Corporations Amendment Regulations 2001 (No. 2)

Overview

The Corporations Amendment Regulations 2001 (No. 2) were enacted to amend the Corporations Regulations 2001 in relation to the recognition of foreign futures exchanges under the Corporations Act 2001. This was achieved by the authority of the Minister for Financial Services and Regulation, in accordance with the enabling provisions of the Act. The policy objective behind these regulations was to ensure that the legal framework governing futures trading remains current and reflective of international market developments, specifically by updating the list of recognised foreign futures exchanges. The regulations specifically address a gap in the existing regulatory framework by incorporating the Korea Futures Exchange and updating the name of the Austrian Options and Futures Exchange to reflect its merger with another exchange, now known as Wiener Borse AG. These amendments provide legal certainty for futures brokers dealing on recognised foreign futures exchanges, ensuring compliance with Australian regulatory standards.

Scope and Application

The Corporations Amendment Regulations 2001 (No. 2) applies to entities involved in futures trading, specifically futures brokers who deal in futures contracts on behalf of another person. The regulations amend the Corporations Regulations to include the Korea Futures Exchange (KOFEX) and update the reference to an already recognised foreign futures exchange, previously known as the Austrian Options and Futures Exchange (OTOB), to reflect its name change to Wiener Borse AG. This amendment ensures that futures brokers can legally deal in futures contracts on these recognised exchanges. The geographic reach of the Act is national, given it pertains to entities operating within Australia, and the regulations apply to conduct and transactions involving these recognised futures exchanges. The Act does not explicitly state any exclusions or exemptions but operates under the broader provisions of the Corporations Act 2001. The application of these regulations is extended through subordinate instruments, which are necessary for carrying out or giving effect to the Corporations Act.

Key Provisions

The Corporations Amendment Regulations 2001 (No. 2) modifies Schedule 11 of the Corporations Regulations 2001, updating the list of recognised futures exchanges under section 1258 of the Corporations Act 2001 (the Act). This amendment allows futures brokers to legally deal in futures contracts on behalf of another person on these recognised futures exchanges. Specifically, the regulations add the Korea Futures Exchange (KOFEX) to the list of recognised exchanges and update the entry for the Austrian Options and Futures Exchange (OTOB) to reflect its new name, Wiener Borse AG, following a merger with another exchange. These changes ensure that the list of recognised futures exchanges remains current and accurate, thereby facilitating compliance with the Act for futures brokers operating in Australia. Under the Corporations Act 2001, the obligations imposed on futures brokers include ensuring that any futures contracts they deal in on behalf of another person are executed on a recognised futures exchange, as defined and listed in Schedule 11 of the Corporations Regulations. This requirement is crucial for maintaining transparency and regulatory oversight in the trading of futures contracts. Brokers must also adhere to other provisions of the Act that govern the conduct of financial services, including but not limited to, disclosure requirements, client protection measures, and reporting obligations. The Corporations Amendment Regulations 2001 (No. 2) ensure that the list of recognised futures exchanges is up to date, thereby assisting brokers in meeting these obligations. The Act includes provisions for offences and penalties for breaches, although the specific penalties are not detailed in the explanatory statement. Generally, breaches of the Corporations Act 2001 can result in both civil and criminal penalties. Civil penalties may include fines and compensation orders, while criminal penalties can include imprisonment and fines. The severity of the penalties depends on the nature and extent of the breach. The explanatory statement does not provide specific details on the penalties for breaches related to the recognition of futures exchanges, but it can be inferred that such breaches could lead to significant consequences, including potential enforcement actions by the Australian Securities and Investments Commission (ASIC) or other regulatory bodies. The Corporations Amendment Regulations 2001 (No. 2) incorporate amendments made on 5 July 2001, which were initially part of the Corporations Regulations 1990 but were not included in the subsequent remake of the Corporations Regulations 2001. By making these regulations retrospective, the legal basis for any trading activities conducted by futures brokers on the Korean Futures Exchange and Wiener Borse AG is established, thereby providing clarity and certainty for those who have already engaged in such activities. The regulations do not contravene subsection 48(2) of the Acts Interpretation Act 1901 because they are transitional in nature and provide advantage to the persons affected, as permitted by subsection 1409(4) of the Corporations Act 2001.