Bills Digest no. 109 2009–10
Corporations Amendment (Financial
Market Supervision) Bill 2010
WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced
and does not canvass subsequent amendments. This Digest does not have
any official legal status. Other sources should be consulted to determine
the subsequent official status of the Bill.
CONTENTS
Passage history
Purpose
Background
Financial implications
Main provisions
Concluding comments
Contact officer & copyright details
Passage history
Corporations Amendment (Financial
Market Supervision) Bill 2010
Date introduced: 10 February 2010
House: House of Representatives
Portfolio: Treasury
Commencement: Sections 1–3: on Royal Assent
Schedule
1: a date to be fixed by Proclamation—however, if any provision does not
commence within a period of 12 months from the day on which the Act itself receives
Royal Assent, such provision is repealed on the day after that period of time
ends.
Links: The relevant links to the Bill, Explanatory Memorandum
and second reading speech can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/. When Bills have been passed they can
be found at ComLaw, which is at http://www.comlaw.gov.au/.
The
Corporations Amendment (Financial Market Supervision) Bill 2010 (the Bill)
proposes to amend the Corporations Act 2001 (the Corporations Act) to
provide that the Australian Securities and Investment Commission (ASIC) would
supervise trading on financial markets with a domestic Australian market
licence.[1]
There are 16
licensed financial markets in Australia, of which five are licensed overseas financial
markets.[2]F The largest domestic
financial market is the Australian Securities Exchange (ASX).[3]
Currently, the
supervision of financial markets in Australia is co-regulatory. In other words,
financial market operators, such as the ASX, are responsible for supervising
market participants and listed entities, while ASIC, the corporate regulator,
is responsible for ensuring that market operators meet their statutory obligations.[4]
In addition, market
operators must co-operate with ASIC in relation to enforcing obligations under
the Corporations Act. For example, market operators must notify ASIC of various
matters, which include suspected contraventions of the market’s operating rules
or the Corporations Act, as well as any matter potentially affecting a market
participant’s ability to meet its obligations as a financial services licensee.[5]
There has been
strong public criticism of market operators’ inherent conflict of interest
between their supervisory and operating functions.[6]
In addition, the Government argues that:
Issues also arise concerning the detecting of market
misconduct when trading in the same securities takes place on multiple markets.
If a person can trade the same securities on different markets which are
supervised independently of each other, it is easier to conceal market
misconduct. Market misconduct may involve trading activities on more than one
market.
…
For example, the
offence of market manipulation can involve creating the false or misleading
appearance of active trading of a financial product on a financial market. The
‘false or misleading appearance’ aspect arises where a person trades with
themselves or an associate in an attempt to create a false impression of demand
for a financial product, and consequently increase the price for the financial
product. Where there are multiple markets trading in the one security this sort
of misconduct would be more difficult to detect. It would be possible for an
individual seeking to make a false or misleading impression of demand for a
product to trade with themselves on multiple markets. As the conduct would be
dispersed across different markets, the actions being performed on each of
those individual markets may seem innocuous. It would require a whole-of-market
view to pick up the offensive behaviour.[7]
Confidence in the integrity of the financial system is
crucial to how it operates and the Government observed that:
The continued
perception of the presence of conflicts of interests could result in decreased
confidence in the integrity of the market by market participants, which in turn
could lead to individuals being unwilling to invest in the market for fear of
market misconduct, potentially affecting the liquidity and stability of the
market.[8]
Consequently, to improve confidence in the integrity of
Australia’s financial markets, the Government decided to remove the possibility
of conflict of interest and enable improved supervision of cross-market trading
activities.
The proposed
measures in the Bill were announced by the Government on 24 August 2009 and
included in an Exposure Draft and Consultation Paper released on 2 December
2009.[9]
The Bill itself was introduced into Parliament on 10
February 2010.
As at 18 February 2010, the Standing Committee on the
Scrutiny of Bills had not yet released any comments on the Bill.
In addition, as at 18 February 2010, the Senate Standing
Committee on the Selection of Bills had not yet resolved whether to refer the
Bill to a parliamentary committee.
Generally,
stakeholders support the idea of ASIC supervising Australian financial markets.
