Australian Securities and Investments Commission Market Integrity Rules (Chi-X Australia Market-Capital) 2014 (Cth)

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ASIC Market Integrity Rules

(Chi-X Australia Market-Capital) 2014

I, Oliver Harvey, acting with the written consent of the Minister, make the following ASIC Market Integrity Rules (Chi-X Australia Market-Capital) 2014 under subsection 798G(1) of the Corporations Act 2001.

Dated this 20th day of May 2014

Signed by Oliver Harvey

as delegate of the Australian Securities and Investments Commission

ASIC Market Integrity Rules (Chi-X Australia Market-Capital) 2014

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 (Chi-X Australia Market-Capital) 2014.

1.1.3Commencement

This instrument commences on the later of:
(a)
26 May 2014; and
(b)
the day on which the instrument is registered under the Legislative Instruments Act 2003.
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, section 4 (definition of register). The FRLI may be accessed at of these Rules
These Rules apply to:
(a)
the activities or conduct of the Chi-X Market;
(b)
the activities or conduct of persons in relation to the Chi-X Market;
(c)
the activities or conduct of persons in relation to Financial Products traded on the Chi-X 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:
(a)
the Market Operator;
(b)
Market Participants; and
(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:
(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
(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:
(a)
the date that the relief takes effect;
(b)
the person or class of persons relieved from the obligation;
(c)
the provision to which the relief applies;
(d)
brief reasons for the relief; and
(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:
(a)
delivering it to the recipient personally;
(b)
leaving it at or by sending it by courier or post to the address of the recipient last notified to ASIC;
(c)
sending it by facsimile to the recipient’s facsimile number last notified to ASIC;
(d)
a circular or bulletin addressed to a class of persons and delivered or communicated by any means permitted under this Rule;
(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;
(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
“ASIC” means the Australian Securities and Investments Commission.
“ASX” means ASX Limited (ACN 008 624 691).
“ASX Listing Rules” means the Listing Rules of ASX.
“ASX Market” means the market for Financial Products operated by ASX.
“ASX Market Integrity Rules” means the ASIC Market Integrity Rules (ASX Market) 2010, and the ASIC Market Integrity Rules (ASX Market-Capital) 2014, as amended from time to time.
“ASX Participant” means a participant in the ASX Market admitted under the Operating Rules of the ASX Market.
“Australian ADI” has the meaning given by section 9 of the Corporations Act.
“Business Day” means a day other than a Saturday, Sunday, New Year’s Day, Good Friday, Easter Monday, Christmas Day or Boxing Day.
“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).
“Chi-X Australia” means Chi-X Australia Pty Ltd (ACN 129 584 667).
“Chi-X Market” means the market operated by the Market Operator under Australian Market Licence (Chi-X Australia Pty Ltd) 2011.
“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 Participant” means a person admitted as a participant under the Clearing Rules.
“Clearing Rules” means:
(a)
in relation to a particular Clearing Facility, the operating rules, procedures, practices, directions, decisions and requirements of that Clearing Facility;
(b)
in relation to a particular Clearing Participant, the rules of the Clearing Facility to which that Clearing Participant is subject.
“Corporations Act” means the Corporations Act 2001 (Cth).
“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.
“ETF” means a Managed Fund:
(a)
which is listed on the ASX Market;
(b)
with power and approval to continuously issue and have quoted on the ASX Market, Equity Securities in the Managed Fund;
(c)
which provides for the issue of new Equity Securities in return for the subscriber transferring to the Managed Fund a portfolio of Securities; and
(d)
for which the price of the Financial Product, index, foreign or Australian currency, commodity or other point of reference for determining the value of the Equity Securities is continuously disclosed or can be immediately ascertained.
“ETF Security” means a Financial Product issued by or provided pursuant to an ETF.
“Equity Market Product” means:
(a)
a share in a body;
(b)
a financial product referred to in subparagraph 764A(1)(b)(i) or subparagraph 764A(1)(ba)(i) of the Act; or
(c)
a right (whether existing or future and whether contingent or not) to acquire, by way of issue, the following under a rights issue:
(i)
a share covered by paragraph (a); or
(ii)
a financial product covered by paragraph (b); or
(d)
a CHESS Depository Interest,
admitted to quotation on ASX and able to be traded on the Chi-X Market.
“Equity Securities” means:
(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
(b)
interests in a managed investment scheme, except those referred to in paragraph (d) of the definition of Loan Securities; or
(c)
renounceable and non-renounceable rights to subscribe for Securities other than Loan Securities; or
(d)
options over unissued Securities other than Loan Securities; or
(e)
convertible notes; or
(f)
any Securities which are determined by the operator of the Relevant Financial Market to be Equity Securities,
but does not include Options Market Contracts, or Securities determined to be Loan Securities by the operator of the Relevant Financial Market.
“Family Trust” means a trust in which:
(a)
the person or the Immediate Family of the person is the sole or majority beneficiary; or
(b)
the person has the ability to remove the trustee of the trust and replace that trustee with his or her own nominee.
“Financial Product” has the meaning given by Division 3 of Part 7.1 of the Corporations Act.
“Futures Market Contract” means a contract on the terms of a Futures Series.
“Futures Series” means a set of contractual terms on which futures contracts are authorised for trading by the operator of the Relevant Financial Market.
“Immediate Family” in relation to a person, means that person’s spouse and any non-adult children.
“Issuer” means, in relation to an Equity Market Product, the legal entity which issues the Equity Market Product.
“Listing Rules” has the meaning given by section 761A of the Corporations Act.
“Loan Securities” means:
(a)
debentures, stocks or bonds issued or proposed to be issued by a government; or
(b)
debentures of a body corporate or an unincorporated body; or
(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
(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
(e)
any Securities which are determined by the operator of the Relevant Financial Market to be Loan Securities,
but does not include Options Market Contracts, or Securities determined to be Equity Securities by the operator of the Relevant Financial Market.
“Managed Fund” means 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.
“Market Operating Rules” means the Operating Rules of the Chi-X Market.
“Market Operator” means Chi-X Australia.
“Market Participant” means a participant in the Chi-X Market admitted under the Market Operating Rules.
“Market Transaction” means a transaction for one or more Equity Market Products, entered into on a Trading Platform or reported to the Market Operator under the Market Operating Rules.
“Official Quotation”, in relation to Financial Products, means admitted to quotation by ASX under the ASX Listing Rules.
“Operating Rules” has the meaning given by section 761A of the Corporations Act.
“Option Series” means a set of contractual terms on which options are authorised for trading by ASX on the ASX Market.
“Options Market Contract” means a contract on the terms of an Option Series.
“Order” means, in relation to Equity Market Products, an instruction to purchase or sell Equity Market Products, or an instruction to amend or cancel a prior instruction to purchase or sell Equity Market Products.
“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.
“Principal Trader” means a Market Participant with Trading Permission which limits it to trading on its own behalf.
“Related Body Corporate” has the meaning given by section 50 of the Corporations Act.
“Relevant Financial Market” has the meaning given by section 9 of the Corporations Act.
“Representative” has the meaning given by section 910A of the Corporations Act.
“Rules” means these market integrity rules.
“Security” or “security” means:
(a)
a “security” within the meaning of section 761A of the Corporations Act; or
(b)
a managed investment product.
“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 Permission” means the right to submit Trading Messages in a Trading Platform.
“Trading Platform” means a facility made available by the Market Operator to Market Participants for the entry of Trading Messages, the matching of Orders and the reporting of transactions.
Note: There is no penalty for this Rule
Part 1.5Transitional
1.5.1Repeal
The following provisions of the ASIC Market Integrity Rules (Chi-X Australia Market) 2011 are repealed:
(a)
Chapters 8 and 9;
(b)
Schedules 1A to 1C; and
(c)
the Annexures to Schedule 1A.
Note: There is no penalty for this Rule.
Chapter 8: Capital requirements
Part 8.1 Preliminary
8.1.1Definitions
In this Chapter and in Chapter 9:
“Approved Clearing Facility” means ASX Clear Pty Limited (ACN 001 314 503).
“Capital Requirements” means, in relation to a Market Participant, the Risk Based Capital Requirements.
“Risk Based Capital Requirements” means the requirements set out in Schedule 1A.
Note: There is no penalty for this Rule.
Part 8.2 Application
8.2.1Market Participant to comply with Risk Based Capital Requirements
A Market Participant must at all times comply with the Risk Based Capital Requirements, unless:
(a)
the Market Participant is only a Principal Trader; or
(b)
the Market Participant is a Clearing Participant of an Approved Clearing Facility and complies with the capital requirements under the Clearing Rules.
Maximum penalty: $1,000,000
Note: The Risk Based Capital Requirements are contained in Schedule 1A.
Chapter 9: Accounts and audit
Part 9.1 Application of Rules
9.1.1Principal Traders and Clearing Participants
This Chapter does not apply to:
(a)
a Market Participant that is only approved as a Principal Trader;
(b)
a Market Participant that is a Clearing Participant of an Approved Clearing Facility and complies with the capital requirements under the Clearing Rules.
Note: There is no penalty for this Rule.
Part 9.2 Risk Based Capital RequirementsReporting
9.2.1ARisk Based Capital Requirements: Forms
In this Part 9.2:
“Ad Hoc Risk-Based Return” means a return containing the information in, and in the form set out in, Part 1 of Form 1 in Schedule 1C to these Rules.
“Annual Audited Risk-Based Return” means a return containing the information in, and in the form set out in, Part 1 of Form 3A in Schedule 1C to these Rules, except for the section Credit Facilities & Overdraft (coded “CFO”).
“Monthly Risk-Based Return” means a return containing the information in, and in the form set out in, Part 1 of Form 3A in Schedule 1C to these Rules.
“Risk-Based Return Declaration” means a declaration containing the information in, and in the form set out in, Part 2 of Form 2 in Schedule 1C to these Rules.
“Summary Risk-Based Return” means a return containing the information in, and in the form set out in, Part 1 of Form 3A in Schedule 1C to these Rules, except for the following sections:
(a)
Underwriting Risk Requirement (coded “URR”);
(b)
Non Standard Risk Requirement (coded “NRR”); and
(c)
Credit Facilities & Overdraft (coded "CFO").
Note: There is no penalty for this Rule.
9.2.1Risk Based Capital Requirements—Ad hoc or Summary Return on Request by ASIC
A Market Participant that is required to comply with the Risk Based Capital Requirements must, if requested to do so by ASIC, provide ASIC with an Ad Hoc Risk-Based Return or a Summary Risk-Based Return and Risk-Based Return Declaration, authorised by one director or partner of the Market Participant, within the time specified by ASIC in the request.
Maximum penalty: $20,000
9.2.2Core Capital or Liquid Capital below minimum
(1) Subject to Rule 9.2.6, a Market Participant that is required to comply with the Risk Based Capital Requirements must notify ASIC immediately if its:
(a)
Core Capital is at any time less than the minimum amount required by paragraph S1A.2.1(b); or
(b)
Liquid Capital divided by its Total Risk Requirement is equal to or falls below 1.2.
(2) Subject to Rule 9.2.6, a Market Participant must provide ASIC with, at the option of ASIC, an Ad Hoc Risk-Based Return, or a Summary Risk-Based Return and Risk-Based Return Declaration, disclosing the amount of its Liquid Margin:
(a)
no later than one Business Day after notifying ASIC under subrule (1); and
(b)
from then on, either:
(i)
by 10am on the first Business Day of each week, showing the financial position of the Market Participant on the last Business Day of the prior week, for so long as the amount referred to in paragraph (1)(b) is equal to or less than 1.2 but greater than 1.1; and
(ii)
by 10am on each Business Day, showing the financial position of the Market Participant on the prior Business Day, for so long as the amount referred to in paragraph (1)(b) is 1.1 or less.
(3) The return referred to in subrule (2) must be authorised by one director or partner of the Market Participant.
Maximum penalty: $20,000
9.2.3Monthly Return
(1) Subject to Rule 9.2.6, a Market Participant that is required to comply with the Risk Based Capital Requirements must prepare and deliver to ASIC within 10 Business Days of the end of each calendar month, the following documents and information:
(a)
if the Market Participant is not a partnership, a Monthly Risk-Based Return, which accurately reflects the Market Participant’s accounts and financial position on the last Business Day of the previous calendar month;
(b)
if the Market Participant is not a partnership, a Risk-Based Return Declaration relating to the Monthly Risk Based Return, authorised by one director of the Market Participant;
(c)
if the Market Participant is a partnership, a Monthly Risk-Based Return, which accurately reflects the Market Participant’s accounts and financial position on the last Business Day of the previous calendar month, or such other alternative form of return as ASIC directs under this paragraph; and

