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Corporations Regulations 2001

Authoritative Version
  • - F2016C00736
  • In force - Superseded Version
  • View Series
SR 2001 No. 193 Regulations as amended, taking into account amendments up to Tax and Superannuation Laws Amendment (2016 Measures No. 2) Regulation 2016
Principal Regulations. These Regulations repeal the Corporations Regulations 1990 and the Partnerships and Associations Application Order 1999 (No. 1)
Administered by: Treasury
Registered 12 Jul 2016
Start Date 01 Jul 2016
End Date 28 Oct 2016
Table of contents.

Corporations Regulations 2001

Statutory Rules No. 193, 2001

made under the

Corporations Act 2001

Compilation No. 124

Compilation date:                              1 July 2016

Includes amendments up to:            F2016L00710

Registered:                                         12 July 2016

This compilation is in 7 volumes

Volume 1:       regulations 1.0.01–6D.5.02

Volume 2:       regulations 7.1.02–7.6.08E

Volume 3:       regulations 7.7.01–8.4.02

Volume 4:       regulations 9.1.01–12.9.03

Volume 5:       Schedules 1, 2 and 2A

Volume 6:       Schedules 3–12

Volume 7:       Endnotes

Each volume has its own contents

 

This compilation includes a commenced amendment made by SLI No. 101, 2013

About this compilation

This compilation

This is a compilation of the Corporations Regulations 2001 that shows the text of the law as amended and in force on 1 July 2016 (the compilation date).

The notes at the end of this compilation (the endnotes) include information about amending laws and the amendment history of provisions of the compiled law.

Uncommenced amendments

The effect of uncommenced amendments is not shown in the text of the compiled law. Any uncommenced amendments affecting the law are accessible on the Legislation Register (www.legislation.gov.au). The details of amendments made up to, but not commenced at, the compilation date are underlined in the endnotes. For more information on any uncommenced amendments, see the series page on the Legislation Register for the compiled law.

Application, saving and transitional provisions for provisions and amendments

If the operation of a provision or amendment of the compiled law is affected by an application, saving or transitional provision that is not included in this compilation, details are included in the endnotes.

Editorial changes

For more information about any editorial changes made in this compilation, see the endnotes.

Modifications

If the compiled law is modified by another law, the compiled law operates as modified but the modification does not amend the text of the law. Accordingly, this compilation does not show the text of the compiled law as modified. For more information on any modifications, see the series page on the Legislation Register for the compiled law.

Self‑repealing provisions

If a provision of the compiled law has been repealed in accordance with a provision of the law, details are included in the endnotes.

  

  

  


Contents

Chapter 7Financial services and markets                                      1

Part 7.1Preliminary                                                                                                         1

Division 1General                                                                                                      1

7.1.02.................... Participant........................................................................... 1

7.1.03.................... Prescribed CS facility......................................................... 1

7.1.03A................. Basic deposit products........................................................ 1

7.1.03B.................. Self managed superannuation funds................................... 1

7.1.04.................... Derivatives.......................................................................... 1

7.1.04A................. Meaning of kind of financial products (section 1012IA of the Act)         3

7.1.04B.................. Meaning of class of financial products (managed investment schemes)  3

7.1.04C.................. Meaning of class of financial products (superannuation products)          4

7.1.04CA............... Kinds of financial products................................................. 4

7.1.04D................. Meaning of issuer for certain derivatives............................ 4

7.1.04E.................. Issue of a new interest in a superannuation fund................ 4

7.1.04F.................. Meaning of class of financial services (subsections 917A(3), 917C(2) and 917C(3) of the Act)..................................................................................... 5

7.1.04G................. Meaning of issuer for a foreign exchange contract............. 5

7.1.04N................. Specific things that are financial products—litigation funding schemes and arrangements............................................................................................ 5

7.1.05.................... Specific things that are not financial products: superannuation interests  5

7.1.06.................... Specific things that are not financial products: credit facility 5

7.1.06A................. Arrangements for certain financial products that are not credit facilities   7

7.1.06B.................. Specific things that are not financial products: superannuation interests  8

7.1.07.................... Specific things that are not financial products: surety bonds 8

7.1.07A................. Specific things that are not financial products: rental agreements             8

7.1.07B.................. Specific things that are not financial products: bank drafts. 9

7.1.07C.................. Specific things that are not financial products: insurance under an overseas student health insurance contract............................................................... 9

7.1.07D................. Specific things that are not financial products: funeral expenses policy   9

7.1.07E.................. Specific things that are not financial products: rights of the holder of a debenture   9

7.1.07F.................. Specific things that are not financial products: money orders.. 9

7.1.07G................. Specific things that are not financial products: electronic funds transfers 10

7.1.07H................. Specific things that are not financial products: ACT insurance                10

7.1.07I................... Specific things that are not financial products—Australian carbon credit units and eligible international emissions units............................................. 10

7.1.07J................... Specific things that are not financial products—carbon abatement           10

7.1.08.................... Meaning of financial product advice: exempt document or statement      11

7.1.08A................. Modification of section 766D of the Act—free carbon units 12

7.1.09.................... Obligations related to clearing and settlement facility........ 12

7.1.10.................... Conduct that does not constitute operating a clearing and settlement facility            12

Division 2Retail clients and wholesale clients                                           14

7.1.11.................... Meaning of retail client and wholesale client: motor vehicle insurance product       14

7.1.12.................... Meaning of retail client and wholesale client: home building insurance product      14

7.1.13.................... Meaning of retail client and wholesale client: home contents insurance product      15

7.1.14.................... Meaning of retail client and wholesale client: sickness and accident insurance product.......................................................................................... 16

7.1.15.................... Meaning of retail client and wholesale client: consumer credit insurance product   17

7.1.16.................... Meaning of retail client and wholesale client: travel insurance product    18

7.1.17.................... Meaning of retail client and wholesale client: personal and domestic property insurance product.............................................................................. 18

7.1.17A................. General insurance products: medical indemnity insurance products         20

7.1.17B.................. Retail clients and wholesale clients: aggregation of amounts for price or value of financial product.............................................................................. 20

7.1.17C.................. Retail clients: traditional trustee company services............ 20