However, stakeholders have expressed several concerns about aspects of how this
would actually be implemented, as set out in the Exposure Draft to the Bill.[10]F In summary, the major
concerns of stakeholders in relation to the Exposure Draft include:
- the amount of penalties proposed for contraventions of market
integrity rules being much higher than the current amount imposed for breaches
of existing rules[11]
- ASIC’s proposed directions powers and the need for transparency
and accountability[12]
- application of compensation orders to market operators and the
dangers of indeterminate liability[13]
- appeal processes in relation to decisions made under the Bill,[14] and
- the need for consultation with stakeholders in making the
regulations.[15]
These concerns will be discussed elsewhere in the relevant
parts of the Main Provisions.
The Explanatory Memorandum states that the reforms proposed
in the Bill will have no financial impact on the Government:
The Government will
incur capital costs of approximately $6 million associated with the acquisition
of the relevant market supervision software and fitout requirements. The total
operating costs associated with ASIC’s new responsibility are expected to be
$53.5 million over the five years to 2013-14. The costs associated with
preparing ASIC for the performance of the supervisory function and the ongoing
performance of supervision by ASIC will be fully recoverable by ASIC over the
forward estimates via a levy on market operators.[16]
Although the
Government expects compliance costs would be incurred by market operators and
participants to whom the Bill applies, the Explanatory Memorandum states that
it is not possible to quantify such costs until the market integrity rules are
made.[17]
It is noted, however,
that the Government expects that the costs of levies relating to ASIC’s proposed
supervision of financial markets, imposed by the Corporations (Fees) Amendment
Bill 2010 on market operators, would be off-set by market operators having
lower operational costs as they would no longer be supervising trading on their
markets.[18]
As the Explanatory Memorandum comprehensively deals with the
proposed amendments in the Bill, this Digest will only focus on certain
provisions in the Bill.
Item 14 proposes to insert new Part 7.2A Supervision
of financial markets (sections 798F–798L) into the Corporations Act,
which contains many of the core amendments relating to ASIC’s proposed
supervision of financial markets.
Under proposed section 798F, ASIC would supervise
financial markets whose operators are licensed under existing subsection
795B(1). Subsection 795B(1) sets out the circumstances that must be satisfied for
an Australian market licence to be granted.
Amendments are also proposed to existing provisions in the
Corporations Act to reflect ASIC’s new role, with market operators being
required to have adequate resources for operating their market and being responsible
for ensuring that market participants comply with operating rules (see, for
example, items 7–9; 12–13).
Some stakeholders
have suggested that there be formal mechanisms in place to oversee ASIC’s
exercise of its new roles and functions.[19]F It is noted, however,
that the Bill does not propose this.
Proposed section 798G would enable ASIC, with the Minister’s
consent, to make (by legislative instrument) market integrity rules dealing
with:
- activities or conduct of licensed markets
- activities or conduct of persons in relation to licensed markets,
and
- activities or conduct of persons in relation to financial
products traded on licensed markets.[20]
It is noted that proposed subsections 798G(4) and (5) provide for ‘emergency rules’. If ASIC is of the opinion that it is
necessary, or in the public interest, to protect people dealing in a financial
product or a class thereof—ASIC would be able to make market integrity rules
without the Minister’s consent. However, in doing so, ASIC would have to
provide the Minister with a written explanation justifying such rule on the day
after making the rule; and would have to amend or revoke the rule in accordance
with any written directions of the Minister. According to the Explanatory
Memorandum:
These provisions are
included to ensure that ASIC has the capacity to respond instantly to serious
emerging market situations, while also ensuring that the role of the Minister
is maintained. It is expected that ASIC will make rules without seeking the
Minister’s prior consent only in limited situations where ASIC needs to respond
swiftly to a situation and there is insufficient time to get the prior written
approval of the Minister.[21]
Although it is not expressly set out in the Bill, the
Government assures that:
ASIC intends to
consult with stakeholders regarding the introduction of the proposed market
integrity rules. In cases where it is not possible to consult prior to the
introduction of a market integrity rule, ASIC intends to subsequently review
implementation arrangements relating to the rule.[22]
Stakeholders have
stressed the importance of proper consultation during the process of making
these rules.[23]
Again, although not expressly stated in the Bill, it is
noted that the Government does intend that market integrity rules would be
flexible and apply differently in relation to various types of licensed
markets. The Explanatory Memorandum states that:
The Bill allows ASIC
to make market integrity rules in a wide range of areas. The current law
already allows markets to make operating rules, which also cover a wide range
of areas … The regime is designed to be flexible and to allow ASIC to make
rules to cover new and emerging issues as the market adapts and innovates, while
also recognising that every market is different and needs operating rules
tailored to the specifics of that market.[24]
The Government’s intention for the market integrity
rules to be flexible is consistent with stakeholder opinion that the new
arrangements be adaptable to a wide range of financial markets.[25]
Under proposed new subsection 793B(2), if the
operating rules of an Australian financial market (made by the market operator)
and the market integrity rules (made by ASIC) are inconsistent, the market
integrity rules would prevail to the extent of the inconsistency (see item
11).
