.

Note: There is no penalty for this Rule.

10.1.2Initial Margin

(1) Where a Market Participant is required to pay an amount of Initial Margin to a Clearing Participant (or to a participant of an Alternative Clearing Facility) in respect of positions the Market Participant holds for the benefit of one or more of its clients, the Market Participant must, in turn, call a corresponding amount from the relevant client or clients.

(2) Subject to Rule 10.1.4, the call must be made in sufficient time to ensure that the Market Participant is placed in funds before the Market Participant is obliged to pay the corresponding amount to the Clearing Participant or, if applicable, the participant of an Alternative Clearing Facility.

(3) A Market Participant that is required to comply with this Part in relation to a client must have in place arrangements with that client that entitle the Market Participant, at any time, to ask the client to pay any additional amount which the Market Participant considers appropriate to manage the risk to which the Market Participant is exposed.

Maximum penalty: $100,000

10.1.3Close out, settlement or daily settlement of Open Contracts

(1) A Market Participant that is required to comply with this Part in relation to a client must have in place arrangements with that client that entitle the Market Participant to call from the client an amount sufficient to cover amounts which the Market Participant has been required to pay to its Clearing Participant pursuant to the close out, settlement or daily settlement of Open Contracts under the Clearing Rules (or to a participant of an Alternative Clearing Facility under the rules of that facility).

(2) Subject to Rule 10.1.4, if, at any time, the net amount of those amounts payable by the client under subrule (1) exceeds 25% of the amount of Initial Margin called under Rule 10.1.2, the Market Participant must call that amount.

(3) This Rule does not prevent the Market Participant from calling the amount at an earlier time or from calling an additional amount which it considers appropriate to manage the risk to which it is exposed.

Maximum penalty: $100,000

10.1.4Exception

A Market Participant is not required to make a call under Rule 10.1.2 or Rule 10.1.3 if:

  1. (a)

    (in the case of a call under Rule 10.1.3 in relation to settlement amounts generated as a result of close outs, contract settlement or daily settlement of Open Contracts) the amount of the call at that time is less than $1000;

  2. (b)

    the client has already paid that amount to the relevant Market Participant; or

  3. (c)

    the client has provided security for that amount to the relevant Market Participant (or to an Approved Clearing Facility on behalf of the Clearing Participant or an Alternative Clearing Facility, if applicable, on behalf of a participant) which is acceptable to the relevant Market Participant.

    Note: There is no penalty for this Rule

10.1.5Arrangements with client—Payment and security

A Market Participant that is required to comply with this Part in relation to a client must have in place arrangements with the client that require the client to, by the time specified in the relevant Client Agreement:

  1. (a)

    pay to the Market Participant any amounts which the Market Participant asks the client to pay under Rule 10.1.2 or Rule 10.1.3; or

  2. (b)

    provide security for the amounts referred to in paragraph (a) which is acceptable to the Market Participant.

Maximum penalty: $100,000

10.1.6Arrangements with client—Default timing

If no time is agreed between the Market Participant and the client for the purpose of Rule 10.1.5, the Market Participant must have in place arrangements with the client that require the client to meet its obligations under Rule 10.1.5 within 24 hours after the request for payment.

Maximum penalty: $100,000

10.1.7Arrangements with client—Maximum time

The time agreed between the Market Participant and its client for the purpose of Rule 10.1.5 must not be later than 48 hours after the request for payment.

Maximum penalty: $100,000

Part 10.2 Death of client and other circumstances

10.2.1Application

Rules 10.2.2 to 10.2.6 apply only where the Market Participant is regarded as the client of a Clearing Participant and holds positions in Futures Market Contracts on an omnibus basis for its own clients.

Note: There is no penalty for this Rule

10.2.2Death of client—Where legal representative unable to be identified

If a Market Participant becomes aware of the death of a client and, after reasonable enquiry, the Market Participant does not know the identity of the legal representative of the client, the Market Participant may exercise the powers under Rule 10.2.5 where the Market Participant had in place arrangements with the Client as required by that Rule.