(d)
if the Market Participant is a partnership, a Risk-Based Return Declaration relating to the Monthly Risk-Based Return, authorised by one partner of the Market Participant, or such other alternative form of declaration as ASIC directs under this paragraph.
Maximum penalty: $20,000

9.2.4Audited Annual Return

(1) Subject to Rule 9.2.6, a Market Participant that is required to comply with the Risk Based Capital Requirements must prepare and deliver to ASIC:
(a)
within 3 months following the end of the Market Participant’s financial year if the Market Participant is not a partnership; or
(b)
within 2 months following the end of the Market Participant’s financial year if the Market Participant is a partnership,
the following documents and information:
(c)
the Market Participant’s statutory accounts, including directors’ declaration and audit report as required under the laws of the Market Participant’s home jurisdiction, which give a true and fair view of the financial position and performance of the Market Participant’s business as at the end of the financial year and which are prepared in accordance with accounting standards and principles which are generally accepted in Australia, unless ASIC determines otherwise;
(d)
if the Market Participant is not a partnership, an Annual Audited Risk-Based Return, which accurately reflects the Market Participant’s accounts and its financial position as at the end of the Market Participant’s financial year;
(e)
if the Market Participant is not a partnership, a Risk-Based Return Declaration relating to the Annual Audited Risk-Based Return, authorised by two directors of the Market Participant or by one director in accordance with a resolution of the board of directors of the Market Participant;
(f)
if the Market Participant is a partnership, an Annual Audited Risk-Based Return, which accurately reflects the Market Participant’s accounts and its financial position as at the end of the Market Participant’s financial year, or such other alternative form of return as ASIC directs under this paragraph;
(g)
if the Market Participant is a partnership, a Risk-Based Return Declaration relating to the Annual Audited Risk-Based Return, authorised by two partners of the Market Participant, or such other alternative form of declaration as ASIC directs under this paragraph;
(h)
an auditor’s report on the Annual Audited Risk-Based Return or alternative form of return directed by ASIC under paragraph (f), in the form set out in Form 5 in Schedule 1C to these Rules, dated and signed by the audit firm;
(i)
a statement (the “Key Risks and Internal Systems Statement”) in the form set out in Form 6 in Schedule 1C to these Rules, dated and signed by two directors of the Market Participant or by one director in accordance with a resolution of the board of directors of the Market Participant (the date of the resolution must be specified), or, if the Market Participant is a partnership, by two partners of the Market Participant; and
(j)
the Market Participant’s group structure chart showing the Market Participant’s corporate ownership structure starting at the ultimate parent, dropping down to the immediate parent, the Market Participant, any subsidiaries (including nominee companies of the Market Participant) and any related/associated companies of the Market Participant.
(2) Subject to Rule 9.2.6, if the financial year end of the Market Participant is other than 30 June, the Market Participant must notify ASIC of its financial year end.
Maximum penalty: $20,000

9.2.5 Partnership Statutory Declaration

Subject to Rule 9.2.6, a Market Participant that is a partnership must give ASIC, within 10 Business Days after the end of June and December each year, for each partner of the Market Participant, a declaration (the “Partnership Statutory Declaration”) in the form set out in Form 7 in Schedule 1C to these Rules, signed by the partner to which the Partnership Statutory Declaration relates and witnessed in accordance with the instructions included on the Partnership Statutory Declaration.
Maximum penalty: $20,000
9.2.6Double Reporting Exemption for Dual Chi-X/ASX Participants
A Market Participant that is also an ASX Participant does not have to comply with subrule 9.2.2(1), 9.2.2(2), 9.2.3(1), 9.2.4(1) or 9.2.4(2) or Rule 9.2.5 if the Market Participant has complied with the equivalent subrule or Rule in the ASIC Market Integrity Rules (ASX Market-Capital) 2014.
Note: There is no penalty for this Rule.

Part 9.3

Note: There is no Part 9.3.

Part 9.4 General

9.4.1Alternate Director

Where a Market Participant has appointed an alternate director in accordance with section 201K of the Corporations Act and the constitution of the Market Participant, the alternate director may authorise or sign the Forms referred to in Part 9.2 only if the Market Participant has provided ASIC with:
(a)
the details of the appointment of the alternate director; and
(b)
a statement that the Market Participant’s constitution permits the appointment of the alternate director.
Note: There is no penalty for this Rule.

Part 9.5 Scope of audits

9.5.1Market Participant to assist auditor

(1) A Market Participant must give its auditor access to its premises and Employees and all records, documents, explanations and other information required by the auditor in respect of any audit conducted under Part 9.2.
(2) A Market Participant must:
(a)
not impose any limitation on the extent of any audit required under Part 9.2; and
(b)
permit and direct the auditor to notify ASIC immediately if any limitation is imposed on the auditor, or if the auditor is hindered or delayed in the performance of the auditor’s duties.
(3) The records of each of the Market Participant’s nominee companies must be included in the audit.
Maximum penalty: $100,000