Proposed subsection 798H(1) provides that market
integrity rules must be complied with by:
- operators of licensed markets
- participants of licensed markets, and
- entities prescribed by the regulations (yet to be made) for these
purposes.
The Explanatory Memorandum
states that:
The Bill also
provides a regulation making power allowing for the regulations to specify
other entities that the rules may be enforced against. This regulation making
power is needed to allow the framework to develop to meet innovations and new
players in the market. The financial market is by nature fluid and often
involves complex and changing financial arrangements. It may be necessary to
apply these rules to additional entities.[26]
It is noted,
however, that some stakeholders are of the opinion that the market integrity
rules should not apply to market operators. According to ASX, subjecting market
operators to these rules would create ‘a blurring of roles and
responsibilities’ and that ‘ASIC and the Government already have a number of
regulatory means by which requirements can be imposed that may affect a
market’s integrity on trade facility operators’.[27]F According to ASX:
It is important to
promote role and regulatory clarity under the new arrangements. The best
framework to achieve this aim is that trade facility operators are subject to
the Corporations Act, associated regulations which can impose requirements on
what must be included in operators’ rules and licence obligations, while market
Participants are subject to the Corporations Act and rules – either as imposed
by ASIC or by the trade facility through which they choose to participate in
the market (these being set by the operator of the relevant trade facility).[28]
In relation to overseas financial markets, proposed
subsection 798H(2) provides that operators of such markets who are licensed
under existing subsection 795B(2) would not have to comply with the market
integrity rules. However, the Explanatory Memorandum explains that:
A decision was made
not to require ASIC to directly supervise overseas financial markets which are
licensed to operate in Australia as the Act allows such markets to operate in
Australia on the basis of sufficiently equivalent regulation ...[29]
These rules do not
apply in relation to overseas markets with an Australian market licence. This
is because operators of such markets are expected to be subject to the changes
by implication. The Act provides that an operator of an overseas market can
only be granted a licence where the Minister is satisfied that the regulatory
regime the market is subject to is sufficiently equivalent to Australia’s. In
the future this would include taking into consideration the new regulatory
framework applying to domestic Australian market licence holders.[30]
Item 28 proposes to insert new subsections 1317G(1C) and (1D) into the
Corporations Act.[31]
Proposed
subsection 1317G(1C) provides that a Court may order a person to pay a
pecuniary penalty to the Commonwealth where the Court is satisfied on the balance
of probabilities that the person has contravened a market integrity rule (see
also item 27 below) and a declaration of the contravention has been made
under section 1317E.[32]
Proposed subsection 1317G(1D) provides that the
maximum amount for such penalty is the amount specified in the market integrity
rules for the rule in question.
To that effect, under proposed subsection 798G(2), (see item 14) market integrity rules may include a penalty of an amount of up
to $1 million. According to the Explanatory Memorandum:
… the market
integrity rules will cover a variety of areas, and the penalties will range in
severity in line with the nature of the rule ...[33]
Some rules will
relate to minor and technical or procedural matters and it will be appropriate
that a lower penalty level, or no penalty, attach to those rules.[34]
The amount of
penalty that could potentially be imposed on corporations for a contravention
of a market integrity rule has been a major concern for stakeholders.[35]
Concerns were expressed that this penalty amount only relates
to individuals and, consequently, the penalty amount for corporations could
actually be an amount of up to $5 million.
It is noted that for penalties relating to criminal
offences, subsection 4B(3) of the Crimes Act 1914, provides that:
Where a body corporate is convicted of an offence against a
law of the Commonwealth, the court may, if the contrary intention does not
appear and the court thinks fit, impose a pecuniary penalty not exceeding an
amount equal to 5 times the amount of the maximum pecuniary penalty that could
be imposed by the court on a natural person convicted of the same offence.