7.1.18.................... Retail clients and wholesale clients: price of investment‑based financial products   21

7.1.19.................... Retail clients and wholesale clients: value of investment‑based financial products   22

7.1.19A................. Retail clients and wholesale clients: price of margin lending facilities      24

7.1.20.................... Retail clients and wholesale clients: price of income stream financial products        25

7.1.21.................... Retail clients and wholesale clients: value of income stream financial products       26

7.1.22.................... Retail clients and wholesale clients: value of derivatives... 28

7.1.22A................. Retail clients and wholesale clients: value of foreign exchange contracts 29

7.1.23.................... Retail clients and wholesale clients: price of non‑cash payment financial products  29

7.1.24.................... Retail clients and wholesale clients: value of non‑cash payment products                30

7.1.25.................... Retail clients and wholesale clients: life risk insurance and other risk‑based financial products.......................................................................................... 31

7.1.26.................... Superannuation‑sourced money........................................ 32

7.1.27.................... Retail clients and wholesale clients: effect of wholesale status 32

7.1.28.................... Retail clients and wholesale clients: assets and income..... 33

Division 3When does a person provide a financial service?             34

7.1.28AA.............. Provision of financial product advice about default funds 34

7.1.28A................. Circumstances in which a person is taken to be provided a traditional trustee company service.......................................................................................... 34

7.1.29.................... Circumstances in which a person is taken not to provide a financial service            34

7.1.30.................... Information and advice about voting................................. 37

7.1.31.................... Passing on prepared documents........................................ 37

7.1.32.................... Remuneration packages.................................................... 38

7.1.33.................... Handling insurance claims................................................ 38

7.1.33A................. Allocation of funds available for investment..................... 39

7.1.33B.................. General advice.................................................................. 39

7.1.33D................. Investment‑linked life insurance products......................... 39

7.1.33E.................. Advice about the existence of a custodial or depository service               40

7.1.33F.................. School banking................................................................. 40

7.1.33G................. Certain general advice that does not attract remuneration etc. 41

7.1.33H................. Certain general advice given by a financial product issuer 41

Division 4—Dealings in financial products                                                     42

7.1.34.................... Conduct that does not constitute dealing in a financial product                42

7.1.35.................... Conduct that does not constitute dealing in a financial product                42

7.1.35A................. Conduct that does not constitute dealing in a financial product—lawyers acting on instructions....................................................................... 42

7.1.35B.................. Conduct that does not constitute dealing in a financial product—issuing carbon units, Australian carbon credit units or eligible international emissions units    43

7.1.35C.................. Conduct that does not constitute dealing in a financial product—carbon units, Australian carbon credit units or eligible international emissions units 43

Division 5—Custodial or depository services                                                45

7.1.40.................... Conduct that does not constitute the provision of a custodial or depository service 45

Division 6—Operating a financial market                                                      47

7.1.50.................... Operating a financial market............................................. 47

Part 7.2Licensing of financial markets                                                              48

Division 1Market licensees’ obligations                                                       48

7.2.01.................... Obligation to inform ASIC of certain matters: contraventions of licence or Act      48

7.2.02.................... Obligation to inform ASIC of certain matters: becoming director, secretary or executive officer of market licensee.................................................. 48

7.2.03.................... Obligation to inform ASIC of certain matters: ceasing to be director, secretary or executive officer of market licensee.................................................. 48

7.2.04.................... Obligation to inform ASIC of certain matters: voting power in market licensee      49

7.2.05.................... Giving ASIC information about a listed disclosing entity. 49

7.2.06.................... Annual report of market licensee...................................... 50

Division 2The market’s operating rules and procedures                   51

7.2.07.................... Content of licensed market’s operating rules.................... 51

7.2.08.................... Content of licensed market’s written procedures.............. 52

Division 3Powers of the Minister and ASIC                                              53

7.2.09.................... Agencies for compliance assessment................................ 53

Division 4The Australian market licence: applications (general)  54

7.2.10.................... Application of Division 4................................................. 54

7.2.11.................... Information....................................................................... 54

7.2.12.................... Documents........................................................................ 55

Division 5The Australian market licence: applications (financial market in foreign country)                                                                                                   57

7.2.13.................... Application of Division 5................................................. 57

7.2.14.................... Information....................................................................... 57

7.2.15.................... Documents........................................................................ 57

Division 6The Australian market licence: other matters                   58

7.2.16.................... Potential conflict situations............................................... 58

Part 7.2A—Supervision of financial markets                                                     61

Division 7.2A.1—Enforceable undertakings                                                  61

7.2A.01................. Enforceable undertakings.................................................. 61

Division 7.2A.2—Infringement notices                                                             62

7.2A.02................. Purpose of Division.......................................................... 62

7.2A.03................. Definitions for Division 7.2A.2........................................ 62

7.2A.04................. When infringement notice can be given............................ 63

7.2A.05................. Statement of reasons must be given.................................. 63

7.2A.06................. Contents of infringement notice........................................ 63

7.2A.07................. Amount of penalty payable to the Commonwealth........... 64

7.2A.08................. Compliance with infringement notice................................ 65

7.2A.09................. Extension of compliance period........................................ 65

7.2A.10................. Effect of compliance with infringement notice.................. 66

7.2A.11................. Application to withdraw infringement notice.................... 67

7.2A.12................. Withdrawal of infringement notice by ASIC.................... 67

7.2A.13................. Notice of withdrawal of infringement notice..................... 67

7.2A.14................. Withdrawal of notice after compliance.............................. 68

7.2A.15................. Publication of details of infringement notice..................... 68

Part 7.3Licensing of clearing and settlement facilities                              70

Division 1Regulation of CS facility licensees: licensees’ obligations  70

7.3.01.................... Obligation to inform ASIC of certain matters: becoming director, secretary or executive officer of CS facility licensee............................................ 70

7.3.02.................... Obligation to inform ASIC of certain matters: ceasing to be director, secretary or executive officer of CS facility licensee............................................ 70

7.3.03.................... Obligation to inform ASIC of certain matters: voting power in CS facility licensee.......................................................................................... 71

