ASIC Class Order [CO 01/1599]
Sydney Futures Exchange — participant’s relevant interest and voting power
This instrument is made under subsections 655A(1) and 673(1) of the Corporations Act 2001.
This compilation was prepared on 4 October 2005 taking into account amendments up to [CO 02/274].
Prepared by the Australian Securities and Investments Commission.
Australian Securities and Investments Commission
Corporations Act 2001 — Subsections 655A(1) and 673(1) —
Revocation and Declaration
1. Under subsections 655A(1) and 673(1) of the Corporations Act 2001 (the “Act”) the Australian Securities and Investments Commission (ASIC) hereby revokes Class Order [00/458].
2. Under subsection 655A(1) of the Act ASIC hereby declares that Chapter 6 of the Act applies to the classes of persons mentioned in the Schedule as if section 609 of the Act were modified or varied by inserting the following subsection after subsection 609(6):
“(6A) For the purposes of this Chapter, disregard a relevant interest of a person (a “broker”) in relation to a security if the broker's ordinary business includes dealing in derivatives and the broker has authority to exercise powers as the holder of the relevant interest only because of specific instructions given to the broker, by or on behalf of another person (a “client”), directing the broker to enter into a sold position in relation to the security on the client's behalf in the ordinary course of that business.”
3. Under subsection 673(1) of the Act ASIC hereby declares that Chapter 6C of the Act applies to the classes of persons mentioned in the Schedule as if section 671B of the Act were modified or varied by inserting after subsection 671B(7) the following subsection:
“(7A) For the purposes of this section and the definition of “substantial holding” in section 9, disregard any relevant interest or voting power in shares which is disregarded for the purposes of Chapter 6 because of subsection 609(6A).”
SCHEDULE
Persons who are a “participant” within the meaning of the operating rules of:
(a) SFE Corporation Limited (ACN 000 299 392);
(b) Sydney Futures Exchange Limited (ACN 000 943 377);
(c) SFE Clearing Corporation Pty Limited (ACN 050 615 864).
Notes to ASIC Class Order [CO 01/1599]
Note 1
ASIC Class Order [CO 01/1599] (in force under subsections 655A(1) and 673(1) of the Corporations Act 2001) as shown in this compilation comprises that Class Order amended as indicated in the Tables below.
Table of Instruments
Instrument number | Date of making or FRLI registration | Date of commencement | Application, saving or transitional provisions |
[CO 01/1599] | 21/12/2001 | 21/12/2001 | - |
[CO 02/274] | 5/3/2002 | 11/3/2002 | - |
Table of Amendments
ad. = added or inserted am. = amended rep. = repealed rs. = repealed and substituted
Provision affected | How affected |
Para 2 | am. [CO 02/274] |
Schedule | am. [CO 02/274] |
Overview
The ASIC Class Order [CO 01/1599], made under subsections 655A(1) and 673(1) of the Corporations Act 2001, was enacted to address the need for specific regulations concerning the relevant interests and voting power of participants in the Sydney Futures Exchange (SFE). The enactment by the Australian Securities and Investments Commission (ASIC) was aimed at ensuring that certain interests and voting powers of brokers, who deal in derivatives, are disregarded in certain circumstances, particularly where their actions are directed by clients. This legislative instrument provides a framework to clarify the application of the Act to the specified classes of participants in SFE, thereby maintaining the integrity and transparency of financial markets. The policy objective is to prevent undue influence or conflicts of interest by brokers who operate under client instructions, ensuring that their interests do not distort market activities.
Scope and Application
ASIC Class Order [CO 01/1599], made under the Corporations Act 2001, applies to participants in the Sydney Futures Exchange (SFE), which includes SFE Corporation Limited, Sydney Futures Exchange Limited, and SFE Clearing Corporation Pty Limited. This legislative instrument modifies specific sections of the Corporations Act to disregard certain relevant interests and voting power for brokers who deal in derivatives and act on specific instructions from clients. The order ensures that these brokers do not need to disclose their relevant interests or voting power if they are acting under client instructions in the ordinary course of their business. This class order operates under the authority of the Australian Securities and Investments Commission (ASIC) and applies to the entities mentioned in the schedule, encompassing their participants as defined by the operating rules of the SFE entities. There are no exclusions, exemptions, or thresholds specified in the Class Order itself, although the application of the Corporations Act and related provisions may include additional criteria or conditions.
Key Provisions
The ASIC Class Order [CO 01/1599], made under subsections 655A(1) and 673(1) of the Corporations Act 2001, specifically addresses the participant's relevant interest and voting power in relation to the Sydney Futures Exchange (SFE). The Class Order revokes the previous Class Order [00/458] and introduces modifications to the application of Chapter 6 of the Act. It modifies section 609 to disregard a broker's relevant interest in securities if the broker is dealing in derivatives and has authority to act on behalf of a client who has directed them to enter into a sold position. This is to ensure that the broker's interest is not considered in determining whether they hold a substantial interest in the securities, provided their actions are within the ordinary course of their business (subsection 609(6A)). Additionally, it modifies section 671B to disregard any relevant interest or voting power in shares that are disregarded under the modified section 609 (subsection 671B(7A)).
The ASIC Class Order imposes specific obligations on participants of SFE Corporation Limited, Sydney Futures Exchange Limited, and SFE Clearing Corporation Pty Limited. These obligations include adhering to the modified provisions of the Corporations Act 2001 as outlined in the Class Order. Participants must ensure that any relevant interest in securities held by a broker acting under specific client instructions is disregarded for the purposes of determining substantial holdings, as per the modifications introduced. This requirement aims to align the application of the Act with the unique business practices within the derivatives market.
Failure to comply with the provisions of the ASIC Class Order [CO 01/1599] may result in civil or criminal penalties under the Corporations Act 2001. The penalties for breaching the Act can include fines, imprisonment, or both, depending on the nature and severity of the breach. The maximum penalties are prescribed by the Act and can vary significantly based on the specific offence and circumstances. For instance, individuals and corporations may face substantial fines, and in more serious cases, imprisonment terms can be imposed. These penalties serve as deterrents to ensure compliance with the regulatory requirements governing financial market participants.