Note: There is no penalty for this Rule

10.2.3Death of client—Where no undertaking by legal representative

If:

  1. (a)

    a Market Participant becomes aware of the death of a client;

  2. (b)

    the Market Participant knows the identity of the legal representative who has been appointed to the client’s estate; and

  3. (c)

    the legal representative does not, after being requested by the Market Participant, undertake to meet the client’s obligations in respect of one or more Open Contracts for the benefit of the client’s estate,

the Market Participant may exercise the powers under Rule 10.2.5 in respect of those Open Contracts for which the undertaking referred to in paragraph (c) is not given by the legal representative and where the Market Participant had in place arrangements with the Client as required by that Rule.

Note: There is no penalty for this Rule

10.2.4Other circumstances—Where client unable to be contacted

If the Market Participant, after reasonable enquiry, has been unable to contact a client to obtain instructions in respect of the exercise of any rights or the performance of any obligations in connection with an Open Contract, the Market Participant may exercise the powers under Rule 10.2.5 where the Market Participant has in place arrangements with the Client as required by that Rule.

Note: There is no penalty for this Rule

10.2.5Death of client and other circumstances—Prior arrangements with client

A Market Participant that is required to comply with this Part in relation to a client must have in place arrangements with that client such that if Rules 10.2.2, 10.2.3 or 10.2.4 apply, the Market Participant may, without giving prior notice to the client or the legal representative (as the case may be), take any action, or refrain from taking action, which it considers reasonable in the circumstances in connection with Open Contracts held for the benefit of the relevant client or the estate of the client (as the case may be) and, without limitation, the Market Participant may:

  1. (a)

    enter into, or cause to be entered into, one or more Futures Market Transactions to effect the close out of one or more Open Contracts;

  2. (b)

    exercise one or more Options Market Contracts; or

  3. (c)

    exercise, or cause to be exercised, any other rights conferred by the Rules or the Client Agreement or perform any other obligations arising under the Rules or the Client Agreement in respect of those Open Contracts,

and the client or the estate of the client (as the case may be) will be required to account to the Market Participant as if those actions were taken on the instructions of the client and, without limitation, will be liable for any deficiency and entitled to any surplus which may result.

Note: There is no penalty for this Rule

10.2.6Records

A Market Participant must keep records in writing containing full particulars of all enquiries made and action taken under Rules 10.2.1 to 10.2.5.

Maximum penalty: $100,000

Part 10.3 Default by a client

10.3.1Application

Rule10.3.2 applies only where the Market Participant is regarded as the client of a Clearing Participant and holds positions in Futures Markets Contracts on an omnibus basis for its own clients.

Note: There is no penalty for this Rule

10.3.2Default by a client—Prior arrangements with client

A Market Participant that is required to comply with this Part in relation to a client must have in place arrangements with that client such that if:

  1. (a)

    a client fails to pay, or provide security for, amounts payable to the Market Participant under Rule 10.1.2 or Rule 10.1.3;

  2. (b)

    a client fails to discharge any obligation in connection with the settlement of an Open Contract in accordance with its terms; or

  3. (c)

    any other event occurs which the Market Participant and the client have agreed entitles the Market Participant to take action in respect of the client,

the Market Participant may exercise any rights which the Market Participant has under these Rules, the Client Agreement, the Clearing Agreement or otherwise and such that the client will be required to account to the Market Participant for any deficiency and will be entitled to any surplus which may result from the exercise of those rights.

Maximum penalty: $100,000

Endnotes

Endnote 1 – Instrument history

Instrument number

Date of FRL registration

Date of commencement

Application, saving or transitional provisions

ASIC Market Integrity Rules (ASX Market) 2010 (F2010L02211)

01/08/2010

01/08/2010

-

ASIC Market Integrity Rules (ASX Market) Amendment 2011 (No. 1) (F2011L00217)

10/02/2011

11/02/2011

-

ASIC Market Integrity Rules (ASX Market) Amendment 2011 (No. 2) (F2011L01573)

29/07/2011

01/08/2011

-

ASIC Market Integrity Rules (ASX Market) Amendment 2011 (No. 3) (F2011L02145)

28/10/2011

31/10/2011

-

ASIC Market Integrity Rules (ASX Market) Amendment 2012 (No. 1) (F2012L01562)

