EXPLANATORY STATEMENT
Statutory Rules 1989 No. 371
Issued by the Authority of the Attorney-General
Futures Industry Regulations (Amendment)
Subsection 160(1) of the Futures Industry Act 1986 (the Act) provides that the Governor-General may make regulations, not inconsistent with the Act, prescribing all matters that are necessary or convenient to be prescribed for carrying out or giving effect to the Act. Subsection 160(8) of the Act provides that the power of the Governor-General to make regulations shall be exercised only in accordance with advice that is consistent with resolutions of the Ministerial Council for Companies and Securities (the Council).
2. The Council was established under an Agreement between the Commonwealth and the States, executed on 22 December 1978 (the Agreement), that provides the framework for a co-operative Commonwealth-State scheme for a uniform system of law and administration in relation to company law and the regulation of the securities and futures industries in the six States, the Australian Capital Territory and the Northern Territory of Australia.
3. Under subclause 45(1) of the Agreement, the Council may consider a proposal for the amendment of regulations made under the Commonwealth Acts enacted for the purposes of the co-operative companies and securities scheme. Should the Council approve any draft amending regulation which gives effect to such a proposal, the Commonwealth is then required, under subclause 45(2) of the Agreement, to submit the draft regulations to the Federal Executive Council for making by the Governor-General.
4. The proposed Regulations are in accordance with a resolution of the Council.
5. The purpose of the proposed Regulations is to make changes of a technical nature to the Futures Industry Regulations. The need for the changes arises from amendments to the Act made by the Co-operative Scheme Legislation Amendment Act 1989 with effect from 1 November 1989 which effect deregulatory reforms concerning the licensing of participants in the futures industry.
6. Details of the proposed Regulations are as follows:
Regulation 1: Principal Regulations
The Principal Regulations referred to are the Futures Industry Regulations.
Regulation 2: Conditions of licences: General
This regulation inserts a new Regulation 18 in the Principal Regulations that is consequential upon the discontinuation of licensing of representatives.
Paragraph 18(1)(a) requires a licensee to ensure that each representative of the licensee is adequately supervised in the duties that the representative is required by the licensee to perform.
Paragraphs 18(1)(b) and (c) require a licensee to ensure that each representative of the licensee is sufficiently trained prior to his or her acting as a representative and is kept up to date in relation to those duties by means of continuing training programs.
Subregulation 18(2) provides that the National Companies and Securities Commission (the NCSC) may require a licensee to satisfy it that the above conditions have been met.
Regulation 3: Insertion of new Regulations 22A and 22B: Prescribed information under para. 78E(3)(e) and forms of notice under s.78F of the Act
Section 78E of the Futures Industry Act (‘the Act’) requires a licensee to keep a register of holders of proper authorities in accordance with the section. Subsection 78E(3) sets out what information the register is to contain in relation to each holder of a proper authority and paragraph 78E(3)(e) requires the inclusion of any other prescribed information. Regulation 22A prescribes information specified in items 1, 2, 3 and 5 of new form 10C in Schedule 2 for the purpose of paragraph 78E(3)(e). The prescribed information relates to the register keeper’s name, the address of the register keeper’s principal place of business, the type and number of the licence held by the register keeper and the date of the representative’s first holding of a proper authority.
Section 78F of the Act requires a licensee to notify the NCSC, by way of written notice, of the location and contents of the register of holders of proper authorities which a licensee is required to keep under S.78E of the Act. Regulation 22B prescribes the form of the notices required under s.78F of the Act.
Regulation 4: Amendment of Schedule 2: New Forms 10A, 10B, and 10C
This Regulation amends Schedule 2 of the Principal Regulations by inserting new Forms 10A, 10B and 10C. Written notices under s. 78F of the Act (see Regulation 3 above) are to be in accordance with these forms.
Overview
The Futures Industry Regulations (Amendment) Statutory Rules 1989 No. 371 were enacted in 1989 by the authority of the Governor-General, in accordance with the Futures Industry Act 1986. These regulations were introduced to address the technical amendments required following the deregulatory reforms concerning the licensing of participants in the futures industry, as enacted by the Co-operative Scheme Legislation Amendment Act 1989. The policy objective behind these amendments was to ensure effective regulation and supervision of the futures industry, particularly in relation to the licensing of representatives. The regulations were made in accordance with a resolution of the Ministerial Council for Companies and Securities, which was established under an Agreement between the Commonwealth and the States, executed on 22 December 1978. The Council's approval was necessary before the Commonwealth could submit the draft regulations to the Federal Executive Council for making by the Governor-General.
Scope and Application
The Futures Industry Regulations (Amendment) Statutory Rules 1989 No. 371 apply to entities and individuals operating within the futures industry across Australia, including all states and territories. The regulations are designed to amend the existing Futures Industry Regulations and are made under the authority of the Futures Industry Act 1986, with the approval of the Ministerial Council for Companies and Securities. These regulations specifically target licensed entities and their representatives, imposing new obligations related to the supervision, training, and record-keeping of these representatives. This includes requirements for licensees to ensure that their representatives are adequately supervised, trained, and kept up to date through continuing training programs. Additionally, the regulations mandate the inclusion of specific information in the register of holders of proper authorities and prescribe the form of notices to be submitted to the National Companies and Securities Commission. The amendments are aimed at ensuring that the regulatory framework remains effective and responsive to the evolving needs of the futures industry.
Key Provisions
The Futures Industry Regulations (Amendment) Statutory Rules 1989 No. 371, made under subsection 160(1) of the Futures Industry Act 1986 (the Act), introduce technical changes to the existing regulations. These changes are primarily in response to deregulatory reforms affecting the licensing of participants in the futures industry, as effected by the Co-operative Scheme Legislation Amendment Act 1989. Regulation 2 introduces new Regulation 18, which places specific obligations on licensees regarding the supervision and training of their representatives. This regulation is a direct consequence of the discontinuation of the licensing of representatives. Under Regulation 18(1)(a), a licensee must ensure that each representative is adequately supervised in the duties assigned to them. Regulation 18(1)(b) and (1)(c) require that each representative is sufficiently trained before they act as a representative and that they receive ongoing training to keep their skills and knowledge current.
The obligations imposed on licensees under the new regulations are designed to maintain a high standard of professionalism and competence among those involved in the futures industry. These obligations include ensuring that representatives are under appropriate supervision and that they possess the necessary training to perform their duties effectively. The National Companies and Securities Commission (NCSC) has the authority to verify that these conditions are met, as provided in subregulation 18(2). Additionally, Regulation 22A prescribes specific information that must be included in the register of holders of proper authorities, as mandated by section 78E of the Act. This prescribed information includes details such as the register keeper's name, address, type and number of the licence held, and the date of the representative's first holding of a proper authority.
Regulation 22B sets out the form of the written notices that licensees must provide to the NCSC regarding the location and contents of the register of holders of proper authorities, as required by section 78F of the Act. The new forms, 10A, 10B, and 10C, introduced by Regulation 4, are intended to standardise these notices and ensure that they comply with the statutory requirements. Failure to comply with these regulations can result in serious consequences. Breaches of the new requirements may be subject to penalties as outlined in the Act. While the specific penalties are not detailed in the explanatory statement, it is clear that non-compliance could lead to enforcement actions by the NCSC, potentially including fines or other administrative sanctions. The precise nature and extent of the penalties would depend on the specific breach and the discretion of the NCSC in enforcing the provisions of the Act.