7.3.04.................... Annual report of CS facility licensee................................ 71

Division 2Regulation of CS facility licensees: the facility’s operating rules and procedures                                                                                                                      72

7.3.05.................... Content of licensed CS facility’s operating rules.............. 72

7.3.06.................... Content of licensed CS facility’s written procedures........ 72

Division 3Regulation of CS facility licensees: powers of the Minister and ASIC        74

7.3.07.................... Agencies for compliance assessment................................ 74

7.3.08.................... Agencies for compliance assessment................................ 74

Division 4The Australian CS facility licence: applications (general) 76

7.3.09.................... Application of Division 4................................................. 76

7.3.10.................... Information....................................................................... 76

7.3.11.................... Documents........................................................................ 77

Division 5The Australian CS facility licence: applications (overseas clearing and settlement facility)                                                                              79

7.3.12.................... Application of Division 5................................................. 79

7.3.13.................... Information....................................................................... 79

7.3.14.................... Documents........................................................................ 79

Part 7.4Limits on involvement with licensees                                                 81

7.4.01.................... Widely held market body.................................................. 81

7.4.02.................... Record‑keeping: market licensee....................................... 81

7.4.03.................... Record‑keeping: CS facility licensee................................. 81

7.4.04.................... Information for widely held market body......................... 82

Part 7.5Compensation regimes for financial markets                              83

Division 1—Preliminary                                                                                            83

7.5.01.................... Definitions for Part 7.5..................................................... 83

7.5.01A................. Modification of Act: compensation regimes..................... 85

7.5.02.................... Meaning of becoming insolvent........................................ 85

7.5.03.................... Meaning of dealer............................................................ 86

7.5.04.................... Meaning of excluded person............................................. 86

7.5.06.................... Meaning of sale and purchase of securities..................... 88

7.5.07.................... Meaning of securities business: general........................... 88

7.5.08.................... Meaning of securities business: Subdivision 4.9.............. 89

7.5.09.................... Meaning of security.......................................................... 89

7.5.10.................... Meaning of transfer of securities...................................... 89

7.5.13.................... Effect of contravention of Part 7.5.................................... 90

Division 2When there must be a compensation regime                       91

7.5.14.................... Application for Australian market licence: information about compensation arrangements.......................................................................................... 91

Division 3Approved compensation arrangements                                 92

7.5.15.................... Application for approval of compensation arrangements after grant of Australian market licence: information about compensation arrangements.... 92

7.5.16.................... Notification of payment of levies...................................... 92

7.5.17.................... Amount of compensation.................................................. 93

Division 4NGF Compensation regime                                                          94

Subdivision 4.1—Preliminary                                                                              94

7.5.18.................... Application of Division 4................................................. 94

Subdivision 4.2—Third party clearing arrangements                                   94

7.5.19.................... Clearing arrangements...................................................... 94

Subdivision 4.3—Contract guarantees                                                               95

7.5.24.................... Claim by selling client in respect of default by selling dealer: ASTC‑regulated transfer.......................................................................................... 95

7.5.25.................... Claim by selling client in respect of default by selling dealer: transaction other than ASTC‑regulated transfer................................................... 96

7.5.26.................... Claim by buying client in respect of default by buying dealer: ASTC‑regulated transfer.......................................................................................... 97

7.5.27.................... Claim by buying client in respect of default by buying dealer: transaction other than ASTC‑regulated transfer................................................... 98

7.5.28.................... Cash settlement of claim: ASTC‑regulated transfer.......... 99

7.5.29.................... Cash settlement of claim: transfer other than ASTC‑regulated transfer    100

7.5.30.................... Making of claims............................................................ 100

Subdivision 4.7—Unauthorised transfer                                                          101

7.5.53.................... Application of Subdivision 4.7....................................... 101

7.5.54.................... Claim by transferor......................................................... 102

7.5.55.................... Claim by transferee or sub‑transferee............................. 102

7.5.56.................... How and when claim may be made................................ 102

7.5.57.................... How claim is to be satisfied............................................ 103

7.5.58.................... Discretionary further compensation to transferor............ 104

7.5.59.................... Nexus with Australia...................................................... 104

Subdivision 4.8—Contraventions of ASTC certificate cancellation provisions             105

7.5.60.................... Claim in respect of contravention of ASTC certificate cancellation provisions        105

7.5.61.................... How and when claim may be made................................ 105

7.5.62.................... How claim is to be satisfied............................................ 106

7.5.63.................... Discretionary further compensation................................ 106

Subdivision 4.9—Claims in respect of insolvent participants                     107

7.5.64.................... Claim in respect of property entrusted to, or received by, dealer before dealer became insolvent......................................................................... 107

7.5.65.................... Cash settlement of claims if property unobtainable......... 108

7.5.66.................... Ordering of alternative claims and prevention of double recovery           109

7.5.67.................... No claim in respect of money lent to dealer.................... 110

7.5.68.................... Nexus with Australia...................................................... 110

7.5.69.................... No claim in certain other cases........................................ 110

7.5.70.................... Making of claims............................................................ 111

7.5.71.................... Limits of compensation................................................... 111

Subdivision 4.10—General                                                                                  112

7.5.72.................... Power of SEGC to allow and settle claim....................... 112

7.5.73.................... Application of Fund in respect of certain claims............. 112

7.5.74.................... Discretion to pay amounts not received etc because of failure to transfer securities 113

7.5.75.................... Reduction in compensation............................................. 113

7.5.76.................... Claimant may be required to exercise right of set‑off...... 114

7.5.77.................... Effect of set‑off on claim................................................ 114

7.5.78.................... Claimant entitled to costs and disbursements.................. 115

7.5.79.................... Interest............................................................................ 116

7.5.80.................... SEGC to notify claimant if claim disallowed.................. 116

7.5.81.................... Arbitration of amount of cash settlement of certain claims 117

7.5.82.................... Instalment payments....................................................... 118

7.5.83.................... Notification of payment of levies.................................... 118

7.5.84.................... Notification of payment of levies.................................... 119

Subdivision 4.11—Other provisions relating to compensation                  119

7.5.85.................... Prescribed body corporate with arrangements covering clearing and settlement facility support............................................................................ 119

