Australian Securities and Investments Commission Amendment Regulations 2002 (No. 2) 2002 No. 124
EXPLANATORY STATEMENT
Statutory Rules 2002 No. 124
Issued by the Parliamentary Secretary to the Treasurer
Australian Securities and Investments Commission Act 2001
Australian Securities and Investments Commission Amendment Regulations 2002 (No. 2)
Section 251 of the Australian Securities and Investments Commission Act 2001 (the Act) provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed by regulations or necessary or convenient to be prescribed by such regulations for carrying out or giving effect to the Act.
The purpose of the amendments is to make minor, technical changes to the concept of operating a clearing and settlement facility. (A typical clearing and settlement facility assists in the processing of securities transactions by calculating the amounts and the securities owed to or by brokers for settlement of transactions entered into on a stock exchange, and facilitates delivery of the securities and payment for them.)
Regulation 46 currently excludes certain conduct from the concept of operating a clearing and settlement facility. Subregulations 46(1) and (4) exclude the conduct of TNS Clearing Pty Limited (TNS), a subsidiary of the Australian Stock Exchange, in novating transactions entered into on that exchange. (In its role as the novating entity, TNS is interposed, by virtue of the rules of the facility, between the buying broker and the selling broker so that all obligations are owed to it.) Although TNS' conduct in this regard would usually bring it within the concept of operating a clearing and settlement facility, it was initially excluded from the concept by regulation because it is simply the novating entity and performs no other role. However, in the light of developments in the industry, it is considered appropriate that subregulations 46(1) and (4) be deleted. The same change had previously been made to this concept in the Corporations Regulations.
The Regulations commence on gazettal.
Overview
The Australian Securities and Investments Commission Amendment Regulations 2002 (No. 2) were enacted to address a technical gap in the regulatory framework concerning the definition and operation of clearing and settlement facilities, specifically as it pertains to the conduct of TNS Clearing Pty Limited, a subsidiary of the Australian Stock Exchange. The regulations were made under section 251 of the Australian Securities and Investments Commission Act 2001, which empowers the Governor-General to create regulations necessary for the effective implementation of the Act. The policy objective of these amendments was to ensure that the regulatory framework remains aligned with industry practices and technological advancements by removing outdated exclusions that no longer serve the intended purpose of the regulatory scheme. These amendments aimed to streamline the regulatory environment and maintain consistency with other related regulatory changes, particularly those in the Corporations Regulations.
Scope and Application
The Australian Securities and Investments Commission Amendment Regulations 2002 (No. 2) aim to refine the scope of the concept of operating a clearing and settlement facility within the Australian Securities and Investments Commission Act 2001. This legislation applies to entities that operate clearing and settlement facilities, which are integral to the processing of securities transactions by calculating and facilitating the settlement of transactions on stock exchanges. The amendments specifically address the conduct of TNS Clearing Pty Limited, a subsidiary of the Australian Stock Exchange, which had been previously excluded from the definition of operating a clearing and settlement facility due to its role as a novating entity. However, recognising the evolving nature of the financial industry, these regulations remove the exclusion for TNS's conduct in novating transactions, thereby aligning the regulatory framework with current industry practices. The amendments are minor and technical, focusing solely on the clarification of the concept of operating a clearing and settlement facility, and they apply across the Commonwealth of Australia.
Key Provisions
The Australian Securities and Investments Commission Amendment Regulations 2002 (No. 2) primarily deal with modifications to the concept of operating a clearing and settlement facility, as outlined in section 251 of the Australian Securities and Investments Commission Act 2001. Regulation 46, in particular, is revised to remove exclusions previously applied to certain conduct by TNS Clearing Pty Limited (TNS). Previously, subregulations 46(1) and (4) excluded TNS's activities in novating transactions on the Australian Stock Exchange from the definition of operating a clearing and settlement facility. This exclusion was due to TNS functioning solely as a novating entity without performing other roles within the facility. However, in light of industry developments, the regulations now incorporate these activities into the broader concept of operating such a facility.
These amendments impose specific obligations on TNS and other entities involved in the clearing and settlement processes. TNS, along with other entities that were previously exempt, now must comply with the regulations governing the operation of clearing and settlement facilities. This includes adhering to the rules and standards set forth by the Australian Securities and Investments Commission (ASIC). Such compliance ensures that TNS, and other entities, contribute to the efficient and secure processing of securities transactions, facilitating the settlement of trades on the stock exchange.
There are no specific offences or penalties outlined in these regulations themselves. However, breaches of the Australian Securities and Investments Commission Act 2001 or related regulations can result in significant consequences. For instance, non-compliance with the Act can lead to enforcement actions by ASIC, which may include fines, legal proceedings, and other regulatory sanctions. The maximum penalties for breaches can vary widely depending on the nature and severity of the offence, but they can include substantial fines for corporations and potential imprisonment for individuals found guilty of serious violations. It is important for entities like TNS to ensure they adhere to the updated regulatory requirements to avoid these potential consequences.