However, the
penalties in the Bill are civil penalties UnotU criminal penalties. Therefore, one can rest
assured that, as the proposed provision states, the market integrity rules may
include a penalty of an amount of up to $1 million only irrespective of whether
the penalty is payable by an individual or a corporation.
In addition to the above, proposed section 798K provides for alternatives to civil proceedings in relation to contraventions of
market integrity rules, which may be provided by the regulations (yet to be
made). These would include requiring a person to:
- pay a penalty to the Commonwealth (not exceeding three-fifths of
the penalty amount set out in the market integrity rules for the rule in
question)
- undertake or institute remedial measures
- accept sanctions other than penalty payments
- enter into legally enforceable undertakings to do one of the
following:
- take specified action within a specified time
- refrain from taking specified action, or
- pay a specified amount within a specified period to a specified
person (proposed subsections 798K(1)–(3)).
According to the Explanatory
Memorandum:
The alternatives to
civil proceedings work on the basis that persons who are alleged to have
contravened a market integrity rule, which in turn will be a breach of a civil
penalty provision, can opt to enter into an infringement notice or enforceable
undertaking with ASIC, as an alternative to ASIC pursuing the matter in Court.
Such remedies are vital to the ongoing success of the market integrity rule
framework as they provide ASIC with a fast and effective remedy, akin to the
remedies available to markets under the current operating rule framework.[36]
However, it is
important to note that the proposed provisions only provide the framework
within which the alternative sanctions would be established and that the detail
of these proposals will actually be set out in the regulations. The Explanatory
Memorandum states that:
The details of the alternatives to proceedings will be
established in the regulations. The regulations will establish an infringement
notice and enforceable undertaking framework under this provision …
The regulations will
also set out things such as the detailed requirements for the issue and service
of a notice, matters to be included in the notice or undertaking, effect of the
issue and compliance with a notice or undertaking, the effect of failure to
comply with a notice or undertaking, the compliance period for a notice or
undertaking, the withdrawal of a notice or undertaking, and the publication of
the notice or undertaking. It is appropriate that such details are set out in
the regulations as they are technical and procedural in nature.[37]
Item 29 proposes to insert new section 1317HB into the Corporations Act relating to compensation orders.
Proposed subsection 1317HB(1) provides that a Court
may order a person to compensate another person (including a corporation) or
registered scheme for damage suffered if:
- the first mentioned person has contravened proposed subsection
798H(1) in relation to complying with market integrity rules, and
- damage has resulted from that contravention.
The court order must specify an amount of compensation.
Importantly, proposed subsection 1317HB(2) provides
that this would not apply to a contravention by an operator of a licensed
market acting in that capacity.
The Explanatory Memorandum states that:
The Bill does not
provide for compensation orders to be made against market operators. This is
because market operators are at the centre of the financial system, and
therefore are potentially open to claims from all participants in financial markets
for a breach of a market integrity rule. There would be systemic risks in
opening markets up to claims for compensation of an indeterminate liability.
For this reason market operators have been excluded from the compensation
provision.[38]
Proposed
subsection 1317HB(2) of the Bill should allay concerns of some stakeholders
about market operators potentially facing indeterminate liability if they were
also subject to compensation orders.[39]
Neither the Minister’s consent to making the market
integrity rules nor his or her direction to ASIC to vary or revoke the rule
would be a legislative instrument (item 14-proposed subsection 798G(6)).
However, the Explanatory Memorandum explains that:
This provision
clarifies that these instruments are not legislative instruments as such
documents are only interim steps in the rule making process. The market
integrity rule, when made, will be a legislative instrument and subject to
parliamentary scrutiny.[40]
Proposed section 798J enables ASIC to give certain directions
if ASIC is of the opinion that it is necessary, or in the public interest, to
protect people dealing in a financial product or class thereof. These
directions are:
- directions given to entities to suspend dealings in a financial
product or class thereof, and
- some other direction in relation to those dealings.