Schedule 1A:Capital liquidity requirements

Part S1A.1 Definitions and Interpretation

S1A.1.1 Definitions

In this Schedule 1A and in Chapter 9, unless the context otherwise requires:
“Approved Deposit Taking Institution” means:
(a)
an authorised deposit taking institution under section 5 of the Banking Act 1959 (Cth);
(b)
a banking institution which has its activities formally regulated in accordance with the standards of the Basel Committee on Banking Supervision; or
(c)
an institution which has been given a risk weighting by the Australian Prudential Regulation Authority equivalent to an authorised deposit taking institution referred to in paragraph (a) above.
“Approved Institution” means:
(a)
any of the following institutions whose net assets are greater than $30 million at the date of its last published audited balance sheet:
(i)
a life insurance company or general insurance company; or
(ii)
an investment company, trust or other similar institution whose ordinary business is to buy and sell Financial Instruments;
(b)
any body corporate or partnership whose ordinary business is to buy and sell Financial Instruments and which is regulated by a:
(i)
Recognised non-European Union Regulator specified in Table A5.3.1 in Annexure 5 to this Schedule 1A;
(ii)
Recognised European Union Regulator specified in Table A5.3.2 in Annexure 5 to this Schedule 1A; or
(c)
a Fund Manager and an underlying client that has placed money with, or has securities under the control of, the Fund Manager, where:
(i)
the Market Participant has a dealing relationship with the Fund Manager but not the underlying client; and
(ii)
the Fund Manager is placing orders on behalf of the underlying client and not as principal,
provided that the Market Participant maintains adequate documentation in support of paragraphs (a), (b) or (c).
“Approved Subordinated Debt” means an amount owing by a Market Participant under a subordination arrangement which is approved by ASIC under Rule S1A.2.4.
“Approved Subordinated Loan Deed” means, in respect of a subordination arrangement, a deed which:
(a)
is executed:
(i)
by the lender and ASIC under seal or by such equivalent method expressly recognised under the Corporations Act;
(ii)
in the case of a Market Participant which is a company, by the Market Participant under seal or by such equivalent method expressly recognised under the Corporations Act; and
(iii)
in the case of a Market Participant which is a partnership, by each of its partners;
(b)
sets out details of the terms governing any subordinated debt regulated by the subordination arrangement or identifies the document which does so;
(c)
contains those provisions required by ASIC including without limitation, provisions to the effect that:
(i)
alterations to the subordinated loan deed or the terms or details of any subordinated debt regulated by the subordination arrangement cannot be made unless the agreement of all parties is obtained and the variation is executed in the manner required under paragraph (a);
(ii)
ASIC must be satisfied that the Market Participant has made adequate arrangements to ensure that Schedule 1A will be complied with and will continue to be complied with upon the maturity date of any loan for a fixed term;
(iii)
ASIC must be given full particulars of any debt to be regulated by the subordination arrangement under the subordinated loan deed prior to such debt being created; and
(iv)
prior to the Bankruptcy of the Market Participant, repayment of any subordinated debt regulated by the subordination arrangement can only occur in accordance with subrules S1A.2.4(6) and (7); and
(d)
contains specific acknowledgment by the lender of the matters set out in paragraphs S1A.2.4(2)(a) and (b).
“ASX Clear” means ASX Clear Pty Limited (ACN 001 314 503).
“ASX Clear Operating Rules” means the Operating Rules of ASX Clear.
“ASX Operating Rules” means the Operating Rules of ASX.
“ASX Settlement” means ASX Settlement Pty Limited (ACN 008 504 532).
“ASX Settlement Operating Rules” means the Operating Rules of ASX Settlement.
“Bankruptcy” means in respect of an entity:
(a)
the entity becomes an externally administered body corporate within the meaning of the Corporations Act;
(b)
the entity becomes an individual who is an insolvent under administration within the meaning of the Corporations Act;
(c)
if the entity is a partnership, the entity is wound up or dissolved or a liquidator is appointed to it;
(d)
a person takes control of the entity’s property for the benefit of the entity’s creditors because the entity is, or is likely to become, insolvent;
(e)
the entity enters into an arrangement, composition or compromise with, or assignment for the benefit of, all of its creditors or any class of them; or
(f)
anything analogous to, or having a substantially similar effect to the events specified in paragraphs (a) to (e) happens to the entity under the laws of any applicable jurisdiction.
“CFD” means contract for difference.
“Chi-X Australia Operating Rules” means the Operating Rules of Chi-X Australia.
“Classical ETF” means a managed fund that meets all of the following criteria:
(a)
that is listed and quoted on a stock exchange (and in Australia is registered as a managed investment scheme under the Corporations Act);
(b)
where, under an open prospectus, the units in the fund can only be subscribed for and redeemed in kind, on demand and via the exchange of a defined basket of Equity securities;
(c)
that has a “passive” investment strategy designed to replicate a stock index at all times and this is evidenced by the holding of physical securities in weightings that predominantly match the stock index the fund has been issued over, and accordingly, any cash or Derivative components must be immaterial and must not be used to gear the fund;
(d)
where the underlying assets are known on a daily basis; and
(e)
that is subscribed for and redeemed in a “primary” market via either a Market Participant or the fund issuer, and existing units are traded in a “secondary” market provided through a stock exchange.
“Client Balance” means an individual Counterparty’s net debit or credit balance with a Market Participant arising from non margined Financial Instruments.
“Core Capital” means:
(a)
in the case of a Market Participant which is a company, the sum of:
(i)
all ordinary issued shares to the extent that those shares are paid-up;
(ii)
all non cumulative Preference Shares;
(iii)
all reserves, excluding revaluation reserves other than Financial Asset Revaluation Reserves; and
(iv)
opening retained profits/losses adjusted for all current year movements; and
(b)
in the case of a Market Participant which is a partnership, the sum of the partners’ current and capital accounts.
“Counterparty” means in respect of a transaction to which a Market Participant is a party, another party to that transaction whether that person is a counterparty or a client.
“Counterparty Risk Requirement” means the greater of:
(a)
zero; and
(b)
the absolute sum of the counterparty risk amounts calculated in accordance with Annexure 1 to this Schedule 1A less any provision raised for doubtful debts.
Note: The provision for doubtful debts must relate to a specific Counterparty receivable for which a counterparty risk amount has been calculated in accordance with Annexure 1 or to cover the possibility of a Counterparty or Client Balance becoming doubtful. A Market Participant must not deduct a provision amount from an individual counterparty risk amount.
“Debt Derivative” includes:
(a)
a convertible note (except to the extent that Annexure 3 to this Schedule 1A provides for the treatment of a convertible note as an equity position);
(b)
an interest rate Swap;
(c)
a Forward Rate Agreement;
(d)
a forward contract over a Debt Instrument;
(e)
a Future over a Debt Instrument and a Future over an index or basket product based on Debt Instruments;
(f)
an index or basket product based on Debt Instruments; and
(g)
an Option over a Debt Instrument and an Option over any of the products referred to in paragraphs (a) to (f),
but does not include an instrument that falls within the definition of Equity Derivative or Foreign Exchange Derivative.
“Debt Equivalent” means the value of a position in a Debt Derivative that is equivalent to the value had it been a physical position in the underlying Debt Instrument calculated in accordance with Part A3.16 of Annexure 3 to this Schedule 1A.
“Debt Instrument” includes:
(a)
a debt security without call or put provisions;
(b)
a discount security without call or put provisions;
(c)
a non-convertible preference share;
(d)
a redeemable preference share with a fixed and certain date for redemption; and
(e)
an interest in a managed investment scheme investing only in Debt Instruments, mortgages or cash, including an interest in a Hybrid ETF or Other Managed Fund that is issued over physical Debt Instruments only (ignoring any immaterial percentage of cash or Derivatives also included in the Hybrid ETF or Other Managed Fund and used only for hedging purposes),
but does not include an instrument that falls within the definition of Equity.
“Debt Net Position” means an amount calculated in accordance with Part A3.17 of Annexure 3 to this Schedule 1A.
“Derivative” includes:
(a)
an Equity Derivative;
(b)
a Debt Derivative; and
(c)
a Foreign Exchange Derivative,
but does not include an instrument that falls within the definition of Equity or Debt Instrument.
“Equity” includes:
(a)
a share other than a share referred to in paragraphs (c) and (d) of the definition of Debt Instrument;
(b)
a depository receipt;
(c)
an instalment receipt;
(d)
an interest in a managed investment scheme, including an interest in a Hybrid ETF or an Other Managed Fund that is issued over:
(i)
physical Equities only;
(ii)
physical Debt Instruments and property;
(iii)
physical Equities, physical Debt Instruments and property;
(iv)
physical Equities and property; or
(v)
physical property only,
(ignoring any immaterial percentage of cash or Derivatives also included in the Hybrid ETF or Other Managed Fund and used only for hedging purposes), other than an interest referred to in paragraph (e) of the definition of Debt Instrument,
but does not include an instrument that falls within the definition of Debt Instrument.
“Equity Derivative” includes:
(a)
an equity Swap;
(b)
a forward contract over an Equity;
(c)
a Future over an Equity and a Future over a basket or index product based on Equities;
(d)
an index or basket product based on Equities (including a Classical ETF);
(e)
a renounceable or non-renounceable right to subscribe for an equity;
(f)
an Option over an Equity (whether issued or unissued) and an Option over any of the products referred to in paragraphs (a) to (d); and
(g)
an exchange traded CFD over:
(i)
an Equity; or
(ii)
a basket or index product based on Equities,
but does not include an instrument that falls within the definition of Debt Derivative or Foreign Exchange Derivative.
“Equity Equivalent” means the value of a position calculated in accordance with Part A3.8 of Annexure 3 to this Schedule 1A.
“Equity Net Position” means an amount calculated in accordance with Part A3.9 of Annexure 3 to this Schedule 1A.
“Excluded Asset” means:
(a)
a fixed asset;
(b)
an intangible asset;
(c)
a future income tax benefit;
(d)
a non current asset;
(e)
a deposit with or loan to a person other than:
(i)
a deposit or loan with an Approved Deposit Taking Institution;
(ii)
a deposit or loan to the extent the balance is secured by collateral which is Liquid, evidenced in writing and valued at the mark to market value; or
(iii)
a deposit of funds as a margin or deposit with a person licensed to trade or clear Futures or Options to the extent that those funds relate to an open position;
(f)
a deposit with a third party clearing organisation;
(g)
a Related/Associated Persons Balance to the extent the balance is not secured by collateral which is:
(i)
Liquid;
(ii)
under the control of the Market Participant, able to be accessed by the Market Participant without the approval of a third party and not otherwise encumbered;
(iii)
evidenced in writing by a legally binding agreement between the Market Participant and the Related/Associated Person in circumstances where the Market Participant has established that the Related/Associated Person and the persons signing the agreement have the legal capacity to enter into the agreement and provide the nominated collateral; and
(iv)
valued at the mark to market value;
(h)
a debt which was reported or created more than 30 days previously, other than a debt:
(i)
from another Market Participant that is not an Related/Associated Person; or
(ii)
which is secured by collateral which is Liquid, evidenced in writing and valued at the mark to market value;
(i)
a prepayment (being an expense which has been paid during one accounting period for a term which extends beyond the end of that period) which is not Liquid or which is Liquid but has been made in respect of an item of expenditure that is specifically required to be made by the Market Participant for the Market Participant to comply with the requirements of these Rules or the Market Operating Rules;
(j)
an asset which is not Liquid; or
(k)
an asset which is Liquid but which has a charge against it (in whole or in part) where the purpose of the charge is to raise funds for use outside the ordinary course of the Market Participant’s securities or derivatives business.
“Excluded Liability” means the maximum liability specified in a guarantee or indemnity under paragraph S1A.2.6(1)(c).
“Family Trust” means a trust in which:
(a)
the person or the Immediate Family of the person is the sole or majority beneficiary; or
(b)
the person has the ability to remove the trustee of the trust and replace the trustee with his or her own nominee.
“Financial Asset Revaluation Reserves” means revaluation reserves relating to available for sale financial assets as defined in accordance with accounting standards which are generally accepted in Australia or other accounting standards approved by ASIC under subrule S1A.2.7(3).
“Financial Instrument” means:
(a)
an Equity;
(b)
a Debt Instrument; and
(c)
a Derivative.
“Foreign Exchange Derivative” includes:
(a)
a forward contract over foreign currency;