17/07/2012

18/07/2012

-

ASIC Market Integrity Rules (ASX Market) Amendment 2012 (No. 2) (F2012L01573)

18/07/2012

19/07/2012

-

ASIC Market Integrity Rules (ASX Market) Amendment 2012 (No. 3) (F2012L02248)

26/11/2012

Items [30] to [34] of Schedule 1: 27/11/2012

All Items other than Items [30] to [34] of Schedule 126/05/2014

-

as amended by

ASIC Market Integrity Rules (ASX Market) Amendment 2013 (No.2) (F2013L01555)

09/08/2013

Items [1] to [3] of Schedule 2: 10/08/13

ASIC Market Integrity Rules (ASX Market) Amendment 2013 (No.1) (F2013L00561)

27/03/2013

28/03/2013

ASIC Market Integrity Rules (ASX Market) Amendment 2013 (No.2) (F2013L01555)

09/08/2013

Items [1], [7] to [10] of Schedule 1: 10/08/13

Items [2] and [3] of Schedule 1: 9/11/13

Items [5], [6] and [11] to [13] of Schedule 1: 9/02/14

Item [4] of Schedule 1: 26/05/14

Commencement of item [4] of Schedule 1 as amended by item [1] of Schedule. 1 of F2014L00514

as amended by

ASIC Market Integrity Rules (ASX Market) Amendment 2014 (No.2) (F2014L00514)

08/05/2014

09/05/2014

ASIC Market Integrity Rules (ASX Market) Amendment 2014 (No. 1) (F2014L00128)

07/02/2014

09/02/2014

ASIC Market Integrity Rules (ASX Market) Amendment 2014 (No. 3) (F2014L01023)

25/07/2014

26/07/2014

ASIC Market Integrity Rules (ASX Market) Amendment 2015 (No. 1) (F2015L00622)

01/05/2015

02/05/2015

ASIC Market Integrity Rules (ASX Market) Amendment 2015 (No. 2) (F2015L01695)

26/10/2015

27/10/2015

Endnote 2 – Amendment history

ad. = added or inserted

am. = amended rep. = repealed rs. = repealed and substituted

Provision affected

How affected

Rule 1.4.3

am. F2011L02145, Schedule 1, items [1] to [12], am. F2012L01573, paragraph 4, items [1] and [2], am. F2013L00561, Schedule 1, items [1] to [3], am. F2013L01555, Schedule 1, item [1], am.F2012L02248, Schedule 1, items [1] to [4], am. F2015L01695, Schedule 1, items [1] to [4]

Rule 2.1.4(2)(b)(i)

am. F2011L00217, paragraph 4

Rule 2.2.3

rep. F2015L00622, Schedule 1, item [1]

Rule 2.4.1(3)

ad. F2015L01695, Schedule 1, item [5]

Part 2.6

ad. F2011L02145, Schedule 1, item [13]

Rule 3.1.8(4)

ad. F2015L01695, Schedule 1, item [6]

Rule 3.2.4(1)

am. F2013L01555, Schedule 1, item [2]

Rule 3.2.5(1)(e)

am. F2013L01555, Schedule 1, item [3]

Rule 3.3.1(a)

am. F2011L02145, Schedule 1, item [14]

Rule 3.3.1(d)

am. F2011L02145, Schedule 1, item [15]

Rule 3.4.3

rs. F2013L01555, Schedule 1, item [4]

Rule 5.1.4(1)(g)

am. F2013L01555, Schedule 1, item [5]

Rule 5.1.4(1)(h)

ad. F2013L01555, Schedule 1, item [6]

Part 5.2

rep. F2015L00622, Schedule 1, item [2]

Rule 5.6.1

am. F2013L01555, Schedule 1, item [7]

Rule 5.6.1(b)(i)

am.F2013L01555, Schedule 1, item [8]

Rule 5.6.1(b)(ii)

am. F2013L01555, Schedule 1, item [9]

Rule 5.6.1(b)(iii)

ad. F2013L01555, Schedule 1, item [10]

Rule 5.6.1(2)

ad. F2013L01555, Schedule 1, item [10]

Rule 5.6.3

am. F2012L02248, Schedule 1, item [5]

Rule 5.6.3(b)

am. F2012L02248, Schedule 1, item [6]

