EXPLANATORY STATEMENT
Corporations (Foreign Exchange Markets) Exemption Amendment Notice 2005 (No. 1)
Subsection 791C(1) of the Corporations Act 2001 (the Corporations Act) empowers the Minister, ‘by publishing a notice in the Gazette’, to exempt from the operation of Part 7.2 of the Act a particular financial market or type of financial market.
By an instrument dated 9 March 2004 and published in the Australian Securities and Investments Commission (ASIC) Gazette of 10 March 2004, the then Parliamentary Secretary to the Treasurer exempted certain foreign exchange markets from the operation of Part 7.2 on specified conditions. The instrument is the Corporations (Foreign Exchange Markets) Exemption Notice 2004.
This notice is expressed to cease to have effect at the end of 10 March 2005.
One of the criteria for use of the exemption is that the operator of the market has notified ASIC in writing that the operator relies on this exemption. Only one body has so notified ASIC. That body has also sought an individual exemption from Part 7.2 but this application is under consideration by ASIC and has not been finally determined.
It has been decided to extend the general exemption until 30 September 2005 to allow time for the regulatory status of this body to be finally determined. The extension should not be construed as indicative of a preliminary view as to the likely advice that ASIC may give to Treasury Ministers in relation to the application for an individual exemption referred to above.
The Corporations (Foreign Exchange Markets) Exemption Amendment Notice 2005 (No. 1) will, on registration on the Federal Register of Legislative Instruments, extend the term of the Corporations (Foreign Exchange Markets) Exemption Notice 2004 to 30 September 2005.
The effect of section 56 of the Legislative Instruments Act 2003 is that the requirement for gazettal in section 791C of the Corporations Act is now satisfied by registration.
There has been no formal public consultation on the Corporations (Foreign Exchange Markets) Exemption Amendment Notice 2005 (No. 1) because it involves a minor change to an existing instrument. ASIC, however, has undertaken some informal consultation on the issue. The primary purpose of the new instrument is to facilitate the operation of the one body which has chosen to use this exemption for a reasonable period during which its regulatory status is to be finally determined.
Overview
The Corporations (Foreign Exchange Markets) Exemption Amendment Notice 2005 (No. 1) was introduced to address the issue of extending the exemption for certain foreign exchange markets from Part 7.2 of the Corporations Act 2001. The notice amends the Corporations (Foreign Exchange Markets) Exemption Notice 2004, which had been set to expire on 10 March 2005. The original exemption, established under subsection 791C(1) of the Corporations Act, allowed specific foreign exchange markets to operate under certain conditions, provided the market operator notified the Australian Securities and Investments Commission (ASIC) of their reliance on the exemption. This amendment extends the exemption period to 30 September 2005 to allow sufficient time for ASIC to determine the regulatory status of the sole market operator currently using this exemption. The notice was enacted by the Minister and registered on the Federal Register of Legislative Instruments, satisfying the requirement for gazettal under section 791C of the Corporations Act. Although no formal public consultation was conducted due to the minor nature of the change, ASIC engaged in informal consultations regarding the amendment.
Scope and Application
The Corporations (Foreign Exchange Markets) Exemption Amendment Notice 2005 (No. 1) amends the Corporations (Foreign Exchange Markets) Exemption Notice 2004, extending its term until 30 September 2005. The original exemption notice, which was in effect until 10 March 2005, allowed certain foreign exchange markets to be exempt from Part 7.2 of the Corporations Act 2001 under specific conditions. The amendment serves to maintain this exemption for a further period to allow time for the Australian Securities and Investments Commission (ASIC) to determine the regulatory status of a particular body that has applied for an individual exemption from Part 7.2. The extension is not indicative of any preliminary view on the outcome of ASIC's consideration of this application. This amendment applies to the entities operating within the exempted foreign exchange markets, provided they have notified ASIC of their reliance on this exemption. The notice will be registered on the Federal Register of Legislative Instruments, thereby satisfying the requirement for gazettal under section 791C of the Corporations Act. Notably, this amendment does not involve formal public consultation due to its minor nature, though ASIC has conducted some informal consultations on the matter.
Key Provisions
The main operative sections of the Corporations (Foreign Exchange Markets) Exemption Amendment Notice 2005 (No. 1) involve extending the term of the Corporations (Foreign Exchange Markets) Exemption Notice 2004, which had been in place to exempt certain foreign exchange markets from the operation of Part 7.2 of the Corporations Act 2001. The amendment notice extends this exemption until 30 September 2005. The Corporations Act, under subsection 791C(1), provides the Minister with the power to exempt financial markets from certain regulatory requirements by publishing a notice in the Gazette. The original exemption notice, published in March 2004, was set to expire on 10 March 2005, and this amendment notice seeks to prolong its effect by six months to allow for the regulatory status of a particular body to be determined.
The obligations imposed by this amendment notice are primarily administrative. Market operators who wish to continue relying on the exemption must ensure that the conditions specified in the Corporations (Foreign Exchange Markets) Exemption Notice 2004 are met. This includes providing written notification to the Australian Securities and Investments Commission (ASIC) that they are relying on the exemption. The amendment notice itself does not introduce new obligations but ensures that the existing exemption remains in place for a longer period, allowing continued operation under the existing regulatory framework.
In terms of penalties or consequences for breach, the Corporations (Foreign Exchange Markets) Exemption Amendment Notice 2005 (No. 1) does not introduce new penalties. The primary focus is on the regulatory oversight and compliance requirements as outlined in the original exemption notice. Any breach of the conditions set out in the Corporations (Foreign Exchange Markets) Exemption Notice 2004 would result in the relevant market operator losing the exemption, potentially subjecting them to the full regulatory requirements of Part 7.2 of the Corporations Act. This could include significant fines and other enforcement actions by ASIC. The specific penalties for non-compliance would be determined under the Corporations Act and would not be altered by this amendment notice.