Contents
Chapter 7—Financial services and markets 1
Part 7.1—Preliminary 1
Division 1—General 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
7.1.04CAA............ Meaning of claimant intermediary—persons excluded from being claimant intermediaries............................................................................................ 4
7.1.04CA............... Kinds of financial products................................................. 7
7.1.04CB............... When providing certain claims handing and settling services is not the primary part of a business.............................................................................. 7
7.1.04D................. Meaning of issuer for certain derivatives............................ 7
7.1.04E.................. Issue of a new interest in a superannuation fund................ 7
7.1.04F.................. Meaning of class of financial services (subsections 917A(3), 917C(2) and 917C(3) of the Act)..................................................................................... 8
7.1.04G................. Meaning of issuer for a foreign exchange contract............. 8
7.1.04N................. Specific things that are financial products—funding schemes and arrangements relating to insolvency and litigation..................................................... 8
7.1.05.................... Specific things that are not financial products: superannuation interests 10
7.1.06.................... Specific things that are not financial products: credit facility 10
7.1.06A................. Arrangements for certain financial products that are not credit facilities 12
7.1.07.................... Specific things that are not financial products: surety bonds 12
7.1.07A................. Specific things that are not financial products: rental agreements 12
7.1.07B.................. Specific things that are not financial products: bank drafts 13
7.1.07C.................. Specific things that are not financial products: insurance under an overseas student health insurance contract............................................................. 13
7.1.07E.................. Specific things that are not financial products: rights of the holder of a debenture 13
7.1.07F.................. Specific things that are not financial products: money orders.. 13
7.1.07G................. Specific things that are not financial products: electronic funds transfers 13
7.1.07H................. Specific things that are not financial products: ACT insurance 14
7.1.07I................... Specific things that are not financial products—Australian carbon credit units and eligible international emissions units............................................. 14
7.1.07J................... Specific things that are not financial products—carbon abatement 14
7.1.08AA.............. Meaning of financial product advice—advice that is not regarded as a necessary part of providing claims handling and settling services................ 14
7.1.08.................... Meaning of financial product advice: exempt document or statement 15
7.1.08A................. Modification of section 766D of the Act—free carbon units 16
7.1.09.................... Obligations related to clearing and settlement facility........ 17
7.1.10.................... Conduct that does not constitute operating a clearing and settlement facility 17
Division 2—Retail clients and wholesale clients 19
7.1.11.................... Meaning of retail client and wholesale client: motor vehicle insurance product 19
7.1.12.................... Meaning of retail client and wholesale client: home building insurance product 19
7.1.13.................... Meaning of retail client and wholesale client: home contents insurance product 20
7.1.14.................... Meaning of retail client and wholesale client: sickness and accident insurance product.......................................................................................... 21
7.1.15.................... Meaning of retail client and wholesale client: consumer credit insurance product 22
7.1.16.................... Meaning of retail client and wholesale client: travel insurance product 23
7.1.17.................... Meaning of retail client and wholesale client: personal and domestic property insurance product.............................................................................. 23
7.1.17A................. General insurance products: medical indemnity insurance products 25
7.1.17B.................. Retail clients and wholesale clients: aggregation of amounts for price or value of financial product.............................................................................. 25
7.1.17C.................. Retail clients: traditional trustee company services............ 25
7.1.18.................... Retail clients and wholesale clients: price of investment‑based financial products 26
7.1.19.................... Retail clients and wholesale clients: value of investment‑based financial products 27
7.1.19A................. Retail clients and wholesale clients: price of margin lending facilities 29
7.1.20.................... Retail clients and wholesale clients: price of income stream financial products 30
7.1.21.................... Retail clients and wholesale clients: value of income stream financial products 31
7.1.22.................... Retail clients and wholesale clients: value of derivatives... 33
7.1.22AA.............. Retail clients and wholesale clients: contract for difference 34
7.1.22A................. Retail clients and wholesale clients: value of foreign exchange contracts 35
7.1.23.................... Retail clients and wholesale clients: price of non‑cash payment financial products 36
7.1.24.................... Retail clients and wholesale clients: value of non‑cash payment products 37
7.1.25.................... Retail clients and wholesale clients: life risk insurance and other risk‑based financial products.......................................................................................... 38
7.1.26.................... Superannuation‑sourced money........................................ 38
7.1.27.................... Retail clients and wholesale clients: effect of wholesale status 39
7.1.28.................... Retail clients and wholesale clients: assets and income..... 39
Division 3—When does a person provide a financial service? 40
7.1.28AA.............. Provision of financial product advice about default funds 40
7.1.28A................. Circumstances in which a person is taken to be provided a traditional trustee company service.......................................................................................... 40
7.1.29.................... Circumstances in which a person is taken not to provide a financial service 41
7.1.30.................... Information and advice about voting................................. 43
7.1.31.................... Passing on prepared documents........................................ 44
7.1.32.................... Remuneration packages.................................................... 44
7.1.33A................. Allocation of funds available for investment..................... 44
7.1.33B.................. General advice.................................................................. 45
7.1.33D................. Investment‑linked life insurance products......................... 45
7.1.33E.................. Advice about the existence of a custodial or depository service 46
7.1.33F.................. School banking................................................................. 46
7.1.33G................. Certain general advice that does not attract remuneration etc. 46
7.1.33H................. Certain general advice given by a financial product issuer 47
Division 4—Dealings in financial products 48
7.1.34.................... Conduct that does not constitute dealing in a financial product 48
7.1.35.................... Conduct that does not constitute dealing in a financial product 48
7.1.35A................. Conduct that does not constitute dealing in a financial product—lawyers acting on instructions....................................................................... 48
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 49
7.1.35C.................. Conduct that does not constitute dealing in a financial product—carbon units, Australian carbon credit units or eligible international emissions units 49