(b)
a Future over foreign currency;
(c)
an Option over foreign currency; and
(d)
an exchange traded CFD over an exchange rate or foreign currency,
but does not include an instrument that meets the definition of Equity Derivative or Debt Derivative.
“Foreign Exchange Equivalent” means the value of a position calculated in accordance with Part A3.21 of Annexure 3 to this Schedule 1A.
“Forward Rate Agreement” means an agreement in which two parties agree that:
(a)
one party will make payments to the other of an amount of interest based on an agreed interest rate for a specified period from a specified date applied to an agreed principal amount;
(b)
no commitment is made by either party to lend or borrow the principal amount; and
(c)
the exposure is limited to the interest difference between the agreed and actual market rates at settlement.
“Free Delivery” means a trade where delivery of the Financial Instrument is made to a client or Counterparty without receiving payment or where a payment is made without receiving a Financial Instrument, regardless of whether the client or Counterparty is issuer sponsored or participant sponsored.
“Fund Manager” means any licensed responsible entity, agent of a responsible entity, trustee or manager whose ordinary business it is to buy or sell Financial Instruments and make investment decisions on behalf of an independent third party.
“Future” means a contract which is traded on an exchange, subject to a Primary Margin Requirement and which is:
(a)
a contract to make an adjustment between the parties on an agreed future date as to the value on that date of an interest rate, a foreign currency, an Equity, basket or index, or some other agreed factor; or
(b)
a deliverable bond futures contract or deliverable share futures contract.
“Government Debt Instrument” means any form of government financial instrument including a bond, treasury note or other short term instrument, and a Debt Derivative of any
of those instruments where:
(a)
it is issued by, fully guaranteed by, or fully collateralised by a Debt Instrument issued by:
(i)
the Australian Commonwealth, State (including Territories) governments; or
(ii)
a central government or central bank within the OECD;
(b)
it is issued by, or fully guaranteed by, a non-OECD country central government or central bank, has a residual maturity of one year or less and is denominated in local currency and funded by liabilities in the same currency.
“Group of Connected Persons” means two or more persons or entities where:
(a)
each person or entity is a Related/Associated Person of each other person or entity; or
(b)
the persons who have control of the management of each entity or have been appointed as directors of each entity are substantially the same.
“Hybrid ETF” means a managed fund:
(a)
that is listed and quoted on a stock exchange (and in Australia is registered as a managed investment scheme under the Corporations Act); and
(b)
where, under an open prospectus, the units can only be subscribed for and redeemed in cash or in kind; and
(c)
that is subscribed for and redeemed in a “primary” market and existing units are traded in a “secondary” market; or
(d)
that does not satisfy all of the requirements of a Classical ETF but satisfies the three criteria referred to in paragraphs (a), (b) and (c).
“Immediate Family” in relation to a person means that person’s spouse and any non-adult children.
“In the Money” means:
(a)
in relation to call Options, that the current market price of the underlying instrument is greater than the exercise price; and
(b)
in relation to put Options, that the current market price of the underlying instrument is less than the exercise price.
“Large Exposure Risk Requirement” is the absolute sum of a Market Participant’s:
(a)
counterparty large exposure risk amount calculated in accordance with Annexure 2 to this Schedule 1A; and
(b)
issuer large exposure risk amount calculated in accordance with Annexure 2 to this Schedule 1A.
“Liquid” means realisable or otherwise convertible to cash within 30 days and in the case of a Financial Instrument, means the Financial Instrument meets the following criteria:
(a)
there are genuine independent offers from third parties to the Market Participant;
(b)
prices or rates exist that closely approximate the last sale price or rate in the Financial Instrument (whether exchange traded or over-the-counter);
(c)
payment/settlement can be effected within the settlement conventions applicable to the Financial Instrument; and
(d)
there is sufficient liquidity in the market to ensure a ready sale of the position held.
“Liquid Capital” means the sum of:
(a)
Core Capital;
(b)
cumulative Preference Shares;
(c)
Approved Subordinated Debt; and
(d)
revaluation reserves other than Financial Asset Revaluation Reserves;
less the sum of:
(e)
Excluded Assets; and
(f)
Excluded Liabilities.
“Liquid Margin” means the amount calculated by deducting the Total Risk Requirement amount from the amount of Liquid Capital.
“Market Spot Exchange Rate” means the closing rate of exchange for foreign currencies against Australian dollars on each Business Day, having a settlement period of 2 days.
“Non-Standard Risk Requirement” means the amount calculated in accordance with Rule S1A.2.9 to cover unusual or non-standard exposures.
“OECD” means the Organisation for Economic Co-operation and Development.
“Operational Risk Requirement” means the amount calculated in accordance with subrule S1A.2.3(1) which is required to cover exposures associated with commencing and remaining in business arising separately from exposures covered by other risk requirements.
“Option” means a contract which gives the holder the option or right, exercisable at or before a specified time to:
(a)
buy (whether by way of issue or transfer) or sell a quantity of a Financial Instrument or a foreign currency; or
(b)
be paid an amount of money calculated by reference to the value of a Financial Instrument, foreign currency or index as specified in the contract.
“OTC Derivative” means a Derivative which is not traded on an exchange.
“Other Managed Fund” means a managed fund:
(a)
that is not listed and quoted on a stock exchange (and in Australia is registered as a managed investment scheme under the Corporations Act); or
(b)
that is listed and quoted on a stock exchange but does not satisfy all of the requirements of a Classical ETF or Hybrid ETF.
“Position Risk Factors” are the percentages applied to principal positions as specified in Tables A5.1.1, A5.1.2, A5.1.3 and A5.1.7 of Annexure 5 to this Schedule 1A.
“Position Risk Requirement” is the absolute sum of the position risk amounts for a Market Participant’s:
(a)
Equity and Equity Derivative positions calculated in accordance with Parts A3.1 to A3.9 of Annexure 3 to this Schedule 1A;
(b)
Debt Instrument and Debt Derivative positions calculated in accordance with Parts A3.10 to A3.17 of Annexure 3 to this Schedule 1A; and
(c)
foreign exchange and Foreign Exchange Derivative positions calculated in accordance with Parts A3.18 to A3.22 of Annexure 3 to this Schedule 1A.
“Positive Credit Exposure” means an exposure to a Counterparty such that if the Counterparty were to default on its obligations under:
(a)
an individual transaction; or
(b)
to the extent allowed by Schedule 1A, a group of transactions, contracts, arrangements or agreements,
the Market Participant may incur a financial loss.
“Preference Share” means a preference share that is redeemable solely at the request of the Market Participant.
“Primary Margin Requirement” means the amount which a Market Participant lodges or is notionally required to lodge as a deposit to cover potential daily worse case price movements in the relevant market, lodged in accordance with the rules of an exchange or clearing house against open positions registered in the name of the Market Participant on the exchange or clearing house.
“Qualifying Debt Instruments” means Debt Instruments that are:
(a)
rated investment grade by at least two of the credit rating agencies recognised by the Australian Prudential Regulation Authority and specified in Table A5.1.5 in Annexure 5 to this Schedule 1A;
(b)
rated investment grade by one credit rating agency recognised by the Australian Prudential Regulation Authority and specified in Table A5.1.5 in Annexure 5 to this Schedule 1A, and the issuer has its ordinary shares included in a Recognised Market Index;
(c)
unrated but the Issuer of the Debt Instrument has its ordinary shares included in a Recognised Market Index and the Debt Instruments are reasonably deemed by the Market Participant to be of comparable investment quality to one or more of the categories of Qualifying Debt Instrument as described in this definition;
(d)
issued by, or guaranteed by, Australian local governments and Australian public sector entities other than those which have corporate status or operate on a commercial basis;
(e)
issued by, or fully guaranteed by, a non-OECD country’s central government and central bank and which have a residual maturity of over one year and are denominated in local currency and funded by liabilities in the same currency;
(f)
issued by or collaterised by claims on, an international agency or regional development bank including the International Monetary Fund, the International Bank for Reconstruction and Development, the Bank for International Settlements and the Asian Development Bank;
(g)
issued, guaranteed, first endorsed or accepted by an Australian ADI or a bank incorporated within the OECD or a non-OECD bank accorded the same credit risk weight as an OECD bank by the Australian Prudential Regulation Authority provided that such instruments do not qualify as capital of the issuing institution;
(h)
issued, guaranteed, endorsed or accepted by a non-OECD bank and which have a residual maturity of one year or less provided that such instruments do not qualify as capital of the issuing institution; or
(i)
issued by or guaranteed by OECD country, State and regional governments and OECD public sector entities.
“Recognised Market Index” means an index specified in Table A5.1.6 in Annexure 5 to this Schedule 1A.
“Related/Associated Person” means:
(a)
a partner, director, employee, officer or consultant of a Market Participant or of a company which is a partner of a Market Participant;
(b)
a person who is a member of the Immediate Family of a person referred to in paragraph (a);
(c)
the trustee of a Family Trust of a person referred to in paragraph (a);
(d)
an entity which is:
(i)
controlled by a person referred to in paragraphs (a), (b) or (c) or any of those persons acting together; or
(ii)
a corporation in which a person referred to in paragraphs (a) or (b) is beneficially entitled to more than 50% of the issued capital;
(e)
an entity which is the holding company, or which is controlled by the holding company, of a Market Participant or of a company which is a partner of a Market Participant;
(f)
a person who is a Substantial holder of a Market Participant or of a company which is a partner of a Market Participant;
(g)
an associate of a Market Participant (as defined in each section of Part 1.2, Division 2 of the Corporations Act) or of a company which is a partner of a Market Participant; and
(h)
a lender who is a party to an Approved Subordinated Loan Deed or a related entity or associate of that lender.
“Related/Associated Person Balance” is an amount owing to the Market Participant by a person who is a Related/Associated Person of the Market Participant and excludes an amount owing as a result of:
(a)
the deposit with, loans to or other amounts owing from an Approved Deposit Taking Institution;
(b)
the deposit of funds as a margin or deposit with a person licensed to trade or clear Futures or Options to the extent that those funds relate to an open position; or
(c)
a transaction in a Financial Instrument under Annexure 1 to this Schedule 1A which is made on terms no more favourable to the Related/Associated Person than those on which it would be reasonable to expect the Market Participant to make if it had entered into the transaction on an arm’s length basis, but not including sundry fees, interest or similar amounts owing on such transactions; or
(d)
brokerage or similar amounts owing that were reported or created less than 30 days previously and which arose as a result of a third party clearing arrangement entered in to with a Clearing Participant that is a Related/Associated Person of the Market Participant.
“Securities Lending and Borrowing” means any transaction undertaken by a Market Participant under an Equity or Debt Instrument lending or borrowing agreement, a repurchase or reverse repurchase agreement or an agreement for the sale and buyback of Equity or Debt Instruments.
“Substantial holder” means a person who has or would have a substantial holding if Part 6C of the Corporations Act applied to that corporation.
“Swap” means a transaction in which two counterparties agree to exchange streams of payments over time on a predetermined basis.
“Total Risk Requirement” means the sum of:
(a)
Operational Risk Requirement;
(b)
Counterparty Risk Requirement;
(c)
Large Exposure Risk Requirement;
(d)
Position Risk Requirement;
(e)
Underwriting Risk Requirement; and
(f)
Non-Standard Risk Requirement,
however where an asset or liability is an Excluded Asset or Excluded Liability a risk requirement otherwise applicable under paragraphs (a) to (e) is not included.
“Trading Day” means a day on which a relevant exchange traded or over the counter market has been open for trading.
“Underwriting” means a commitment to take up Equity or Debt Instruments where others do not acquire or retain them under an underwriting agreement, sub underwriting agreement, or other similar agreement calculated using:
(a)
the price stated in the Underwriting agreement; or
(b)
in the case of new float where the price is not known, the indicative price, until the price is known.
“Underwriting Risk Requirement” is the absolute sum of the risk amounts calculated in accordance with Annexure 4 to this Schedule 1A.
Note: There is no penalty for this Rule.

S1A.1.2 Interpretation

(1) Schedule 1A must be interpreted and applied consistently across positions in the same Financial Instruments throughout a period covered by a return required under Part 9.2.
(2) References to dollar amounts are references to Australian dollar amounts.
(3) The Annexures to Schedule 1A form part of Schedule 1A and a reference to Schedule 1A in these Rules includes a reference to those Annexures.
Note: There is no penalty for this Rule.

Part S1A.2 Obligations of Market Participants

S1A.2.1 Core Capital, Liquid Capital and Total Risk Requirement
A Market Participant must ensure that its:
(a)
Liquid Capital is at all times greater than its Total Risk Requirement; and
(b)
Core Capital is at all times not less than $100,000,
provided that in satisfying the requirement in paragraph (b), a Market Participant may satisfy the requirement in accordance with, and subject to, subrule S1A.2.4(8).
Maximum penalty: $1,000,000

S1A.2.3 Risk Requirements and Risk Amounts

(1) A Market Participant must calculate:
(a)
its Operational Risk Requirement; and
(b)
an operational risk amount, as the sum of:
(i)
the amount of $100,000; and
(ii)
8% of the sum of the Market Participant’s:
(A)
Counterparty Risk Requirement;
(B)
Position Risk Requirement; and
(C)
Underwriting Risk Requirement.
(2) A Market Participant must calculate in accordance with Annexure 1 to this Schedule 1A:
(a)
its Counterparty Risk Requirement; and
(b)
a counterparty risk amount for each of its Positive Credit Exposures to a Counterparty for transactions in Financial Instruments referred in Annexure 1 to this Schedule 1A, except those transactions which relate to Excluded Assets.
(3) A Market Participant must calculate in accordance with Annexure 2 to this Schedule 1A:
(a)
its Large Exposure Risk Requirement; and
(b)
its large exposure risk amount for each:
(i)
Counterparty; and
(ii)
Equity Net Position and Debt Net Position relative to:
(A)
Liquid Capital; and
(B)
an issue or issuer.
(4) A Market Participant must calculate in accordance with Annexure 3 to this Schedule 1A:
(a)
its Position Risk Requirement;
(b)
a position risk amount for all positions in Financial Instruments, except those positions which are Excluded Assets; and
(c)
a position risk amount for other assets and liabilities which are denominated in a currency other than Australian dollars except for those assets which are Excluded Assets.
(5) A Market Participant must calculate in accordance with Annexure 4 to this Schedule 1A:
(a)
its Underwriting Risk Requirement; and
(b)
an underwriting risk amount for each Underwriting.
(6) A Market Participant must calculate a Non-Standard Risk Requirement in accordance with Rule S1A.2.9.
Maximum penalty: $100,000

S1A.2.3A Authorisation

(1) A Market Participant must be authorised by ASIC in writing for each of the risk calculation methods it uses for the purposes of Rule S1A.2.3.
(2) An authorisation given by ASIC under subrule (1) will specify which risk calculation methods the Market Participant is authorised to use.
(3) A Market Participant must obtain an authorisation from ASIC under subrule (1) prior to the use of a particular risk calculation method.
(4) A Market Participant will only be authorised to use a particular risk calculation method under subrule (1) after having satisfactorily demonstrated its ability to calculate risk amounts under that method.
Maximum penalty: $100,000