Division 5Provisions common to both kinds of compensation arrangements                120

7.5.86.................... Excess money in National Guarantee Fund.................... 120

7.5.87.................... Excess money in fidelity fund......................................... 120

7.5.88.................... Minister’s arrangements for use of excess money from compensation funds          120

7.5.89.................... Payment of excess money from NGF............................. 121

7.5.90.................... Use of excess money from NGF.................................... 121

7.5.91.................... Payment of excess money from fidelity fund.................. 122

7.5.92.................... Use of excess money from fidelity fund......................... 122

7.5.93.................... Qualified privilege.......................................................... 123

Part 7.5ARegulation of derivative transactions and derivative trade repositories       124

Division 2—Regulation of derivative transactions: derivative transaction rules            124

Subdivision 2.1Power to make derivative transaction rules                   124

7.5A.30................. Reporting requirements—prescribed facilities................ 124

7.5A.50................. Persons on whom requirements cannot be imposed....... 125

Subdivision 2.1A—Derivative transaction rules imposing clearing requirements       125

7.5A.60................. Definitions for Subdivision 2.1A................................... 125

7.5A.61................. Meaning of Australian clearing entity............................ 126

7.5A.62................. Meaning of foreign clearing entity.................................. 126

7.5A.63................. Clearing requirements—prescribed facilities................... 127

7.5A.64................. Persons on whom clearing requirements cannot be imposed 128

7.5A.65................. Circumstances in which clearing requirements can be imposed               128

Subdivision 2.1B—Phase 3 reporting entities—exemption from OTC derivative reporting requirements                                                                              129

7.5A.70................. Definitions for Subdivision 2.1B.................................... 129

7.5A.71................. Exemption—single‑sided transaction and position reporting 130

7.5A.72................. Reporting counterparties................................................. 130

7.5A.73................. Application of exemptions.............................................. 132

7.5A.74................. Reporting requirement—exemption stops applying........ 134

Subdivision 2.2—Enforceable undertakings                                                   134

7.5A.101............... Enforceable undertakings................................................ 134

Subdivision 2.3—Infringement notices                                                             135

7.5A.102............... Infringement notices....................................................... 135

7.5A.103............... Definitions for Subdivision............................................ 136

7.5A.104............... When infringement notice can be given.......................... 136

7.5A.105............... Statement of reasons must be given................................ 136

7.5A.106............... Contents of infringement notice...................................... 137

7.5A.107............... Amount of penalty payable to the Commonwealth......... 138

7.5A.108............... Compliance with infringement notice.............................. 138

7.5A.109............... Extension of compliance period...................................... 139

7.5A.110............... Effect of compliance with infringement notice................ 139

7.5A.111............... Application to withdraw infringement notice.................. 140

7.5A.112............... Withdrawal of infringement notice by ASIC.................. 141

7.5A.113............... Notice of withdrawal of infringement notice................... 141

7.5A.114............... Withdrawal of notice after compliance............................ 141

7.5A.115............... Publication of details of infringement notice................... 141

Division 5—Regulation of licensed derivative trade repositories: other obligations and powers                                                                                                    143

7.5A.150............... Obligations and powers—confidential information........ 143

7.5A.150A............ European Union requests for derivative trade data.......... 143

7.5A.150B............. Other requests for derivative trade data........................... 144

7.5A.151............... Obligations relating to derivative trade data.................... 145

7.5A.200............... ASIC may assess licensee’s compliance......................... 145

Division 7—Regulation of prescribed derivative trade repositories 146

7.5A.250............... Obligations and powers—confidential information........ 146

Division 8—Other matters                                                                                     147

7.5A.270............... Record‑keeping............................................................... 147

Part 7.6Licensing of providers of financial services                                148

7.6.01.................... Need for Australian financial services licence: general... 148

7.6.01AAA........... Particular financial products not exempted...................... 156

7.6.01AB............... Obligation on persons providing exempt financial service 157

7.6.01A................. Providing financial services on behalf of a person who carries on a financial services business.......................................................................... 158

7.6.01B.................. Need for Australian financial services licence: financial product advice provided by the media........................................................................................ 158

7.6.01BA............... Modification of section 912A of the Act........................ 160

7.6.01C.................. Obligation to cite licence number in documents.............. 161

7.6.02.................... Alternative dispute resolution systems............................ 162

7.6.02AAA........... Compensation arrangements if financial services provided to persons as retail clients (Act s 912B).............................................................................. 163

7.6.02AA.............. Modification of section 912B of the Act: professional indemnity insurance and security instead of compensation arrangements............................ 165

7.6.02AB............... Modification of section 761G of the Act: meaning of retail client and wholesale client........................................................................................ 167

7.6.02AC............... Modification of section 761G of the Act: meaning of retail client and wholesale client........................................................................................ 167

7.6.02AD.............. Modification of section 761G of the Act: meaning of retail client and wholesale client........................................................................................ 168

7.6.02AE............... Modification of section 9 of the Act: Definition of professional investor                168

7.6.02AF............... Modification of section 761G of the Act: renewal period for accountants’ certificates........................................................................................ 169

7.6.02AG.............. Modification of section 911A of the Act........................ 169

7.6.02AGA........... Further modification of section 911A of the Act............ 171

7.6.02AH.............. Modification of paragraph 911B(1)(e) of the Act........... 175

7.6.02AI................ Obligations to provide information about relevant providers and controllers of body corporate licensees.......................................................... 175

7.6.02A................. Obligation to notify ASIC of certain matters.................. 175

7.6.03.................... Applying for Australian financial services licence.......... 175

7.6.03A................. Australian financial services licence—requirements for a foreign entity to appoint local agent........................................................................................ 176

7.6.03B.................. Foreign entity must continue to have local agent............. 176

7.6.04.................... Conditions on Australian financial services licence........ 177

7.6.04AA.............. Time limits for notification of authorised representatives—modification of section 916F of the Act............................................................................ 181

7.6.04A................. Exemptions to notification of authorised representatives 181

7.6.05.................... Register of financial services licensees and register of authorised representatives of financial services licensees............................................................ 182