Division 5—Custodial or depository services 51
7.1.40.................... Conduct that does not constitute the provision of a custodial or depository service 51
Division 6—Operating a financial market 53
7.1.50.................... Operating a financial market............................................. 53
Part 7.2—Licensing of financial markets 54
Division 1—Market licensees’ obligations 54
7.2.01.................... Obligation to inform ASIC of certain matters: contraventions of licence or Act 54
7.2.02.................... Obligation to inform ASIC of certain matters: becoming director, secretary or executive officer of market licensee.................................................. 54
7.2.03.................... Obligation to inform ASIC of certain matters: ceasing to be director, secretary or executive officer of market licensee.................................................. 54
7.2.04.................... Obligation to inform ASIC of certain matters: voting power in market licensee 55
7.2.05.................... Giving ASIC information about a listed disclosing entity. 55
7.2.06.................... Annual report of market licensee...................................... 56
Division 2—The market’s operating rules and procedures 57
7.2.07.................... Content of licensed market’s operating rules.................... 57
7.2.08.................... Content of licensed market’s written procedures.............. 58
Division 3—Powers of the Minister and ASIC 59
7.2.09.................... Agencies for compliance assessment................................ 59
Division 4—The Australian market licence: applications (general) 60
7.2.10.................... Application of Division 4................................................. 60
7.2.11.................... Information....................................................................... 60
7.2.12.................... Documents........................................................................ 61
Division 5—The Australian market licence: applications (financial market in foreign country) 63
7.2.13.................... Application of Division 5................................................. 63
7.2.14.................... Information....................................................................... 63
7.2.15.................... Documents........................................................................ 63
Division 6—The Australian market licence: other matters 64
7.2.16.................... Potential conflict situations............................................... 64
Part 7.2A—Supervision of financial markets 67
Division 7.2A.1—Enforceable undertakings 67
7.2A.01................. Enforceable undertakings.................................................. 67
Division 7.2A.2—Infringement notices 68
7.2A.02................. Purpose of Division.......................................................... 68
7.2A.03................. Definitions for Division 7.2A.2........................................ 68
7.2A.04................. When infringement notice can be given............................ 69
7.2A.05................. Statement of reasons must be given.................................. 69
7.2A.06................. Contents of infringement notice........................................ 69
7.2A.07................. Amount of penalty payable to the Commonwealth........... 70
7.2A.08................. Compliance with infringement notice................................ 71
7.2A.09................. Extension of compliance period........................................ 71
7.2A.10................. Effect of compliance with infringement notice.................. 72
7.2A.11................. Application to withdraw infringement notice.................... 73
7.2A.12................. Withdrawal of infringement notice by ASIC.................... 73
7.2A.13................. Notice of withdrawal of infringement notice..................... 73
7.2A.14................. Withdrawal of notice after compliance.............................. 74
7.2A.15................. Publication of details of infringement notice..................... 74
Part 7.3—Licensing of clearing and settlement facilities 76
Division 1—Regulation of CS facility licensees: licensees’ obligations 76
7.3.01.................... Obligation to inform ASIC of certain matters: becoming director, secretary or executive officer of CS facility licensee............................................ 76
7.3.02.................... Obligation to inform ASIC of certain matters: ceasing to be director, secretary or executive officer of CS facility licensee............................................ 76
7.3.03.................... Obligation to inform ASIC of certain matters: voting power in CS facility licensee.......................................................................................... 77
7.3.04.................... Annual report of CS facility licensee................................ 77
Division 2—Regulation of CS facility licensees: the facility’s operating rules and procedures 78
7.3.05.................... Content of licensed CS facility’s operating rules.............. 78
7.3.06.................... Content of licensed CS facility’s written procedures........ 78
Division 3—Regulation of CS facility licensees: powers of the Minister and ASIC 80
7.3.07.................... Agencies for compliance assessment................................ 80
7.3.08.................... Agencies for compliance assessment................................ 80
Division 4—The Australian CS facility licence: applications (general) 82
7.3.09.................... Application of Division 4................................................. 82
7.3.10.................... Information....................................................................... 82
7.3.11.................... Documents........................................................................ 83
Division 5—The Australian CS facility licence: applications (overseas clearing and settlement facility) 85
7.3.12.................... Application of Division 5................................................. 85
7.3.13.................... Information....................................................................... 85
7.3.14.................... Documents........................................................................ 85
Part 7.4—Limits on involvement with licensees 87
7.4.01.................... Widely held market body.................................................. 87
7.4.02.................... Record‑keeping: market licensee....................................... 87
7.4.03.................... Record‑keeping: CS facility licensee................................. 87
7.4.04.................... Information for widely held market body......................... 88
Part 7.5—Compensation regimes for financial markets 89
Division 1—Preliminary 89
7.5.01.................... Definitions for Part 7.5..................................................... 89
7.5.01A................. Modification of Act: compensation regimes..................... 91
7.5.02.................... Meaning of becoming insolvent........................................ 91
7.5.03.................... Meaning of dealer............................................................ 92
7.5.04.................... Meaning of excluded person............................................. 92
7.5.06.................... Meaning of sale and purchase of securities..................... 94
7.5.07.................... Meaning of securities business: general........................... 94
7.5.08.................... Meaning of securities business: Subdivision 4.9.............. 95
7.5.09.................... Meaning of security.......................................................... 95
7.5.10.................... Meaning of transfer of securities...................................... 95
7.5.13.................... Effect of contravention of Part 7.5.................................... 96
Division 2—When there must be a compensation regime 97
7.5.14.................... Application for Australian market licence: information about compensation arrangements.......................................................................................... 97
Division 3—