S1A.2.4 Approved Subordinated Debt

(1) A Market Participant entering into a subordination arrangement may only include an amount owing under such an arrangement in its Liquid Capital if:
(a)
the subordination arrangement has the prior approval of ASIC under subrules (2) and (3); and
(b)
the amount is notified to and approved by ASIC prior to being drawn down under the subordination arrangement and complies with subrule (4) where relevant.
(2) ASIC will not approve a subordination arrangement unless in the opinion of ASIC:
(a)
subject to subrule (6), the amount owing to the lender under the subordination arrangement will not be repaid until all other debts which the Market Participant owes to any other persons are repaid in full; and
(b)
the obligation to pay any amount owing under the subordination arrangement is suspended if Rule S1A.2.1 is no longer complied with.
(3) ASIC will not approve a subordination arrangement unless the Market Participant has executed an Approved Subordinated Loan Deed in respect of the subordination arrangement.
(4) If a Market Participant is a partnership which has entered into an approved subordination arrangement under subrules (2) and (3) and there is a change in the composition of the Market Participant, then an amount owing under the previously approved subordination arrangement must not be included in its Liquid Capital unless ASIC is of the opinion that this arrangement has been renewed or amended so as to ensure that all partners after the change in composition are bound by it.
(5) A Market Participant must comply with the terms of the Approved Subordinated Loan Deed and any associated agreement to which it, ASIC, and the lender are parties and must ensure the lender’s compliance with these documents.
(6) Prior to its Bankruptcy, a Market Participant may repay an amount owing under an approved subordination arrangement only with the prior approval of ASIC.
(7) ASIC will not withhold its approval under subrule (6) if in the opinion of ASIC:
(a)
the Market Participant’s Liquid Capital divided by its Total Risk Requirement is capable of continuing to be greater than 1.2 on repayment; and
(b)
the Market Participant’s Core Capital is capable of continuing to be equal to or greater than the amount required under Rule S1A.2.1 when Approved Subordinated Debt is included under subrule (8).
(8) If a Market Participant does not hold sufficient Core Capital under paragraph S1A.2.1(b), then it may with the prior approval of ASIC include amounts owing under an approved subordination arrangement in calculating Core Capital for a 6 month period commencing on the date that the Market Participant first does not hold sufficient Core Capital.

(9) In forming an opinion as to whether a Market Participant is capable of continuing to meet the requirements in paragraphs (7)(a) and (b), ASIC may consider matters such as:
(a)
the state of the overall market and the trend of the individual Market Participant’s share of that market;
(b)
the ability of the Market Participant to continue as a going concern for a period that may exceed 30 days;
(c)
any waivers that exist at the time of the request; and
(d)
the existence of any outstanding litigation.
Maximum penalty: $100,000

S1A.2.4A Excluded Assets

(1) Subject to subrule (2), where a Market Participant has an asset due from one entity (which would ordinarily be treated as an Excluded Asset) which is linked to an offsetting liability payable to another entity, the Market Participant may net the asset and liability so that only the net amount (if positive) is reported as an Excluded Asset.
(2) The Market Participant may only net an asset with a liability and report the net amount as an Excluded Asset under subrule (1) if the Market Participant:
(a)
has obtained written authorisation from ASIC for the purposes of this Rule;
(b)
has a documented, legally binding contract or agreement with the Counterparty to the liability that specifies that the liability cannot be enforced unless the asset is realised;
(c)
continues to report the asset and liability on a gross basis in the balance sheet section of the Monthly Risk-Based Return or alternative form of return required by Rule 9.2.3;
(d)
reports the net amount as an “Other Prescribed Asset” in the “Core Capital, Liquid Capital, Liquid Margin and Ratio” section of the Monthly Risk-Based Return or alternative form of return required by Rule 9.2.3; and
(e)
includes the following details in the “Additional Comments” section of the Monthly Risk-Based Return or alternative form of return required by Rule 9.2.3:
The following assets and liabilities have been netted for the purpose of calculating the amount included in the Excluded Asset “other prescribed asset” line of the “Core Capital, Liquid Capital, Liquid Margin and Ratio” section of the capital liquidity return.
Asset—describe the nature of the asset/s $
less Liability—describe the nature of the liability/s $( )
Excluded Asset—other prescribed asset $ net amount
(3) A Market Participant must treat the following amounts as Excluded Assets if they remain outstanding for greater than 30 calendar days:
(a)
Underwriting fees;
(b)
fees due for managing a client portfolio;
(c)
corporate advisory fees; and
(d)
other sundry debtors.
Note: There is no penalty for this Rule.

S1A.2.5 Redeemable Preference Shares

(1) A Market Participant must not redeem any redeemable Preference Shares issued by it in whole or in part without the prior written approval of ASIC.
(2) ASIC will not withhold its approval under subrule (1) if in the opinion of ASIC the Market Participant’s Liquid Capital divided by its Total Risk Requirement is capable of continuing to be greater than 1.2 on redemption.
(3) In forming an opinion as to whether a Market Participant is capable of continuing to meet the requirement in subrule (2), ASIC may consider matters such as:
(a)
the state of the overall market and the trend of the individual Market Participant’s share of that market;
(b)
the ability of the Market Participant to continue as a going concern for a period that may exceed 30 days;
(c)
any waivers that exist at the time of the request; and
(d)
the existence of any outstanding litigation.
Maximum penalty: $100,000

S1A.2.6 Guarantees and Indemnities

(1) A Market Participant may only give a guarantee or indemnity:
(a)
for the purposes of these Rules, the ASX Market Integrity Rules, the Chi-X Australia Operating Rules, the ASX Operating Rules, the ASX Clear Operating Rules or the ASX Settlement Operating Rules;
(b)
in the ordinary course of the conduct of its securities or derivatives business;
(c)
outside the ordinary course of its securities or derivatives business if a maximum liability is specified in the guarantee or indemnity at the time it is entered into; or
(d)
to settle legal proceedings that have been threatened or issued against it,
and must not give a cross-guarantee.
(2) For the purposes of paragraphs (1)(b) and (c), the expression “ordinary course of the conduct of its securities or derivatives business” includes, but is not limited to, a guarantee or indemnity given by a Market Participant to:
(a)
a lessor for lease rental commitments on premises, computer equipment and other property, plant and equipment by the service company of the Market Participant where those premises and equipment are for use exclusively or predominantly by the Market Participant;
(b)
financial institutions for withdrawal of funds by the Market Participant against uncleared cheques;
(c)
ASIC to support the issuance of an Australian financial services licence to the Market Participant; and
(d)
a lessor for lease rental payments on a residence for a member of staff, normally based overseas, who is temporarily located in Australia to perform their duties,
but would not normally include:
(a)
charges, guarantees or indemnities given over the financial performance of a subsidiary or Related/Associated Person of the Market Participant such as a separately incorporated futures broker; and
(b)
charges, guarantees or indemnities given to support Underwriting activities that are not booked in the Market Participant.
(3) A Market Participant that is a member of a consolidated group within the meaning of section 703-5 of the Income Tax Assessment Act 1997 (Cth) must, when it first becomes a member of that group, report in the “Additional Comments” section of the next Monthly Risk-Based Return required by Rule 9.2.3:
(a)
the date its group elected to become a consolidated group;
(b)
the date it entered into a tax sharing agreement (if applicable);
(c)
the date it entered into a tax funding agreement (if applicable); and
(d)
any other information that may be relevant in assessing the Market Participant’s financial position as a result of it being part of a consolidated group,
and any changes to these details must be reported in the “Additional Comments” section of subsequent Monthly Risk-Based Returns required by Rule 9.2.3.
Maximum penalty: $100,000

S1A.2.7 Records and Accounts

(1) A Market Participant must maintain records and working papers in sufficient detail to show continuous compliance with Rule S1A.2.1 for seven years.
(2) The records and working papers referred to in subrule (1) must, at a minimum:
(a)
show the nature of the outstanding transactions and commitments for which the Market Participant was liable;
(b)
disclose the financial position of the Market Participant at any point in time;
(c)
detail and support the calculations required to quantify the Total Risk Requirement and demonstrate that the Market Participant was complying with the Risk Based Capital Requirements;
(d)
permit the Market Participant to prepare a return required by these Rules using those records if so requested; and
(e)
permit the Market Participant to reproduce a calculation of its Liquid Capital or Total Risk Requirement at the close of business on each day in the seven year period.
(3) A Market Participant must prepare its accounts and returns in accordance with accounting standards which are generally accepted in Australia, unless ASIC approves otherwise.
(4) A Market Participant must take any amounts arising from the marking-to-market of principal positions in Financial Instruments to the Market Participant’s profit and loss account immediately and include those amounts in the Market Participant’s overall accounting for taxation.
(5) A Market Participant must record a transaction in its accounts on the date on which it enters into an irrevocable commitment to carry out the transaction.
Maximum penalty: $100,000

S1A.2.8 Valuations and Foreign Currencies

(1) A Market Participant must mark to market each of its principal positions in Financial
Instruments unless Schedule 1A provides otherwise:
(a)
at least once every Business Day; and
(b)
in the following manner:
(i)
subject to subparagraphs (ii) to (v), a position must be valued at its closing market price:
(A)
which is the current bid price for a long position; and
(B)
which is the current offer price for a short position;
or at last price, closing price or mid price;
(ii)
an Option or rights position may be valued using a value derived from an option pricing model approved by ASIC for use in the contingent loss matrix method;
(iii)
an exchange traded Option position may be valued using the “fair value” published by a reputable independent information source, where the “fair value” source is used consistently across all exchange traded Option positions of the Market Participant at all times;
(iv)
an Option or rights position which does not have a published market price under subparagraph (i) or which cannot be valued using an options pricing model under subparagraph (ii) or the “fair value” under subparagraph (iii) must be valued as follows:
(A)
for a purchased Option or right, the In the Money amount multiplied by the quantity underlying the Option; and
(B)
for a written Option, the sum of the In the Money amount multiplied by the quantity underlying the Option and the initial premium received for the Option;
(v)
a Swap or a Forward Rate Agreement must be valued:
(A)
having regard to the net present value of the future cash flows of the contract; and
(B)
using current interest rates relevant to the periods in which the cash flows will arise.
(2) For the purposes of sub-subparagraph (1)(b)(iv)(B), if a written Option was In the Money at the time the contract was written, the In the Money amount for the purposes of this Rule may be taken to be the current In the Money amount less the In the Money amount at the time the contract was written.
(3) If a Market Participant holds a Financial Instrument denominated in a foreign currency then it:
(a)
must calculate a risk amount for each risk type in that foreign currency; and
(b)
convert the risk amount in paragraph (a) to Australian dollars at the Market Spot Exchange Rate,
in all cases other than where the Market Participant is calculating risk amounts for the purposes of Parts A3.18 to A3.22 of Annexure 3 to this Schedule 1A or where this Schedule 1A expressly provides otherwise.
Maximum penalty: $100,000

S1A.2.9 Unusual or Non-Standard Exposures

If a Market Participant has an exposure arising from a transaction which is not:
(a)
specifically described in this Schedule 1A; or
(b)
is not in a form which readily fits within this Schedule 1A,
the risk requirement of a Market Participant in relation to that exposure is the full market value of the transaction unless ASIC approves otherwise.
Note: There is penalty for this Rule.