7.6.06.................... ASIC register relating to persons against whom banning order or disqualification order is made............................................................................... 182

7.6.06A................. Relevant provider number............................................... 183

7.6.06B.................. Register of relevant providers......................................... 183

7.6.06C.................. Correcting registers......................................................... 185

7.6.07.................... Restriction on use of certain words or expressions......... 185

Part 7.6A—Authorised representatives                                                                186

7.6.08.................... Authorised representatives.............................................. 186

Part 7.6B—Provision of information to APRA about contracts of insurance     188

7.6.08A................. Definitions...................................................................... 188

7.6.08B.................. Application..................................................................... 188

7.6.08C.................. Modification of section 912CA of the Act...................... 188

7.6.08D................. Information about general insurance products................ 189

7.6.08E.................. Information about general insurance products—unauthorised foreign insurers       189


Chapter 7Financial services and markets

Part 7.1Preliminary

Division 1General

7.1.02  Participant

                   For subparagraph (b)(vi) of the definition of participant in section 761A of the Act, section 792A of the Act is prescribed.

7.1.03  Prescribed CS facility

                   For the definition of prescribed CS facility in section 761A of the Act, ASX Settlement and Transfer Corporation Pty Limited (also known as ‘ASTC’) is a prescribed CS facility.

7.1.03A  Basic deposit products

             (1)  For subparagraph (d)(ii) of the definition of basic deposit product in section 761A of the Act, this regulation applies in relation to ADIs entitled under the Banking Act 1959 to use any of the following expressions in relation to their financial business:

                     (a)  credit union;

                     (b)  credit society;

                     (c)  credit co‑operative;

                     (d)  building society.

             (2)  The prior notice requirement is a period not more than 7 days before a withdrawal or transfer of funds from a facility made available by the ADI.

7.1.03B  Self managed superannuation funds

                   In this Chapter:

self managed superannuation fund has the same meaning as in the SIS Act.

7.1.04  Derivatives

             (1)  For paragraph 761D(1)(b) of the Act, the prescribed period is:

                     (a)  for a foreign exchange contract—3 business days; and

                     (b)  in any other case—1 business day.

             (2)  For subsection 761D(2) of the Act, and subject to this regulation, an arrangement is declared to be a derivative if the following conditions are satisfied in relation to the arrangement:

                     (a)  the arrangement is not a foreign exchange contract;

                     (b)  under the arrangement, a party to the arrangement must, or may be required to, provide at some future time (which may be less than 1 day after the arrangement is entered into) consideration of a particular kind or kinds to someone;

                     (c)  the amount of the consideration, or the value of the arrangement, is ultimately determined, derived from or varies by reference to (wholly or in part) the value or amount of something else (of any nature whatsoever and whether or not deliverable), including, for example, one or more of the following:

                              (i)  an asset;

                             (ii)  a rate (including an interest rate or exchange rate);

                            (iii)  an index;

                            (iv)  a commodity.

             (4)  An arrangement under which:

                     (a)  a party has, or may have, an obligation to buy tangible property (other than Australian or foreign currency) at a price and on a date in the future; and

                     (b)  another party has, or may have, an obligation to sell that property; and

                     (c)  the arrangement does not permit the seller’s obligations to be wholly settled by cash, or by set‑off between the parties, rather than by delivery of the property; and

                     (d)  neither usual market practice, nor the rules of a licensed market or a licensed CS facility, permits the seller’s obligations to be closed out by the matching up of the arrangement with another arrangement of the same kind under which the seller has offsetting obligations to buy;

is not an arrangement to which subregulation (2) applies to the extent only that the arrangement deals with that purchase and sale.

             (5)  An arrangement under which:

                     (a)  a party has an obligation to buy property; and

                     (b)  another party has an obligation to sell the property;

is not an arrangement to which subregulation (2) applies merely because the arrangement provides for the consideration to be varied by reference to a general inflation index (for example, the Consumer Price Index).

             (6)  A contract for the future provision of services is not an arrangement to which subregulation (2) applies.

             (7)  A thing that is described in subsection 764A(1) of the Act, other than paragraph 764A(1)(c), is not an arrangement to which subregulation (2) applies.

             (8)  For paragraph 761D(3)(d) of the Act, each of the following is declared not to be a derivative for Chapter 7 of the Act:

                     (a)  tradeable water rights;

                     (b)  an arrangement:

                              (i)  under which a person (the seller) has, or may have, an obligation to sell tradeable water rights at a future date; and

                             (ii)  under which another person (the buyer) has, or may have, an obligation to buy the tradeable water rights, or replacement water rights, at a future date; and

                            (iii)  that does not permit the seller’s obligations to be wholly settled by cash, or by set‑off between the seller and the buyer, rather than by transfer of ownership of the tradeable water rights or replacement water rights; and

                            (iv)  in relation to which neither usual market practice, nor the rules, allow the seller’s obligations to be closed out by matching up the arrangement with another arrangement of the same kind under which the seller has offsetting obligations to buy the tradeable water rights or replacement water rights;

                     (c)  a carbon abatement contract.

Note:          For carbon abatement contract, see subregulation 1.0.02(1).

             (9)  Subregulations (4) to (8) apply whether or not a matter mentioned in those subregulations is described in subsection 761D(1) of the Act.

           (10)  In subregulation (8):

replacement water rights means tradeable water rights that are granted, issued or authorised as a replacement for the seller’s tradeable water rights, including as a result of transformation arrangements mentioned in subsection 97(1) of the Water Act 2007.

rules means the rules of:

                     (a)  a licensed market; or

                     (b)  a licensed CS facility.

tradeable water rights has the same meaning as in the Water Act 2007.

7.1.04A  Meaning of kind of financial products (section 1012IA of the Act)

             (1)  For section 761CA of the Act, this regulation applies in relation to paragraph (a) of the definition of custodial arrangement in subsection 1012IA(1) of the Act.

             (2)  Each of the following is a kind of financial product:

                     (a)  for interests in a managed investment scheme, all the interests in that managed investment scheme;

                     (b)  in any other case, all the financial products issued by a person or the person’s related bodies corporate.

