EXPLANATORY STATEMENT
Subject - Securities Industry Act 1980
Securities Industry Regulations (Amendment) 1990 No. 138
Subsection 150(1) of the Securities Industry Act 1980 (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 150(5) 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).
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.
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.
The proposed Regulation is in accordance with a resolution of the Council.
The purpose of the proposed Regulation is to prescribe three named indexes so that the Act will apply to option contracts based on these indexes.
Subsection 4(8A) of the Act defines the option contracts to which the Act applies. Paragraph 4(8A)(b) includes in this definition contracts (entered into on a stock market) under which one of the parties acquires a right or option to be paid an amount determined by reference to a specified index, being the Australian Stock Exchanges All Ordinaries Price Index or a prescribed index.
The three named indexes in the proposed Regulation are:
1. Nikkei Stock Average, which measures the aggregate price performance of 225 well known stocks trading on the Tokyo Exchange;
2. S and P 500 Composite Stock Price Index, which is based on 500 stocks traded on the New York Exchange;
3. FT-SE 100, which is an index of the market value of the shares of 100 leading UK companies on the International Stock Exchange of the United Kingdom and the Republic of Ireland.
Prescription of these indexes means that any organisation which gained approval from the Australian Stock Exchange Limited and publishers of ‘the indexes would be able to sponsor options contracts based on one of the indexes.