S1A.2.9A Margin lending facilities

Where a Market Participant offers margin lending facilities to clients:
(a)
the risk requirement for the exposure with respect to margin calls is:
(i)
equal to 100% of the margin call that the Market Participant makes on a client, where that margin call has either not been paid by the client, or sufficient of the underlying securities have not been sold by the Market Participant to cover the margin call; and
(ii)
applies from the time the margin payment was due; and
(b)
where the client’s actual gearing level exceeds the maximum permitted gearing level by more than 5%, the full amount needed to bring the loan balance back to the maximum permitted gearing level must be taken as the risk requirement for the exposure immediately, regardless of whether the Market Participant has made a margin call on the client.
Maximum penalty: $100,000

S1A.2.9B Hybrid ETFs

Where a Market Participant holds a principal position in a Hybrid ETF that contains a material percentage of assets other than physical Equity securities, physical Debt Instruments or property, the Market Participant must treat the position as a non-standard exposure and the risk requirement must be the full market value of the Hybrid ETF, unless ASIC approves otherwise.
Maximum penalty: $100,000

S1A.2.9C Other Managed Funds

Where a Market Participant has a principal position in an Other Managed Fund that contains a material percentage of assets other than physical Equity securities, physical Debt Instruments or property, the Market Participant must treat the principal position as a nonstandard exposure and the risk requirement must be the full market value of the Other Managed Fund, unless ASIC approves otherwise.
Maximum penalty: $100,000

S1A.2.10 Underwriting Register

A Market Participant must maintain a register of its Underwritings which records:
(a)
the date of commencement, crystallisation and termination of each Underwriting and the parties to each Underwriting;
(b)
the identity, number and price of the Equities or Debt Instruments the subject of each Underwriting;
(c)
the amount underwritten by the Market Participant under each Underwriting; and
(d)
any reduction in the amount underwritten under each Underwriting due to an amount being:
(i)
sub-underwritten; or
(ii)
received under a client placement,
and the date that this reduction occurs.
Maximum penalty: $100,000

Schedule 1B

Note: There is no Schedule 1B.

Annexure 1 to Schedule 1A: Counterparty Risk Requirement

Part A1.1 Counterparty Risk Requirement

A1.1.1 Nature of counterparty risk amount

(1) For each type of counterparty risk that gives rise to a Positive Credit Exposure, a counterparty risk amount:
(a)
must be calculated in accordance with the methods set out in this Annexure 1; and
(b)
may be reduced by a counterparty risk weighting in accordance with Part A1.8.
(2) For the purposes of subrule A1.2.2(1), a Positive Credit Exposure exists on a Client Balance regardless of whether the Client Balance is positive or negative.

A1.1.1A Treatment: Classical ETFs

(1) Subject to subrule (2), a Market Participant is not required to calculate a counterparty risk amount under this Annexure in relation to a subscription for or redemption of a unit in a Classical ETF.
(2) In the event of default in the settlement of a primary market transaction in Classical ETFs:
(a)
in the case of a subscription for Classical ETF units, where the Market Participant transfers underlying securities and does not receive the corresponding Classical ETF units or some other cash consideration; or
(b)
in the case of a redemption, where the Market Participant transfers Classical ETF units and does not receive the corresponding underlying securities, or some other cash consideration,
a counterparty risk amount must be calculated under the Free Delivery method from the time those assets or cash were due to be settled.
(3) A Market Participant is required to calculate a counterparty risk amount under this Annexure for all secondary market transactions in Classical ETF units.

A1.1.1B Treatment: Hybrid ETFs

(1) Subject to subrule (2), a Market Participant is not required to calculate a counterparty risk amount under this Annexure in relation to a subscription for or redemption of a unit in a Hybrid ETF.
(2) In the event of a default in the settlement of a primary market transaction in Hybrid ETFs:
(a)
in the case of a subscription for Hybrid ETF units, where the Market Participant transfers cash and does not receive the corresponding Hybrid ETF units; or
(b)
in the case of a redemption, where the Market Participant transfers Hybrid ETF units and does not receive the corresponding cash,
a counterparty risk amount must be calculated under the Free Delivery Method from the time those assets or cash were due to be settled.
(3) A Market Participant is required to calculate a counterparty risk amount under this Annexure for all secondary market transactions in Hybrid ETF units.

A1.1.1C Treatment: Other Managed Funds

A Market Participant is not required to calculate a counterparty risk amount under this Annexure in relation to a subscription for or redemption of a unit in an Other Managed Fund.

Part A1.2 Methods

A1.2.1 Overview

There are separate methods for measuring counterparty risk amounts for each of the following transaction types:
Table A1.1:Method for measuring counterparty risk: Transaction type

Transaction Type
Non Margined Financial Instrument	Free Delivery	Securities Lending and Borrowing
Margined Financial Instrument	OTC Derivative or a Warrant held as principal	Sub Underwritten Position

A1.2.2 Non-margined Financial Instruments method

(1) For unsettled trades in Financial Instruments which are not margined and not covered by one of the other methods in this Annexure, the counterparty risk amount is 3% of the Client Balance, where this balance does not include trades which remain unsettled with the Counterparty for greater than 10 Business Days following the transaction date and regardless of whether the Counterparty is issuer or participant sponsored.
(2) A Market Participant may reduce the Client Balance by the amount of Financial Instruments held by the Market Participant on behalf of the Counterparty if they specifically relate to the sale trades pending settlement with the market or by the amount of collateral held by the Market Participant on behalf of the specific Counterparty if:
(a)
the collateral is Liquid and only to the extent that it is Liquid;
(b)
the collateral is unrelated to a particular or specific transaction and is not the securities underlying the Counterparty’s purchase;
(c)
the collateral is under the control of the Market Participant, able to be accessed by the Market Participant without the approval of a third party and not otherwise encumbered;
(d)
the collateral is valued at the mark to market value and offset on a transaction-bytransaction basis; and
(e)
the collateral arrangement is evidenced in writing by a legally binding agreement between the Market Participant and the Counterparty in circumstances where:
(i)
the Market Participant has established that the Counterparty and the persons signing the agreement have the legal capacity to enter into the agreement and provide the nominated collateral; and
(ii)
the agreement provides for the Market Participant to deal with that collateral in the event that the client or Counterparty defaults on its settlement of the relevant transactions to recover any amounts owed to the Market Participant,
and the Market Participant may only apply such collateral in accordance with the conditions specified in the collateral agreement.
(3) For unsettled trades in Financial Instruments which are not margined and not covered by one of the other methods in this Annexure, the counterparty risk amount for trades remaining unsettled for greater than 10 Business Days following the transaction date is at the choice of the Market Participant:
(a)
either:
(i)
3% of the contract value; or
(ii)
the excess of:
(A)
the contract value over the market value of each Financial Instrument in the case of a client purchase; and
(B)
the market value of each Financial Instrument over the contract value in the case of a client sale,
whichever is the greater; or
(b)
100% of the contract value for a client purchase or 100% of the market value for a client sale.
(4) A Market Participant may reduce the contract values and the excesses by the amount of collateral held by the Market Participant on behalf of the Counterparty if:
(a)
the collateral is Liquid and only to the extent that it is Liquid;
(b)
the collateral is unrelated to a particular or specific transaction and is not the securities underlying the client purchase;
(c)
the collateral is under the control of the Market Participant, able to be accessed by the Market Participant without the approval of a third party and not otherwise encumbered;
(d)
the collateral is valued at the mark to market value and offset on a transaction by transaction basis; and
(e)
the collateral arrangement is evidenced in writing by a legally binding agreement between the Market Participant and the Counterparty in circumstances where:
(i)
the Market Participant has established that the Counterparty and the persons signing the agreement have the legal capacity to enter into the agreement and provide the nominated collateral; and

Capital Liquidity Return

Return Date:

PRR-VAR-LDL

Largest Daily Losses

LossDate

Capital Liquidity Return

Return Date:

PRR-VAR-EST

Equity Stress Testing

Capital Liquidity Return

Return Date:

PRR-VAR-DST

Debt Stress Testing

Change in Yield (%)
Cash	90 days	180 days	1 year	3 years	5 years	10 years	15 years
Yield curve scenario 1	+20	+20	+20	+20	+20	+20	+20	+20
Yield curve scenario 2	-20	-20	-20	-20	-20	-20	-20	-20

Yield curve scenarios

Yield curve scenario 1

Yield curve scenario 2

Interest rate volatility scenarios

Volatility scenario 1	Volatility scenario 2
Change in Implied Volatility (%)	+250	-75

Capital Liquidity Return

Return Date:

PRR-VAR-FST

Foreign Exchange Stress Testing

Exchange Rate Scenarios

Change in Price (%)
Change in Implied Volatility (%)	-20	-10	0	+10	+20
+100
0
-50

Capital Liquidity Return

Return Date:

LRR

Large Exposure Risk Requirement

Summary	Total
Part 1 - Counterparty Large Exposure Amount
Part 2 - Issuer Large Exposure - Equity Method
Part 3 - Issuer Large Exposure - Debt Method
Part 4 - Issuer Large Exposure - Equity & Debt Method
Total Large Exposure Risk Requirement

Capital Liquidity Return

Return Date:

LRR-CLE

Counterparty Large Exposure Amount

Counterparty Large Exposure

Summary	Total
Total Counterparty Large Exposure Risk Requirement
Total number of counterparties

Capital Liquidity Return

Return Date:

LRR-CLE-NMI

Non Margined Financial Instruments Method

Transaction Type	Risk Amounts
> 10 Business Days: Transactions @ 3% of contract value or excess, whichever is greater
> 10 Business Days: 100% of contract value / 100% of market value
Sub TOTAL RISK AMOUNT
Total Number of Counterparties

Capital Liquidity Return

Return Date:

LRR-CLE-SLB

Securities Lending and Borrowing Method

Transaction Type	Risk Amounts
Option 1
> $10,000 and counterparty exposure ≤15% of value received: 8% of counterparty exposure
> $10,000 and counterparty exposure > 15% of value received: 8% of 15% of value received
> $10,000 and counterparty exposure > 15% of value received: 100% of counterparty exposure over 15% of the value received
Option 2
> $10,000: 100% of counterparty exposure
Sub TOTAL RISK AMOUNT
Total Number of Counterparties

Capital Liquidity Return

Return Date:

LRR-CLE-MFI

Margined Financial Instruments Method

Transaction Type	Risk Amounts
Settlement Amount, Premium, Deposit or Margin owed by Counterparty @ 100%
Sub TOTAL RISK AMOUNT
Total Number of Counterparties

Capital Liquidity Return

Return Date:

LRR-CLE-ODW

OTC Derivatives and Warrants Executed as Principal Method

Transaction Type	Risk Amount
Written Premium Not Received @ 100%
Current Credit Exposure: Equity @ 8%
Potential Credit Exposure: Equity @ 8%
Current Credit Exposure: Debt @ 8%
Potential Credit Exposure: Debt @ 8%
Current Credit Exposure: Fx @ 8%
Potential Credit Exposure: Fx @ 8%
Sub TOTAL RISK AMOUNT
Total Number of Counterparties

Capital Liquidity Return

Return Date:

LRR-ISE

Issuer Large Exposure – Equity Method

Country	Number of Equity Issuers	Equity Net Position	> 25% Of Liquid Capital @ 12%	> 25% Of Liquid Capital @ 16%	> 5% Of Issue @ 12%	> 5% Of Issue @ 16%	Total Risk
							Amount $
							TOTAL

Capital Liquidity Return

Return Date:

LRR-ISD

Issuer Large Exposure – Debt Method

Underlying Currency	Number of Debt Issuers	Debt Net Position	> 25% Of Liquid Capital	> 10% Of Issue	Total Risk Amount $
					TOTAL

Capital Liquidity Return

Return Date:

LRR-IED

Issuer Large Exposure – Equity & Debt Method

Underlying Currency	Number of Equity/Debt Issuers	Equity Net Position Plus Debt Net Position	> 25% Of Liquid Capital @ 12%	> 25% Of Liquid Capital @ 16%	> 25% Of Liquid Capital @ applicable debt position risk factor	Total Risk Amount $
TOTAL