Rule 5.6.3(c)

am. F2012L02248, Schedule 1, items [7] and [8]

Rule 5.6.3(d)

ad. F2012L02248, Schedule 1, item [9]

Rule 5.6.3(e)

ad. F2012L02248, Schedule 1, item [9]

Rule 5.6.3(2)

ad. F2012L02248, Schedule 1, item [10]

Rule 5.6.5(1)

am. F2012L02248, Schedule 1, item [11]

Rule 5.6.5(2)

am. F2012L02248, Schedule 1, item [12]

Rule 5.6.5(2)(a)

am. F2012L02248, Schedule 1, items [13] and [14]

Rule 5.6.5(2)(c)

am. F2012L02248, Schedule 1, item [15]

Rule 5.6.6(1)(a)

am. F2012L02248, Schedule 1, item [16]

Rule 5.6.6(1)(b)

am. F2012L02248, Schedule 1, item [17]

Rule 5.6.6(2)

am. F2012L02248, Schedule 1, item [18]

Rule 5.6.6(2)(d)(iii)

am. F2012L02248, Schedule 1, item [19]

Rule 5.6.7

rep. F2012L02248, Schedule 1, item [20]

Rule 5.6.8 (heading)

am. F2012L02248, Schedule 1, item [21]

Rule 5.6.8

am. F2012L02248, Schedule 1, items [22] to [25]

Rule 5.6.8(2)

ad. F2012L02248, Schedule 1, item [26]

Rule 5.6.8A

ad. F2012L02248, Schedule 1, item [27]

Rule 5.6.8B

ad. F2012L02248, Schedule 1, item [27]

Rule 5.6.9

rep. F2012L02248, Schedule 1, item [28]

Rule 5.6.10

rep. F2012L02248, Schedule 1, item [29]

Rule 5.7.2(g)

am. F2013L01555, Schedule 1, item [11]

Rule 5.7.2(h)

am. F2013L01555, Schedule 1, item [12]

Rule 5.7.2(i),(j),(k)

ad. F2013L01555, Schedule 1, item [13]

Rule 5.10.4

am. F2011L02145, Schedule 1, item [16]

Part 5.11

ad.F2012L01562, paragraph 4, item [1]

Part 5.12

ad. F2012L01573, paragraph 4, item [3]; rep F2014L01023, Schedule 1, item [1].

Rule 5.12.2

am. F2014L00128, Schedule 1, item [1]

Part 6.4

rep. F2015L00622, Schedule 1, item [3]

Part 6.4, heading

am. F2011L02145, Schedule 1, item [17]

Rule 6.4.1, heading

am. F2011L02145, Schedule 1, item [18]

Rule 6.4.1

am. F2012L02248, Schedule 1, item [30]

Subrule 6.4.1(2)

am. F2011L02145, Schedule 1, item [19]

Rule 6.4.3, heading

am. F2011L02145, Schedule 1, item [20]

Rule 6.4.3

am. F2012L02248, Schedule 1, item [31]

Subrule 6.4.3(2)

am. F2011L02145, Schedule 1, item [21]

Part 6.5

rep. F2015L00622, Schedule 1, item [4]

Part 6.6

rep. F2015L00622, Schedule 1, item [5]

Rule 7.1.1(2)(g)(vi)

am. F2012L02248, Schedule 1, item [32]

Rule 7.1.1(2)(g)

ad. F2012L02248, Schedule 1, item [33]

Rule 7.1.2, Note

ad. F2012L02248, Schedule 1, item [34]

Chapter 8

ad. F2011L01573, paragraph 4; rep. F2014L00598, Rule 1.5.1(a)

Chapter 9

ad. F2011L01573, paragraph 4; rep. F2014L00598, Rule 1.5.1(a)

Chapter 10

ad. F2011L01573, paragraph 4

Schedule 1A and Annexures

ad. F2011L01573, paragraph 4; rep. F2014L00598, Rule 1.5.1(b) and (c)

Schedule 1B

ad. F2011L01573, paragraph 4; rep. F2014L00598, Rule 1.5.1(b)

Schedule 1C

ad. F2011L01573, paragraph 4; rep. F2014L00598, Rule 1.5.1(b)

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