Corporations Regulations (Amendment)

Overview

The Corporations Regulations (Amendment) 1998 No. 109, issued under the authority of the Treasurer, amends the Corporations Regulations to address the need for updating the list of recognised foreign futures exchanges in line with market developments. The amendment is made pursuant to the Corporations Act 1989, specifically section 22, which allows for the creation of regulations to carry out or give effect to the Corporations Law. Section 1258 of the Corporations Law sets out the limitations on how a futures broker can deal in futures contracts on behalf of another person, permitting such dealings on recognised futures exchanges. The term 'recognised futures exchange' is defined in the Law, with the specific exchanges prescribed by Corporations Regulation 8.2.02 and listed in Schedule 11 of the Corporations Regulations. This amendment aims to reflect changes in the market by including additional foreign futures exchanges and removing the London Commodity Exchange from the list due to its merger with the London International Financial Futures Exchange.

Scope and Application

The Corporations Regulations (Amendment) 1998 No. 109, issued under the authority of the Treasurer and pursuant to the Corporations Act 1989, aims to amend the Corporations Regulations by updating Schedule 11 to include additional foreign futures exchanges while removing the London Commodity Exchange due to its merger with the London International Financial Futures Exchange. This regulatory amendment applies to the entities involved in trading on recognised futures exchanges, specifically targeting futures brokers who deal in futures contracts on behalf of others. The changes are confined to the specified foreign futures exchanges and do not alter the broader application of the Corporations Act or the Corporations Law. The regulations are designed to ensure that the list of recognised futures exchanges accurately reflects current market realities and operational mergers, thereby maintaining regulatory compliance and effectiveness. The amendments do not introduce new exclusions, exemptions, or thresholds beyond what is already stipulated in the Corporations Act and the Corporations Regulations. The scope of these regulations is national, affecting entities and industries engaged in futures trading across Australia.

Key Provisions

The main operative sections of the Corporations Regulations (Amendment) 1998 No. 109 involve amending the existing regulations under the Corporations Act 1989 (the Act) and the Corporations Law (the Law) (sections 22, 1258, and 9). These sections clarify the permissible dealings of futures brokers and define the term 'recognised futures exchange'. Regulation 1 states that these regulations commence on gazettal, which means they take effect immediately upon being officially published. Regulation 2 explicitly states that the regulations amend the Corporations Regulations, specifically targeting Schedule 11, which lists recognised futures exchanges. Regulation 3 details the specific amendments by adding six new foreign futures exchanges to the Schedule: Bolsa de Derivados do Porto (BDP), Italian Stock Exchange, Korea Stock Exchange (KSE), Kuala Lumpur Commodity Exchange (KLCE), Kuala Lumpur Options and Financial Futures Exchange (KLOFFE), and Malaysia Monetary Exchange (MME). Moreover, the London Commodity Exchange is removed from the list due to its merger with the London International Financial Futures Exchange, which is already included in the list. The Corporations Regulations (Amendment) 1998 No. 109 imposes specific obligations and requirements on futures brokers and entities dealing in futures contracts. These entities must adhere to the definitions and limitations set out in the Corporations Law, particularly section 1258, which governs the manner in which futures brokers can deal in futures contracts on behalf of another person. By amending Schedule 11, the regulations ensure that only exchanges listed in the Schedule can be considered 'recognised futures exchanges' for the purposes of dealing on these platforms. This amendment requires futures brokers to update their records and compliance procedures to reflect the changes in the Schedule. Additionally, it mandates that any dealings on recognised futures exchanges must comply with the specific regulations outlined in the Corporations Law, ensuring transparency and legal compliance in financial markets. Failure to comply with the Corporations Regulations (Amendment) 1998 No. 109 may result in legal consequences. While the specific offences, penalties, or civil/criminal consequences are not explicitly detailed in the explanatory statement, breaches of the Corporations Law generally attract penalties under the Act. These penalties can include fines, imprisonment, or both, depending on the severity of the breach. For instance, under section 1311 of the Corporations Act, a corporation can be fined up to $1,000,000, and an individual can be fined up to $200,000 and/or imprisoned for up to five years for serious breaches. Additionally, civil remedies such as compensation orders and disqualification from managing corporations may also be imposed. The precise penalties would depend on the nature and extent of the breach, as well as any mitigating or aggravating factors.