Under proposed subsection 798J(1)¸ in those circumstances, ASIC may give
written advice to the entity of its opinion and the reasons for it, presumably
before actually giving the direction itself, although the Bill does not
expressly provide this.[41]
Under proposed subsection 798J(2)¸ if, after
receiving ASIC’s advice and reasons, the entity fails to take action:
- to prevent such dealings—in the case of a direction to suspend
dealings in a financial product, or
- which, in ASIC’s view, sufficiently addresses the concerns raised
in the advice,
and ASIC is still of the opinion that it is appropriate to
give the entity the proposed direction, ASIC may give the entity the written
direction with a statement setting out its reasons for doing so. This direction
is not a legislative instrument.
Proposed
subsections 798J(3) and (4) provide that if the entity does not
comply with the written direction within the period of time specified in the
direction (not exceeding 21 days), ASIC may apply to the Court for an order requiring
the entity to comply with the direction.[42]
The Explanatory Memorandum explains that:
This directions
power is necessary so ASIC can intervene to halt dealings in a financial
product in order to protect people and thereby ensure the integrity of the
market. For example, ASIC could direct a broker to stop trading in a product
where the dealings would lead to contravention of the Act or a market integrity
rule, or would impact on the integrity of the market.[43]
Importantly, under proposed subsection 798J(5), if
the entity requests that ASIC refer the matter to the Minister, at any time
after it receives ASIC’s advice regarding the proposed direction, ASIC must do
so immediately. In addition, where the Minister requires ASIC not to make, or
revoke, the direction in question, ASIC must comply with that requirement.
This, in addition
to the requirement that ASIC provide reasons for giving a direction, are important
mechanisms to ensure transparency and accountability in relation to ASIC’s
direction making powers proposed in the Bill.[44]
Under proposed section 798L, the
regulations may also:
- exempt a person, class of persons, a financial market or class of
financial markets from all or specified provisions of proposed Part 7.2A,
or
- modify the application of proposed Part 7.2A in relation
to a person or financial market; or a class thereof.
The Explanatory Memorandum explains that:
Provisions which
allow similar exemption and modification are spread throughout the Act.
Including such a provision in this new Part is in line with the construction of
the Act and similar provisions applying in respect of existing Parts. This
regulation making power is needed to allow the framework to develop to meet
innovations in the market. The financial market is by nature fluid and it may
be necessary to apply the rules differently to different entities. If it
becomes clear that this is necessary, the rules may need to be modified swiftly
to ensure the integrity of the market is maintained. The regulation making
power will allow the framework to adapt quickly to developments in the market.[45]
Other items in the Bill propose consequential
provisions with the effect of widening the application of existing provisions
in the Corporations Act in relation to ASIC’s supervision of financial markets.
These include:
- qualified privilege for information given to ASIC and market
licensees (items 16 and 18) , and
- power of the Court to make certain orders (items 19–23; 30-33).
In relation to qualified privilege, it is
stated in the Explanatory Memorandum that:
The Bill extends the
application of qualified privilege provisions to the giving of information to
ASIC in relation to a contravention or suspected contravention of a market
integrity rule. This is important to ensure concerns about breaching
confidentiality do not prevent ASIC from being able to perform its functions.[46]
In relation to widening the Court’s powers, it
is stated in the Explanatory Memorandum that:
This ensures that a
Court has wide powers to issue orders which the Court deems necessary when
hearing a case concerning the contravention of a market integrity rule.[47]
In terms of administrative review, only the
following would be specifically excluded from review by the Administrative
Review Tribunal (AAT) under proposed paragraphs 1317C(gca)–(gcc) (item
24):
- ASIC’s decisions to make market integrity rules
- the Minister’s decision to consent to making a market integrity
rule; or to direct ASIC to vary or revoke such a rule, or
- ASIC’s decision to do or not do anything under the regulations
under proposed section 798K (alternatives to civil proceedings).
It is stated in the
Explanatory Memorandum that:
This is done to
remove any doubt and to confirm that such decisions are not subject to AAT
review. It is appropriate that such decisions are not subject to review by the
AAT, as the decisions excluded are more akin to policy and rule-making decisions
and should not be subject to merit review.[48]
Consequently, it is expected
that other decisions under the Bill would continue to be subject to
administrative review by the AAT under Part 9.4A of the Corporations Act. In particular, subsection 1317(1)
of the Corporations Act provides that:
Subject to this Part, applications may be made to the
Tribunal for review of a decision made under this Act by:
(a) the Minister; or
(b) ASIC; …
Stakeholder comments
This should allay
stakeholder concerns about the absence of appeal processes in relation to the
Bill.[49]
The Bill largely sets out the framework within which ASIC
would supervise domestic financial markets, with details to be finalised and
included in regulations—stakeholders appear to be largely concerned about those
details. Without knowing what those details are, it is outside the scope of
this Digest to comment on them.
