Corporations Regulations (Amendment)

Overview

The Corporations Regulations (Amendment) 1997 No. 142 was enacted to address the need for updating the list of recognised futures exchanges under the Corporations Act 1989. This amendment was necessary to ensure that the regulatory framework remained current and reflective of the global financial markets. The regulations were made under the authority granted by section 22 of the Corporations Act, which empowers the Governor-General to make regulations necessary or convenient to carry out or give effect to the Corporations Law. The objective of these regulations was to maintain the integrity and effectiveness of the legislative framework by updating the list of recognised futures exchanges, removing non-operational ones, and correcting acronyms to align with current naming conventions. These amendments were made following consultations with the responsible Ministers of the States and the Northern Territory, who did not raise any objections to the proposed changes.

Scope and Application

The Corporations Regulations (Amendment) 1997 No. 142 applies to the entities and individuals involved in futures trading as defined and regulated under the Corporations Act 1989. This Act governs corporations and financial products within Australia and thus, the amendments are focused on entities that operate in the futures industry, particularly futures brokers dealing in futures contracts on recognised futures exchanges. These regulations are designed to update the list of recognised futures exchanges, ensuring that the legal framework accurately reflects the current global landscape of futures trading. The geographic reach of these regulations is national, as they pertain to Australian entities engaging in international futures markets. The amendments made through these regulations include the addition of eight new foreign futures exchanges, the removal of two non-operational exchanges, corrections to acronyms, and updates to reflect name changes of exchanges. The responsible Ministers from the states and the Northern Territory have been consulted and have indicated no difficulties with these changes.

Key Provisions

The Corporations Regulations (Amendment) 1997 No. 142 amends the Corporations Regulations to update the list of recognised futures exchanges. Section 9 of the Corporations Act 1989 defines a 'recognised futures exchange' as a body corporate that conducts a futures market outside Australia and is prescribed for the purposes of this definition. The amendment, under Regulation 2, substitutes a new Schedule 11 (Recognised Futures Exchanges) in the Corporations Regulations. This schedule lists the exchanges that are recognised under the Act. The changes include adding eight additional foreign futures exchanges, removing two exchanges that are no longer operational, correcting the acronyms for eleven exchanges, and reflecting one exchange's change of name. The obligations imposed by these regulations primarily concern authorised futures brokers and entities dealing in futures contracts on recognised futures exchanges. These brokers are required to ensure that any dealings on recognised futures exchanges comply with the regulations. The amendments ensure that the list of recognised futures exchanges is accurate and reflects the current operational status of these exchanges. Brokers must also ensure that their dealings are conducted on recognised exchanges as specified in the amended Schedule 11. The Corporations Regulations do not explicitly detail offences, penalties, or civil and criminal consequences for breaches. However, any failure to comply with the regulations could potentially lead to legal consequences under the broader provisions of the Corporations Act 1989. For instance, unauthorised dealings on non-recognised futures exchanges could be considered non-compliance with section 1258 of the Corporations Act, which limits the way in which a futures broker can deal in futures contracts on behalf of another person. Penalties for breaches of the Corporations Act can include fines and, in severe cases, imprisonment, depending on the nature and severity of the breach. The maximum penalties are determined by the specific provisions of the Act that are breached, and could range from fines for individuals up to several hundred thousand dollars and for bodies corporate even higher, depending on the circumstances.