Capital Liquidity Return

Return Date:

URR

Underwriting Risk Requirement

Equity	Debt Instrument	Total
Underwriting Risk Amount

Capital Liquidity Return

Return Date:

NRR

Non Standard Risk Requirement

Detail the nature of the exposure	Other	Amount - Total
Total

Capital Liquidity Return

Return Date:

ORR

Operational Risk Requirement

Minimum Amount	$100,000
add Variable amount
Counterparty risk requirement	(a)
Position Risk Requirement	(b)
Underwriting Risk Requirement	(c)
Sum (a) + (b) + (c)		* 8% =
add Secondary Requirement
Total Operational Risk

Capital Liquidity Return

Return Date:

ICS

Income Statement

Revenue

Current		Prior
Profits (Losses) from trading in securities / derivatives: Realised
Unrealised
Brokerage: Equities
Warrants
Futures / Exchange Traded Options
Debt
Other
Underwriting commission (less sub-underwriting commission paid)
Sub-underwriting commission
Dividends
Interest
Bad debts recovered and provision for doubtful debts no longer required
Directors' fees
Handling fees
Corporate Advisory Fees
Financial planning / Portfolio Management Fees
Management fees
Other fee received from associated entities
Other Revenue

Capital Liquidity Return

Return Date:

Additional Total

TOTAL REVENUE

Capital Liquidity Return

Return Date:

Expenses

Current		Prior
Salaries (excluding partners, directors and research salaries)
Directors' / Partners' salaries
Commissions paid to Traders / Consultants
Other salary costs
Occupancy costs
Interest paid
Travel, Public Relations and Advertising
Research (including research salaries)
Bad and doubtful debts written off / provided for
Audit fees
Admin costs (postage, fax, phone etc)
Professional indemnity insurance
Other insurance costs
All management / service fees paid to associated entities
Depreciation / Amortisation of fixed and intangible assets
Finance lease payments
Operating lease payments (other than occupancy)
Other Expenses

TOTAL EXPENSES

Capital Liquidity Return

Return Date:

Net Profit / (loss)

Current		Prior
PROFIT before income TAX
Income Tax - Expense
If a profit has been made but no tax provision raised, the reason for NOT providing for tax must be recorded in this comment field
Profit / (loss) after TAX from discontinued operations (detail below)
NET PROFIT / (LOSS) for the period

Capital Liquidity Return

Return Date:

Retained Earnings

Current		Prior
Opening Retained Earnings
Adjustments TO retained earnings (detail) - increases
TOTAL
Dividends
Adjustments from retained earnings (detail) - decreases
TOTAL
Other adjustments to / (from) retained earnings (detail)
TOTAL
Closing Retained Earnings

Capital Liquidity Return

Return Date:

BAL

Balance Sheet

Assets
Current Assets (current)		Current Assets (prior)
Trade Receivables
Less Provision for doubtful debts
Securities Borrowings
Financial Assets
Cash and Cash Equivalents
Related/ Associated Persons
Client segregated/ Trust Accounts
Deposits at Clearing Houses
Other Current Assets
TOTAL CURRENT ASSETS
Non Current Assets (current)		Non Current Assets (prior)
Trade Receivables
Financial Assets
Loans and Deposits
Related/ Associated Persons
Property, Plant & Equipment
Intangible Assets
Deferred Tax Assets
Other Non Current Assets
TOTAL NON CURRENT ASSETS
Total Assets

Capital Liquidity Return

Return Date:

Liabilities
Current Liabilities (current)	Current Liabilities (prior)
Trade Payables
Securities Lending
Financial Liabilities
Short Term Borrowings
Income Tax Payable
Approved Subordinated Debt
Other Current Liabilities
TOTAL CURRENT LIABILITIES
Non Current Liabilities (current)	Non Current Liabilities (prior)
Long Term Borrowings
Deferred Income Tax
Approved Subordinated Debt
Other Non Current Liabilities
TOTAL NON CURRENT LIABILITIES
Total Liabilities
Net Assets

Capital Liquidity Return

Return Date:

Equity
Equity (current)		Equity (prior)
Ordinary Issued and Paid Up Shares
Non Cumulative Preference Shares
Cumulative Preference Shares
Other
Total Equity
Reserves (current)		Reserves (prior)
Revaluation reserves
Other reserves
TOTAL RESERVES
Retained Earnings / (Accumulated Losses)
Total Equity

Capital Liquidity Return

Return Date:

BSD

Balance Sheet Details

Total Contingent Liabilities

Capital Liquidity Return

Return Date:

BSD-CCE

Cash & Cash Equivalents

Detail FUNDS lodged with:	CURRENT		NON CURRENT
Approved Deposit Taking Institution (ADTI)	SECURED	UNSECURED	SECURED	UNSECURED
Total ADTI
Petty Cash
Non ADTI and Other
Total NON ADTI and Other
Total Secured / Unsecured
Total Current / Non Current:

Capital Liquidity Return

Return Date:

BSD-RAP

Related/ Associated Persons

Cash & Cash Equivalents - Detail	CURRENT		NON CURRENT
-Approved Deposit Taking Institution (ADTI)	SECURED	UNSECURED	SECURED	UNSECURED
ADTI Total
Cash & Cash Equivalents - Detail
- Non ADTI and Other
Non ADTI Total
Total Secured/ Unsecured
Total Current/ Non Current

Capital Liquidity Return

Return Date:

BSD-UWG

Underwriting/ Guarantees

Underwriting and Sub Underwriting:
Gross Underwriting Commitments
Gross Sub Underwriting Commitments
Gross Underwriting and Sub Underwriting Commitments
Reduce underwriting and sub underwriting commitments by sub underwritten amounts and/or amounts received from client placement
NET UNDERWRITING COMMITMENTS
Guarantees:
For the purpose of the Rules
Ordinary course of business
To settle legal proceedings
SUB TOTAL
Related/Associated persons
Other
Other Guarantee Sub Total
TOTAL UNDERWRITING / GUARANTEES

Capital Liquidity Return

Return Date:

BSD-LIE

Legal / Insurance / Encumbrances

Contingent Liabilities

Are there any actual / potential legal proceedings and Insurance Claims?

Is there any charge, pledge, or other encumbrance over any of the assets of the Participant?

Has the Participant granted any Credit Facilities to other persons or entities?

Capital Liquidity Return

Return Date:

BSD-LSO

Other Contingent Liabilities and Lease Commitments

Lease Commitments: (including property commitments)
Detail Operating Leases
Other Leases:
TOTAL LEASE COMMITMENTS:
Other Contingent Liabilities:
TOTAL OTHER:
Total Lease Commitments / Other Contingent Liabilities:

Capital Liquidity Return

Return Date:

BSD-OTA

Other Assets

Current Asset Description	Current Asset Amount
Current Asset Amount Total
NON Current Asset Description	NON Current Asset Amount
NON Current Asset Amount Total
Other Assets Total

Capital Liquidity Return

Return Date:

CAP – CC, LQC, LM

Core Capital

Current ReturnPrior Return
Ordinary Issued and Paid-Up Shares
Non-Cumulative Preference Shares
All Reserves Excluding Revaluation Reserves other than Financial Asset Revaluation Reserves
Opening Retained Earnings/Accumulated Losses Adjusted for all Current Year Movements
Core Capital

Capital Liquidity Return

Return Date:

CAP- CC, LQC, LM

Liquid Capital Calculation

Current Return		Prior Return
Core Capital
Cumulative Preference Shares
Approved Subordinated Debt
Revaluation Reserves other than Financial Asset Revaluation Reserves
less Excluded Assets
Property, Plant and Equipment
Intangible Assets
Deferred Tax Assets
Other Non-Current Assets
Unsecured deposits/loans with non approved deposit taking instit's
Unsecured non ADTI related / associated person balances
Other trade receivables realisable after 30 days
Prepayments realisable after 30 days
Other Illiquid Assets
Other charged assets
Other prescribed assets
less Excluded Liabilities
Guarantees and Indemnities
Other prescribed liabilities
Liquid Capital

Capital Liquidity Return

Return Date:

CAO – CC, LQC, LM

Liquid Margin Calculation

Current Return		Prior Return
Liquid Capital
Operational Risk Requirement
Counterparty Risk Requirement
Large Exposure Risk Requirement
Position Risk Requirement
Underwriting Risk Requirement
Non Standard Risk Requirement
Liquid Margin

.Ratio of Liquid Capital to Total Risk Requirement

Current Return	Prior Return
Ratio of Liquid Capital to	=	Liquid Capital	=	=
Total Risk Requirement		Total Risk Requirement

Capital Liquidity Return

Return Date:

ADD

Additional Comments

Capital Liquidity Return

Return Date:

CFO

Credit Facilities & Overdraft

STANDBY CREDIT facilities granted in favour of the Participant
Type	Full Name of Provider	Terms And Availability	Amount of Limit
TOTAL STANDBY CREDIT FACILITIES

Schedule1CForm5: RiskBasedCapitalRequirements–Auditor’s Report

PROFORMA AUDITOR’S REPORTONFINANCIALINFORMATION

Pro Forma Auditor’s Report on Financial Information

KEY

The following key applies throughout this document.

* Where the Participant is a body corporate incorporated or resident outside Australia operating a branch in Australia, the following words may be inserted – “Australian

branch”.

** Delete as applicable.

INDEPENDENT AUDITOR’S REPORTTOTHEDIRECTORS/PARTNERS** OF

[PARTICIPANT_NAME]

To: The Directors/Partners**, [Participant_name];

AUDITOR’S REPORT ON THE RETURN

We have audited the financial information set out in the attached.

Annual Audited Return, excluding the Directors’/Partners’ ** Statement Relating to Accounts of a Participant and “Prior Period” balances as shown in the Audited Return, (the “Return”) of [Participant_name]* (“the Participant”) for the [period] ended [date].

TheResponsibilityoftheDirectors/Partners**fortheReturn

The directors/partners**of the Participant are responsible for the preparation and fair presentation of the financial information set out in the Return in accordance with the requirements of the ASIC Market Integrity Rules (Chi-X Australia Market-Capital) 2014. This responsibility includes: establishing and maintaining internal controls relevant to the preparation and fair presentation of the financial information set out in the Return to ensure that the Return is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’sResponsibility

Our responsibility is to express an opinion on the financial information set out in the Return based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial information set out in the attached Return is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures of the financial information set out in the Return. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial information set out in the Return whether due to fraud or error.

In making those risk assessments, the auditor considers internal controls relevant to the Participant’s preparation and fair presentation of the financial information set out in the Return in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Participant’s internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors/partners** of the Participant, as well as evaluating the overall presentation of the financial information set out in the Return.

The Return has been prepared in accordance with Rule 9.2.4 of the ASIC Market Integrity Rules (Chi-X Australia Market-Capital) 2014 as the Participant is complying with the Risk Based Capital Requirements.

The Return may not be suitable for another purpose. Our report is intended solely for the Participant and ASIC and should not be distributed to or used by parties other than the Participant and ASIC.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

INDEPENDENCE

In conducting our audit, we have complied with the independence requirements of APES

110: Code of Ethics for Professional Accountants.

