EXPLANATORY STATEMENT
STATUTORY RULES 1988 NO.264
ISSUED BY AUTHORITY OF THE MINISTER OF STATE FOR JUSTICE FOR AND ON BEHALF OF THE ATTORNEY-GENERAL
SECURITIES INDUSTRY REGULATIONS (AMENDMENT)
Section 150 of the Securities Industry Act 1980 (the Act) provides in subsection 150(1) that the Governor-General may make regulations, not inconsistent with the Act, prescribing all matters required or permitted by the Act to be prescribed or necessary or convenient to be prescribed for carrying out or giving effect to the Act. Paragraphs 150(1)(a) and (e) of the Act provide that the forms to be used and directions for their preparation may be prescribed by regulation. 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).
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 industry in the six States and the Australian Capital Territory. The Northern Territory became a party to the agreement in 1986.
3. The Council resolved that regulations be made under the Act to insert new regulations into the Securities Industry Regulations to facilitate the proper administration of the National Guarantee Fund.
4. The National Guarantee Fund was established by the Australian Stock Exchange and National Guarantee Fund Act 1987 (which inserted Part IXA into the Securities Industry Act 1980). Previously each capital city exchange had operated a separate fidelity fund. The assets of these funds were then pooled to create the National Guarantee Fund when the stock exchanges were reorganised to establish a single national exchange, the Australian Stock Exchange Ltd (ASX), with the previous capital city exchanges as its subsidiaries.
5. The National Guarantee Fund is administered by the National Securities Exchanges Guarantee Corporation Limited (the Corporation). The draft regulations were prepared in consultation with the Corporation. The Fund provides investor protection by guaranteeing the performance of all reportable transactions in securities quoted on ASX exchanges and compensates investors for pecuniary and property loss as a result of the insolvency of a broker member of the ASX.
6. The accompanying regulations:
(i) prescribe the form of the notice to be published in a daily newspaper, in accordance with subsection 122X(1), calling for claims against the Corporation. This notice nominates a date at least 3 months after its publication before which claims arising from a dealer’s insolvency must be made. (Regulation 45B and Form 25).
(ii) prescribe, for the purposes of subsection 122YC(2) of the Act, the rate of interest which successful
claimants against the National Guarantee Fund under the provisions relating to contract guarantees and insolvent members will receive (subject to subsection 122YC(1)) as 5% per annum (Regulation 45C).
(iii) prescribe the form of the notice which the Corporation is required to serve, pursuant to section 122YF of the Act, on the claimant or his solicitor after disallowing a claim. The claimant then has 3 months after service of this notice to commence court proceedings to establish the claim (Regulation 45D and Form 26).
7. Any excess in the National Guarantee Fund over the required minimum amount may, if the purpose has been approved by the Council, be used for the national development of the securities industry. If a payment is made to a participating exchange (the ASX is the only such exchange at present) for development purposes, it must be kept in a separate securities industry development account. An annual statement of payments from such accounts must be lodged with the National Companies and Securities Commission.
8. The accompanying regulations prescribe, pursuant to subsection 122GE(1) of the Act, the information to be contained in the annual statement of payments (Regulation 45A and Form 24).