7.1.04B  Meaning of class of financial products (managed investment schemes)

             (1)  For section 761CA of the Act, this regulation applies in relation to paragraph 1017F(4)(d) of the Act.

             (2)  An interest in a managed investment scheme is in the same class as another interest in a managed investment scheme if they are both interests in the same managed investment scheme.

7.1.04C  Meaning of class of financial products (superannuation products)

             (1)  For section 761CA of the Act, this regulation applies in relation to paragraph 1017F(4)(d) of the Act.

             (2)  A superannuation product is in the same class as another superannuation product if they are both issued by the same superannuation entity.

7.1.04CA  Kinds of financial products

             (1)  For section 761CA of the Act, this regulation applies in relation to paragraph 917C(3)(ba) of the Act.

             (2)  The following are kinds of financial product:

                     (a)  motor vehicle insurance;

                     (b)  home building insurance;

                     (c)  home contents insurance;

                     (d)  sickness and accident insurance;

                     (e)  consumer credit insurance;

                      (f)  travel insurance.

7.1.04D  Meaning of issuer for certain derivatives

             (1)  This regulation applies in relation to a financial product that:

                     (a)  is a derivative; and

                     (b)  is entered into, or acquired through a facility conducted in accordance with:

                              (i)  the Corporations (Exempt Futures Market—National Wholesale Electricity) Declaration 1999; or

                             (ii)  the Corporations (Exempt Futures Market) Declaration 2001.

             (2)  For paragraph 761E(7)(a) of the Act, each person who is a party to the financial product is taken to be an issuer of the financial product.

             (3)  For paragraph 761E(7)(a) of the Act, subsections 761E(5) and (6) of the Act do not apply to the financial product.

7.1.04E  Issue of a new interest in a superannuation fund

             (1)  This regulation applies if a member of a superannuation fund, who has a superannuation interest in the growth phase, elects to receive a pension in relation to that interest or part of that interest.

             (2)  For paragraph 761E(7)(a) of the Act, the superannuation fund is taken to issue a new financial product when:

                     (a)  it acknowledges receipt of the member’s election; or

                     (b)  it makes the first payment of the pension;

whichever occurs first.

             (3)  For this regulation:

growth phase has the meaning given by regulation 1.03AB of the SIS Regulations.

pension has the meaning given by subregulation 1.06(1) of the SIS Regulations.

7.1.04F  Meaning of class of financial services (subsections 917A(3), 917C(2) and 917C(3) of the Act)

             (1)  For section 761CA of the Act, this regulation applies for subsections 917A(3), 917C(2) and 917C(3) of the Act.

             (2)  Each of the following is a class of financial services:

                     (a)  the provision of financial product advice relating to a general insurance product;

                     (b)  the provision of financial product advice relating to an investment life insurance product;

                     (c)  the provision of financial product advice relating to a life risk insurance product;

                     (d)  dealing in a financial product that is a general insurance product;

                     (e)  dealing in a financial product that is an investment life insurance product;

                      (f)  dealing in a financial product that is a life risk insurance product.

7.1.04G  Meaning of issuer for a foreign exchange contract

             (1)  This regulation applies to a financial product that is a foreign exchange contract that is not entered into, or traded, on a financial market.

             (2)  For paragraph 761E(7)(a) of the Act, each party to the foreign exchange contract is an issuer of the product.

7.1.04N  Specific things that are financial products—litigation funding schemes and arrangements

                   For paragraph 764A(1)(m) of the Act:

                     (a)  an interest in a litigation funding scheme mentioned in regulation 5C.11.01 is a financial product; and

                     (b)  an interest in a litigation funding arrangement mentioned in regulation 5C.11.01 is a financial product.

7.1.05  Specific things that are not financial products: superannuation interests

                   For paragraph 765A(1)(q) of the Act, an exempt public sector superannuation scheme within the meaning of the SIS Act is prescribed.

7.1.06  Specific things that are not financial products: credit facility

             (1)  For subparagraph 765A(1)(h)(i) of the Act, each of the following is a credit facility:

                     (a)  the provision of credit:

                              (i)  for any period; and

                             (ii)  with or without prior agreement between the credit provider and the debtor; and

                            (iii)  whether or not both credit and debit facilities are available; and

                            (iv)  that is not a financial product mentioned in paragraph 763A(1)(a) of the Act; and

                             (v)  that is not a financial product mentioned in paragraph 764A(1)(a), (b), (ba), (f), (g), (h) or (j) of the Act; and

                            (vi)  that is not a financial product mentioned in paragraph 764A(1)(i) of the Act, other than a product the whole or predominant purpose of which is, or is intended to be, the provision of credit;

                     (b)  a facility:

                              (i)  known as a bill facility; and

                             (ii)  under which a credit provider provides credit by accepting, drawing, discounting or indorsing a bill of exchange or promissory note;

                     (c)  the provision of credit by a pawnbroker in the ordinary course of a pawnbroker’s business (being a business which is being lawfully conducted by the pawnbroker);

                     (d)  the provision of credit by the trustee of the estate of a deceased person by way of an advance to a beneficiary or prospective beneficiary of the estate;

                     (e)  the provision of credit by an employer, or a related body corporate of an employer, to an employee or former employee (whether or not it is provided to the employee or former employee with another person);

                      (f)  a mortgage:

                              (i)  that secures obligations under a credit contract (other than a lien or charge arising by operation of any law or by custom); and

                             (ii)  that is not a financial product mentioned in paragraph 763A(1)(a) of the Act; and

                            (iii)  that is not a financial product mentioned in paragraph 764A(1)(a), (b), (ba), (f), (g), (h) or (j) of the Act; and

                            (iv)  that is not a financial product mentioned in paragraph 764A(1)(i) of the Act, other than a product the whole or predominant purpose of which is, or is intended to be, the provision of credit;

                     (g)  a guarantee related to a mortgage mentioned in paragraph (f);

                     (h)  a guarantee of obligations under a credit contract.

             (2)  The provision of consumer credit insurance that includes a contract of general insurance for the Insurance Contracts Act 1984 is not a credit facility.

          (2A)  A litigation funding scheme mentioned in regulation 5C.11.01 is not a credit facility.