[QUALIFIED]AUDITOR’S OPINION

In our opinion, [exceptforthemattersreferredto inthequalification below],the Return of [Participant_name]for the [period]ended [date]presents fairly, in all material respects, the financial information of the Participant for the [period]ended [date]as required by ASIC in accordancewith theASICMarketIntegrity Rules (Chi-X Australia Market-Capital) 2014that are relevant to the preparation and presentation of the Return.

QUALIFICATION(IF APPLICABLE)

Dated this .................................................. day of .............................................................

AuditFirm“Signature” .....................................................................................................

Name of Audit Firm ............................................................................................................. Address of Audit Firm .......................................................................................................... Partner’s Signature ..............................................................................................................

Name of Partner ..................................................................................................................

Ifan auditorisnotsatisfied asto anymattera qualified auditopinion shouldbe expressed.

Schedule1CForm6: RiskBasedCapitalRequirements– Key

RisksandInternalSystems Statement

ATTESTATIONBY DIRECTORS/PARTNERS TOASIC
KEYRISKS ANDINTERNALSYSTEMS

Participant:.......................................................................................................................

Year Ended:......................................................................................................................

PARTICIPANTS KEY RISKS AND INTERNAL SYSTEMS STATEMENT

We hereby certify and represent that:

The Participant has developed and implemented adequate systems, procedures and controls reasonably designed to achieve compliance, at all times, with the requirements of the ASIC MarketIntegrity Rules (Chi-X Australia Market) 2011 and the ASIC MarketIntegrity Rules (Chi-X Australia Market-Capital) 2014, and which are appropriate for the nature and extent of the trading activitiesbeing conducted.

This includes review of the obligations under the ASICMarketIntegrity Rules (Chi-X Australia Market) 2011 and the ASIC MarketIntegrity Rules (Chi-X Australia Market-Capital) 2014, the identification of the key risks facing the Participant and the establishment of systems, procedures and controls to monitor and manage those risks including the establishment of policies and procedures to ensure the accurate calculation of the capital requirements.

The systems, procedures and controls are operating effectively and are adequate having regard to the nature and extent of the Participant’s trading activitiesto ensure compliance with ASICMarketIntegrity Rules (Chi-X Australia Market) 2011 and the ASIC MarketIntegrity Rules (Chi-X Australia Market-Capital) 2014.

We have retained copies of the relevant documentation on which this representation is based and this is available for inspection by ASIC.

Name .........................................................Name........................................................... Director / Partner ......................................Director / Partner..........................................

Dated this ......................................................... day of...................................................

Date of Board Resolution (if applicable)........................................................................

Note: If a Participant considers it necessary to qualify this standard statement, the reasons should be explained in full in an accompanying statement

Schedule 1C Form 7: Risk Based Capital Requirements – Partnership Statutory Declaration

Market Participants – Partner Statutory Declaration

Basis of preparation

In completing this statutory declaration ALL liabilities, actual or contingent must be declared.

Sufficient assets should be declared to demonstrate an excess of assets over liabilities of not less than $50,000. If net assets are less than $50,000 then (i) all assets must be declared as well as all liabilities (actual or contingent) and (ii) a statement must be provided explaining the source of funds required to meet liabilities.

The declaration is required to be made in accordance with the law of the place where the declaration is executed.

The table below sets out the persons who may witness a declaration.

State	Persons who may witness declaration
Victoria	Among others, any justice of the peace, notary public, barrister or solicitor of the Supreme Court, a member of the police force or Parliament, a legally qualified medical practitioner, a bank manager, a dentist or pharmacist, or a public service officer authorised to do so.
New South Wales	Among others, any justice of the peace, notary public, commissioner of the court for taking affidavits, other person authorised by law to administer an oath, or a solicitor holding a current practising certificate.
Queensland	Among others, any commissioner for declarations, justice of the peace, notary public or other officer authorised by law to administer an oath, barrister, solicitor or conveyancer.
Western Australia	Among others, any justice of the peace or other person authorised by law to administer an oath.
South Australia	Among others, any justice, notary public or any officer authorised by law to administer an oath or affirmation.
Tasmania	Among others, any justice, person authorised by law to administer an oath or a commissioner for declarations.

Each page of the notes attached to the statutory declaration must be signed and dated by the partner for identification purposes.

Treatment of property and mortgages

It is intended that the following guidelines be observed in the treatment of property and mortgages:

•
only the partner's proportion of the property value may be included as an asset in note 5;
•
the partner's proportion of the mortgage debt to be shown as a liability in note 8;
•
the proportion of the mortgage debt relating to other owners to be shown as contingent liability in note 9; and
•
no proportion of the property owned by the other parties may be included as an asset, contingent or otherwise.

Summary (note 1)

As note 1 is a summary of the totals of other notes, this note must be completed in full.

Treatment of assets (notes 2 to 7)

Accounts as at 30 June last should be attached to this Statutory Declaration in respect of any borrower who is not a recognised borrowing institution.

Assets are to be separately listed in these notes.

Where such assets are not registered in the sole name of the partner, particulars must be given. Where assets included in these notes have been offered as security, full particulars must be given.

Treatment of assets pledged for liability of a Participant (note 10)

If any personal assets are pledged as security for a liability of a Participant, those assets should be listed in note 10.

They must not be listed in any other notes.

Treatment of assets pledged for other debts not included in note 10 (note 11)

If any of the assets listed are pledged as security for any debt of either the person making this declaration, or a third party, details should be listed in note 11.

Statutory Declaration*

I,	[insert full name]
of	[insert address]
,	[insert occupation]
do solemnly and sincerely declare that:

1.
My actual and contingent liabilities of any nature did not exceed the sum of $ and are detailed on notes 8 and 9;

2.
The information stated in notes 1 to 11 inclusive is true and correct;

3.
The realisable value of my assets (excluding my interest in the Participant of ) exceeded the liabilities referred to in clause 1 by at least $ ; and

4.
All insurable assets described in the notes are, at all times, held insured to a value not less than that shown in the attached notes.

Victoria* - Declaration complying with the Evidence Act 1958

And I acknowledge that this declaration is true and correct, and I make it in the belief that a person making a false declaration is liable to the penalties for perjury.

Declared at

)

this

day of

)

[Signature of declarant]

Before me:

[Signature of person before whom the declaration is made]

[Title of person before whom the declaration is made]

_______________________

* Each partner is required to execute the statutory declaration in accordance with the law of the jurisdiction where the declaration is made. Accordingly, please select the appropriate format and delete or cross out those formats which are not relevant.

This page forms part of Statutory Declaration dated:	___/___/20___
Signed by partner:

New South Wales* - Declaration under the Oaths Act 1990

And I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Oaths Act 1990.

Declared at

)

this

day of

)

[Signature of declarant]

Before me:

[Signature of person before whom the declaration is made]

[Title of person before whom the declaration is made]

Queensland* - Declaration under The Oaths Acts, 1867 to 1988 -

And I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of The Oaths Act of 1867.

Signed and declared by the above-named declarant

in the State of

)

this

day of

)

[Signature of declarant]

Before me:

[Signature of person before whom the declaration is made]

A Justice of the Peace [or as the case may be].

_______________________

This page forms part of Statutory Declaration dated:	___/___/20___
Signed by partner:

Western Australia* - Declaration under the Evidence Act 1906

And I make this solemn declaration by virtue of section 106 of the Evidence Act 1906.

Declared at

)

this

day of

)

[Signature of declarant]

Before me:

[Signature of person before whom the declaration is made]

[Title of person before whom the declaration is made]

South Australia* - Declaration under the Oaths Act 1936

And I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Oaths Act 1936.

Declared at

)

this

day of

)

[Signature of declarant]

Before me:

[Signature of person before whom the declaration is made]

[Title of person before whom the declaration is made]

_______________________

* Each partner is required to execute the statutory declaration in accordance with the law of the jurisdiction where the declaration is made.

Accordingly, please select the appropriate format and delete or cross out those formats which are not relevant.

This page forms part of Statutory Declaration dated:	___/___/20___
Signed by partner:

Tasmania* - Declaration under the Evidence Act 1910

And I make this solemn declaration by virtue of section 132 of the Evidence Act 1910.

Declared at

)

this

day of

)

[Signature of declarant]

Before me:

[Signature of person before whom the declaration is made]

[Title of person before whom the declaration is made]

_______________________

* Each Partner is required to execute the statutory declaration in accordance with the law of the jurisdiction where the declaration is made. Accordingly, please select the appropriate format and delete or cross out those formats which are not relevant.

This page forms part of Statutory Declaration dated:	___/___/20___
Signed by partner:

Note 1Summary as at ___/___/20___

Note	Due not later than 1 year	Due later than 1 year but not later than 3 years	Due later than 3 years
Assets
Cash in Bank	2
Marketable Securities	3
Other Debtors	4
Property	5
Investments	6
Other Assets	7
Total Assets
Liabilities
Actual Liabilities	8
Contingent Liabilities	9
Total Liabilities
Net Assets (Total Assets less Total Liabilities)

This page forms part of Statutory Declaration dated:	___/___/20___
Signed by partner:

Note 2Cash in bank or on deposit

ASSETS AS AT ___/___/20___

Financial institution

Nature of account

Amount

($)

Total cash in bank or on deposit

Note 3Marketable/liquid securities

Company

Number of securities

Type of security

Market value at

___/___/20___

Total Value

Total market value of liquid securities

This page forms part of Statutory Declaration dated:	___/___/20___
Signed by partner:

Note 4Other debtors

Borrower

Interest rate

Term of deposit

Secured/unsecured (if secured, provide details)

Amount

($)

Total other debtors

Note 5

Property

Address & description

Unimproved capital value as set by valuing authority

Method of valuation

Estimated realisable value

Proportion owned

(%)

Value

Total property value

This page forms part of Statutory Declaration dated:	___/___/20___
Signed by partner:

Note 6

Investments

Name of business owned

Total net assets

Proportion owned

(%)

Value

Total investment value

Note 7

Other assets

Description of Assets

Method of valuation

Estimated realisable value

Proportion owned

(%)

Value

Total other assets

This page forms part of Statutory Declaration dated:	___/___/20___
Signed by partner:

Note 8Existing liabilities

Due within 1 year	Due between 1 year and 3 years	Due after 3 years	Total
Description
Outstanding tax assessments
Excess of estimated tax payable over provisional tax paid*
Estimate of tax applicable to income for financial year to date
Bank Overdrafts
Property Mortgages (show address and partner’s share of mortgage)
Other Loans
*Other Liabilities (details required)
Total existing liabilities

Calculate excess of estimated tax payable over provisional tax paid as per below:

Estimated tax payable for the year to 30th June	$ x
less Provisional tax paid	$ y
Amount to be declared	$

This page forms part of Statutory Declaration dated:	___/___/20___
Signed by partner:

Note 9Contingent liabilities*

Due within 1 year	Due between 1 year and 3 years	Due after 3 years	Total
Description
Debt on residence (show address)
Debt on all jointly owned properties (show address)
Debt on other properties
Other contingent liabilities
Total contingent liabilities

Show that part of contingent liabilities which relates to debt of parties other than the partner.

Note 10

Assets pledged for liability of a Participant

Description of assets	Pledged to	Maximum liability	Value of assets pledged
Total assets pledged			$

This page forms part of Statutory Declaration dated:	___/___/20___
Signed by partner:

Note 11

Assets pledged for other debts not included in note 10

Description of assets	Pledged to	Maximum liability	Value of assets pledged
Total assets pledged			$

This page forms part of Statutory Declaration dated:	___/___/20___
Signed by partner: