Corporations Regulations (Amendment)

Overview

The Corporations Regulations (Amendment) 1998 No. 9, issued under the authority of the Treasurer, amend the Corporations Regulations to further refine the regulatory framework established under the Corporations Act 1989. The primary aim of these amendments is to exempt certain entities from the licensing requirements and other regulatory provisions outlined in Parts 8.3, 8.4 and 8.5 of the Corporations Law, which govern the conduct of futures brokers and advisers. This is achieved to safeguard the interests of retail investors while recognising that certain entities, such as those dealing exclusively on behalf of their owners or controllers, do not engage with the public and thus do not necessitate a licence. Additionally, the regulations continue existing exemptions for CSR Limited in relation to services provided to the Crown or other public authorities in Queensland, and exempt Snowy Hydro Trading Pty Limited when acting on behalf of specified entities. The policy objective underpinning these amendments is to balance the need for investor protection with the practicalities of regulating entities that do not interact with the general public. By exempting certain bodies from specific regulatory burdens, the amendments aim to streamline regulatory requirements without compromising the integrity and security of the futures trading market. These regulations commence on the date of their gazettal, thereby immediately effectuating the intended changes.

Scope and Application

The Corporations Regulations (Amendment) 1998 No. 9 applies to the licensing and regulatory framework established under the Corporations Act 1989. Specifically, the regulations amend the Corporations Regulations to exempt certain entities from the licensing requirements and other regulatory provisions applicable to futures brokers and advisers under Parts 8.3, 8.4 and 8.5 of the Corporations Law. The exemptions are intended to protect retail investors by ensuring that only those dealing with the public are appropriately licensed and regulated, while entities dealing solely on behalf of their owners or controllers, or entities dealing on behalf of government or public authorities, are exempt. This exemption extends to bodies dealing in futures contracts on an exempt futures market solely on behalf of their owners or controllers, as well as to Snowy Hydro Trading Pty Limited when dealing on behalf of specified entities such as the Commonwealth, Pacific Power, and the State Electricity Commission of Victoria. The exemption also continues to apply to CSR Limited for services provided to the Crown in the right of Queensland, the Queensland Sugar Board, or other public authorities of Queensland. The regulations commence on the date of gazettal and their provisions are detailed in the attached amendment.

Key Provisions

The Corporations Regulations (Amendment) 1998 No. 9 primarily introduces amendments to the Corporations Regulations, providing exemptions from certain licensing and regulatory requirements for specific entities involved in futures contracts. Section 73 of the Corporations Act 1989 allows the Governor-General to make regulations that prescribe matters required or permitted by the Act. Section 30 further enables exemptions from certain chapters of the Corporations Law, including the licensing requirements for futures brokers and advisers as outlined in sections 1142 and 1143. These amendments impose specific obligations on the entities exempted from Parts 8.3, 8.4, and 8.5 of the Corporations Law. Firstly, entities dealing in futures contracts on an exempt futures market solely on behalf of their owners or controllers are exempt from the licensing and regulatory requirements in those parts of the Act (Regulation 2(a)). Secondly, CSR Limited remains exempt from these provisions when providing services to the Crown in the right of Queensland, the Queensland Sugar Board, or another public authority of Queensland (Regulation 2(b)). Lastly, Snowy Hydro Trading Pty Limited is exempted when dealing on behalf of the Commonwealth, Pacific Power, and the State Electricity Commission of Victoria (Regulation 2(c)). Failure to comply with these regulations may result in legal consequences. While the explanatory statement does not explicitly detail penalties, non-compliance with the Corporations Act 1989 and its regulations can lead to both civil and criminal penalties. Civil penalties can include fines up to a substantial amount as determined by the court, and criminal penalties can involve imprisonment, particularly for serious breaches or repeated non-compliance. Additionally, entities may face legal action from affected parties seeking damages for losses incurred due to non-compliance. The exact penalties depend on the specific breach and the severity of the non-compliance.