          (2B)  A litigation funding arrangement mentioned in regulation 5C.11.01 is not a credit facility.

             (3)  In this regulation:

credit means a contract, arrangement or understanding:

                     (a)  under which:

                              (i)  payment of a debt owed by one person (a debtor) to another person (a credit provider) is deferred; or

                             (ii)  one person (a debtor) incurs a deferred debt to another person (a credit provider); and

                     (b)  including any of the following:

                              (i)  any form of financial accommodation;

                             (ii)  a hire purchase agreement;

                            (iii)  credit provided for the purchase of goods or services;

                            (iv)  a contract, arrangement or understanding for the hire, lease or rental of goods or services, other than a contract, arrangement or understanding under which:

                                        (A)  full payment is made before or when the goods or services are provided; and

                                        (B)  for the hire, lease or rental of goods—an amount at least equal to the value of the goods is paid as a deposit in relation to the return of the goods;

                             (v)  an article known as a credit card or charge card;

                            (vi)  an article, other than a credit card or a charge card, intended to be used to obtain cash, goods or services;

                           (vii)  an article, other than a credit card or a charge card, commonly issued to customers or prospective customers by persons who carry on business for the purpose of obtaining goods or services from those persons by way of a loan;

                          (viii)  a liability in respect of redeemable preference shares;

                            (ix)  a financial benefit arising from or as a result of a loan;

                             (x)  assistance in obtaining a financial benefit arising from or as a result of a loan;

                            (xi)  issuing, indorsing or otherwise dealing in a promissory note;

                           (xii)  drawing, accepting, indorsing or otherwise dealing in a negotiable instrument (including a bill of exchange);

                          (xiii)  granting or taking a lease over real or personal property;

                          (xiv)  a letter of credit.

7.1.06A  Arrangements for certain financial products that are not credit facilities

             (1)  This regulation applies in relation to a financial product that would be a credit facility in accordance with regulation 7.1.06 if subparagraphs 7.1.06(1)(a)(iv), (v) and (vi), and 7.1.06(1)(f)(ii), (iii) and (iv) did not apply.

             (2)  For paragraph 761E(7)(a) of the Act, and in relation to the financial product:

                     (a)  the credit provider is not taken to be the issuer of the financial product; and

                     (b)  the debtor is taken to be the issuer of the financial product.

             (3)  For paragraph 766A(2)(b) of the Act, and in relation to the financial product:

                     (a)  the provision of financial product advice to the debtor, or the debtor’s representative, is taken not to be the provision of a financial service; and

                     (b)  a dealing in the credit facility by the credit provider, or the credit provider’s representative, is taken not to be the provision of a financial service.

             (4)  In this regulation:

credit, credit provider and debtor have the same meanings as in subregulation 7.1.06(3).

7.1.06B  Specific things that are not financial products: superannuation interests

                   For paragraph 765A(1)(q) of the Act, an exempt public sector superannuation scheme within the meaning of the SIS Act is prescribed.

7.1.07  Specific things that are not financial products: surety bonds

             (1)  This regulation applies to an arrangement between 2 persons (person 1 and person 2) made in the following circumstances:

                     (a)  person 1 enters into the arrangement in order to meet a requirement of another arrangement between person 1 and a person other than person 2 (person 3);

                     (b)  under the arrangement, person 2 undertakes to make a payment to, or perform an obligation for the benefit of, person 3 in circumstances specified as part of the arrangement;

                     (c)  under the arrangement, person 1 is liable to person 2 for any payments made, or liabilities, costs or expenses incurred, by person 2 in making the payment to, or performing the obligation for the benefit of, person 3;

                     (d)  the arrangement does not constitute a financial product under section 764A of the Act, other than a derivative.

             (2)  For paragraph 765A(1)(y) of the Act, the arrangement is not a financial product.

7.1.07A  Specific things that are not financial products: rental agreements

             (1)  This regulation applies to an arrangement between 2 persons (person 1 and person 2) made in the following circumstances:

                     (a)  person 1 leases or rents something from person 2;

                     (b)  under the arrangement, person 1 makes a payment to person 2 to reduce the amount that person 1 would otherwise have to pay to person 2 under the leasing or rental agreement;

                     (c)  the payment relates to the event of an accident or other eventuality affecting the thing that is being leased or rented.

Example:    Collision damage waiver insurance for a rental car.

             (2)  For paragraph 765A(1)(y) of the Act, the arrangement is not a financial product.

7.1.07B  Specific things that are not financial products: bank drafts

                   For paragraph 765A(1)(y) of the Act, a bank draft, including (but not limited to):

                     (a)  a cheque drawn by a financial institution on itself; or

                     (b)  a cheque drawn by a financial institution on a financial institution other than itself;

is not a financial product.

7.1.07C  Specific things that are not financial products: insurance under an overseas student health insurance contract

             (1)  For paragraph 765A(1)(y) of the Act, insurance under an overseas student health insurance contract is not a financial product.

             (2)  In this regulation:

overseas student health insurance contract has the same meaning as in regulation 48 of the National Health Regulations 1954.

7.1.07D  Specific things that are not financial products: funeral expenses policy

             (1)  For paragraph 765A(1)(y) of the Act, a funeral expenses policy is not a financial product.

             (2)  In this regulation:

funeral expenses policy means a scheme or arrangement for the provision of a benefit consisting of the payment of money, payable only on the death of a person, for the sole purpose of meeting the whole or part of the expenses of, and incidental to the person’s:

                     (a)  funeral; and

                     (b)  burial or cremation.

7.1.07E  Specific things that are not financial products: rights of the holder of a debenture

             (1)  This regulation applies to a facility that consists of the rights of the holder of a debenture against a trustee under a trust deed entered into under:

                     (a)  section 283AA of the Act; or

                     (b)  Chapter 2L or Division 4 of Part 7.12 of the old Corporations Law.

             (2)  For paragraph 765A(1)(y) of the Act, the facility is not a financial product.

7.1.07F  Specific things that are not financial products: money orders

                   For paragraph 765A(1)(y) of the Act, a money order issued as a money order by, or for, Australia Post is not a financial product.