However, it has been noted that some of the Bill’s provisions
are different to provisions in the Exposure Draft, largely addressing some of
the concerns expressed by stakeholders.
In conclusion, the importance of consulting with
stakeholders when making those regulations cannot be sufficiently stressed.
Members, Senators and
Parliamentary staff can obtain further information from the Parliamentary
Library on (02) 6277 2442.
[1]. Explanatory Memorandum,
Corporations Amendment (Financial Market Supervision) Bill 2010, p. 3. As to
what is a ‘financial market’, see Corporations
Act 2001, section 767A. See also ASIC, ASIC’s role in financial
markets, viewed 18 February 2010, http://www.asic.gov.au/asic/asic.nsf/byheadline/Markets+and+the+role+of+ASIC?openDocument
[2]. ASIC, Licensed
domestic financial markets operating in Australia, viewed 18 February 2010, http://www.asic.gov.au/asic/ASIC.NSF/byHeadline/Licensed%20domestic%20financial%20markets%20operating%20in%20Australia;
ASIC, Licensed overseas financial markets operating in Australia, viewed
18 February 2010, http://www.asic.gov.au/asic/asic.nsf/byheadline/Licensed+overseas+financial+markets+operating+in+Australia?openDocument
[3]. Explanatory
Memorandum, op. cit., p. 17.
[4]. Treasury, Reforms to
the supervision of Australia’s financial markets—Exposure Draft and
Consultation Paper, December 2009, p. 2, viewed 16 February 2010, http://www.treasury.gov.au/documents/1673/PDF/consultation_paper_20091201.pdf
As to the meaning of market participants,
see Corporations Act 2001 section
761A.
For
further information about existing financial market arrangements, see ASIC, Markets
– an overview, viewed 18 February 2010, http://www.asic.gov.au/asic/ASIC.NSF/byHeadline/Markets%20homepage
See also Corporations
Act 2001 sections 792A (general obligations on market licensees) and
795B (what the Minister must be satisfied about when considering whether to
grant an Australian market licence); Corporations
Regulations 2001 regulation 7.2.07 (content of operating rules).
[5]. Explanatory
Memorandum, op. cit., p. 17. See also Corporations
Act 2001 section 792B.
[6]. For a
comprehensive discussion about such criticisms, see Explanatory Memorandum, op.
cit., p. 18.
[7]. Ibid.,
pp. 19–20.
[8]. Ibid., p.
20.
[9]. See Treasury, Reforms
to the supervision of Australia’s financial markets–Exposure Draft and Consultation
Paper, Media release, 2 December 2009, viewed 16 February 2010, http://www.treasury.gov.au/contentitem.asp?NavId=037&ContentID=1673
[10]. For a copy of the Exposure
Draft, see Treasury, Reforms to the supervision of Australia’s financial
markets—Exposure Draft and Consultation Paper, 2 December 2009, viewed 16
February 2010, http://www.treasury.gov.au/documents/1673/PDF/Exposure_draft_of_bill_20091201.pdf
[11]. See, for example:
Australian Securities Exchange (ASX), Comments to Exposure Draft and
Consultation Paper—Reform to the supervision of Australia’s financial markets,
22 December 2009, p. 9, viewed 17 February 2010, http://www.treasury.gov.au/documents/1712/PDF/ASX.pdf;
Australian Bankers’ Association (ABA), Reforms to the supervision of Australia’s
financial markets, 24 December 2009, p. 2, viewed 17 February 2010, http://www.treasury.gov.au/documents/1712/PDF/ABA.pdf;
Stockbrokers Association of Australia (SAA), Reforms to the supervision of
Australia’s financial markets—Treasury Consultation Paper and Exposure Draft
Bill – Submission, 23 December 2009, p. 4, viewed 17 February 2010, http://www.treasury.gov.au/documents/1712/PDF/SAA.pdf
[12]. See, for
example: ASX, op. cit., p. 22.
[13]. See, for
example: ASX, op. cit., p. 10.
[14]. See, for example: ANZ, Re:
Reforms to the supervision of Australia’s financial markets,
23 December 2009, p. 2, viewed 17 February 2010, http://www.treasury.gov.au/documents/1712/PDF/ANZ.pdf
[15]. See, for example:
Investment and Financial Services Association Ltd. (IFSA), Reforms to the
supervision of Australia’s financial markets, 11 January 2010, p. 2, viewed
17 February 2010, http://www.treasury.gov.au/documents/1712/PDF/IFSA.pdf;
ABA, op. cit., p. 5; ASX, op. cit., p. 9.
[16]. Explanatory
Memorandum, op. cit., pp. 3–4.
[17]. Ibid., p.
4.
[18]. Ibid.
[19]. See, for example: ASX,
op. cit., p. 6; National Institute of Accountants (NIA), Reforms to the
supervision of Australia’s financial markets, 22 December 2009, p. 2,
viewed 17 February 2010, http://www.treasury.gov.au/documents/1712/PDF/NIA.pdf
[20]. Arguably,
there appears to be some ambiguity in this proposed provision—does the
Minister’s consent merely mean that Minister consents to idea of making
a particular market integrity rule, or does he/she have to consent to the
actual text of the rule? Presumably, the latter is the legal intent,
however, clarification of this would be useful. For the meaning of ‘financial
products’ under the Corporations Act, see Corporations Act 2001 Part 7.1
Division 3 Subdivision B (the general definition).
[21]. Explanatory
Memorandum, op. cit., p. 11.
[22]. Ibid., pp.
10–11.
[23]. See, for example:
Investment and Financial Services Association Ltd. (IFSA), Reforms to the
supervision of Australia’s financial markets, 11 January 2010, p. 2, viewed
17 February 2010, http://www.treasury.gov.au/documents/1712/PDF/IFSA.pdf;
ABA, op. cit., p. 5; ASX, op. cit., p. 9.
[24]. Explanatory
Memorandum, op. cit., p. 11.
[25]. See, for example:
Australian Financial Markets Association (AFMA), Reforms to the supervision
of Australia’s financial markets, 24 December 2009, p. 5, viewed 17
February 2010, http://www.treasury.gov.au/documents/1712/PDF/AFMA.pdf
[26]. Explanatory
Memorandum, op. cit., p. 12.
[27]. ASX, op.
cit., p. 8.
[28]. Ibid., p.
9.
[29]. Explanatory
Memorandum, op. cit., p. 10. For licensing criteria of operators of overseas
financial markets, see in particular Corporations
Act 2001 paragraph 795B(2)(c).
[30]. Explanatory
Memorandum, op. cit., p. 11.
[31]. Section
1317G of the Corporations Act provides for pecuniary penalty orders.
[32]. As to the
standard of proof relating to civil proceedings under the Corporations Act, see
section 1332 of that Act.
[33]. Explanatory
Memorandum, op. cit., p. 12.
[34]. Ibid., p.
11.
[35]. See, for
example: ASX, op. cit., p. 9; ABA, op. cit., p. 2, SAA, op. cit., p. 4; ANZ,
op. cit., p. 3.
[36]. Explanatory
Memorandum, op. cit., p. 13.
[37]. Ibid., p.
13.
[38]. Ibid., p.
12.
[39]. See, for
example: ASX, op. cit., p. 10.
[40]. Explanatory
Memorandum, op. cit., p. 12.
[41]. It is
noted that this proposed provision is consistent with existing section 794D of
the Corporations Act, which enables ASIC to give directions to entities that
are market licensees.
[42]. For the
meaning of ‘Court’, see Corporations Act 2001 section 58AA.
[43]. Explanatory
Memorandum, op. cit., p. 13.
[44]. For
examples of stakeholder concerns about potentially unfettered use of the
directions power, see: ASX, op. cit., 22.
[45]. Explanatory
Memorandum, op. cit., p. 14.
[46]. Explanatory
Memorandum, op. cit., p. 14.
[47]. Ibid.
[48]. Ibid., p.
15.
[49]. See, for
example: ANZ, op. cit., p. 2.
Sharon Scully
22 February 2010
Bills Digest Service
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