7.1.07G  Specific things that are not financial products: electronic funds transfers

                   For paragraph 765A(1)(y) of the Act, a non‑cash payment facility is not a financial product if:

                     (a)  the issuer is:

                              (i)  a body corporate that is an ADI (within the meaning of the Banking Act 1959); or

                             (ii)  an operator of a payment system; and

                     (b)  under the facility, as instructed by the client, the issuer makes money available (or causes it to be made available) to a person nominated by the client:

                              (i)  within 2 business days of receiving the client’s instruction; or

                             (ii)  within the time reasonably required to complete the transaction subject to any constraints imposed by law; and

                     (c)  under the facility the funds are transferred by electronic means for collection by, or for the credit of, the payer or another person; and

                     (d)  the issuer and the payer do not have a standing arrangement to transfer funds in this manner.

Example:    Telegraphic transfers and international money transfers offered by banks and remittance dealers.

7.1.07H  Specific things that are not financial products: ACT insurance

                   For paragraph 765A(1)(y) of the Act, Australian Capital Territory insurance, including insurance entered into by the Australian Capital Territory and another insurer as joint insurers, is not a financial product.

7.1.07I  Specific things that are not financial products—Australian carbon credit units and eligible international emissions units

             (1)  For paragraph 765A(1)(y) of the Act:

                     (a)  an Australian carbon credit unit is not a financial product; and

                     (b)  an eligible international emissions unit is not a financial product.

             (2)  On 1 July 2012:

                     (a)  subregulation (1) ceases to apply; and

                     (b)  Australian carbon credit units and eligible international emissions units become financial products.

7.1.07J  Specific things that are not financial products—carbon abatement

                   For paragraph 765A(1)(y) of the Act, a carbon abatement contract is declared not to be a financial product.

Note:          For carbon abatement contract, see subregulation 1.0.02(1).

7.1.08  Meaning of financial product advice: exempt document or statement

             (1)  For subparagraph (a)(ii) of the definition of exempt document or statement in subsection 766B(9) of the Act, the following documents and statements are prescribed (and so excluded from the definition):

                     (a)  a Product Disclosure Statement that:

                              (i)  contains personal advice; or

                             (ii)  contains general advice about a financial product other than a financial product to which the Statement relates;

                     (b)  a Financial Services Guide that contains personal advice;

                     (c)  a document or statement that would, but for this regulation, be an exempt document or statement only because it is prepared or given in accordance with section 1018A of the Act;

                     (d)  a record of advice mentioned in subsection 946B(3A) of the Act.

             (2)  For subregulation (1), if a person:

                     (a)  acquires a financial product (product 1); and

                     (b)  will be able, by acquiring product 1, to give the product issuer an instruction to acquire a particular financial product or a financial product of a particular kind (within the meaning of section 1012IA of the Act) under a custodial arrangement (within the meaning of section 1012IA of the Act);

the Product Disclosure Statement for product 1 is taken to relate to the other financial product.

             (3)  For paragraph (b) of the definition of exempt document or statement in subsection 766B(9) of the Act, documents, information and statements that:

                     (a)  do not contain personal advice; and

                     (b)  are required by, and prepared as a result of, a requirement under an Australian law; and

                     (c)  are included in a class of documents, information or statements specified by ASIC in a list published in the Gazette for this subregulation;

are prescribed (and so included in the definition).

             (4)  For paragraph (b) of the definition of exempt document or statement in subsection 766B(9) of the Act:

                     (a)  an assessment under subsection 985E(1) of the Act that a margin lending facility will not be unsuitable for the person to whom the margin lending facility is to be issued is prescribed (and so excluded from the definition); and

                     (b)  an assessment under subsection 985E(1) of the Act that a margin lending facility whose limit is proposed to be increased will not be unsuitable for the person for whom the limit of the margin lending facility is to be increased is prescribed (and so excluded from the definition).

Note:          The effect of paragraph (b) of the definition of exempt document or statement in subsection 766B(9), is that a prescribed document or statement is an exempt document or statement.

7.1.08A  Modification of section 766D of the Act—free carbon units

                   For paragraph 926B(1)(c) of the Act, Part 7.6 of the Act applies in relation to free carbon units (within the meaning of the Clean Energy Act 2011) as if section 766D of the Act were modified by inserting after subsection 766D(2) the following subsection:

             (3)  A person who holds a free carbon unit (within the meaning of the Clean Energy Act 2011) that has been issued to the person by the Clean Energy Regulator is taken not to be making a market for a financial product if the person states the price of the free carbon unit.

7.1.09  Obligations related to clearing and settlement facility

             (1)  For paragraph 768A(1)(b) of the Act, the following obligations are prescribed:

                     (a)  each obligation arising from a contract to transfer a financial product mentioned in paragraph 764A(1)(a) of the Act;

                     (b)  each obligation arising from a contract to transfer a financial product mentioned in paragraph 764A(1)(b) of the Act;

                     (c)  each obligation arising from acquiring or providing a financial product mentioned in paragraph 764A(1)(c) of the Act;

                     (d)  each obligation arising from a contract to transfer a financial product mentioned in paragraph 764A(1)(j) of the Act;

                     (e)  each obligation arising from a contract to transfer a financial product mentioned in paragraph 764A(1)(ba) of the Act;

                      (f)  each obligation arising from a contract to transfer a financial product mentioned in paragraph 764A(1)(k) of the Act;

                    (fa)  each obligation arising from a contract to transfer a carbon unit, an Australian carbon credit unit or an eligible international emissions unit;

Note:          See paragraphs 764A(1)(ka) and (kb) of the Act.

                     (g)  each obligation arising from a contract to transfer a right that includes an undertaking by a body to repay, as a debt, money deposited with or lent to the body;

                     (h)  each obligation arising from the entry into a repurchase agreement.

             (2)  In this regulation, repurchase agreement means a repurchase transaction, in relation to a financial product, entered into pursuant to:

                     (a)  The Bond Market Association and the International Securities Market Association Global Master Repurchase Agreement (known as the TBMA/ISMA Global Master Repurchase Agreement); or

                     (b)  another commonly used m