Commonwealth Consolidated Acts Commonwealth Consolidated Acts(1) A margin lending facility is:
(a) a standard margin lending facility; or
(b) a non - standard margin lending facility; or
(c) a facility of a kind that has been declared by ASIC to be a margin lending facility under subsection (8);
unless the facility is of a kind that has been declared by ASIC not to be a margin lending facility under subsection (9).
Standard margin lending facilities
(2) A standard margin lending facility is a facility under the terms of which:
(a) credit is, or may be, provided by a person (the provider ) to a natural person (the client ); and
(b) the credit provided is, or must be, applied wholly or partly:
(i) to acquire one or more financial products, or a beneficial interest in one or more financial products; or
(ii) to repay, wholly or partly, another credit facility (within the meaning of subparagraph 765A(1)(h)(i)), the credit provided under which was applied, wholly or partly, to acquire one or more financial products, or a beneficial interest in one or more financial products; and
(c) the credit provided is, or must be, secured by property (the secured property ); and
(d) the secured property consists, or must consist, wholly or partly of one or more marketable securities, or a beneficial interest in one or more marketable securities; and
(e) if the current LVR of the facility exceeds a ratio, percentage, proportion or level (however described) determined under the terms of the facility, then:
(i) the client becomes required to take action; or
(ii) the provider becomes entitled to take action; or
(iii) another person becomes required or entitled to take action;
in accordance with the terms of the facility to reduce the current LVR of the facility.
(3) The current LVR of a standard margin lending facility at a particular time is the ratio, percentage, proportion or level (however described) that:
(a) is determined under the terms of the facility; and
(b) under the terms of the facility, represents a particular relationship between:
(i) the amount of the debt owing by the client, or credit provided by the provider, or both, under the facility at that time; and
(ii) the value of the secured property determined at that time under the terms of the facility.
(4) A standard margin lending facility is in margin call when paragraph (2)(e) applies in relation to the facility.
Non - standard margin lending facilities
(5) A non - standard margin lending facility is a facility under the terms of which:
(a) a natural person (the client ) transfers one or more marketable securities, or a beneficial interest in one or more marketable securities (the transferred securities ) to another person (the provider ); and
(b) the provider transfers property to the client (the transferred property ) as consideration or security for the transferred securities; and
(c) the transferred property is, or must be, applied wholly or partly to acquire one or more financial products, or a beneficial interest in one or more financial products; and
(d) the client has a right, in the circumstances determined under the terms of the facility, to be given marketable securities equivalent to the transferred securities; and
(e) if the current LVR of the facility exceeds a ratio, percentage, proportion or level (however described) determined under the terms of the facility, then:
(i) the client becomes required to take action; or
(ii) the provider becomes entitled to take action; or
(iii) another person becomes required or entitled to take action;
in accordance with the terms of the facility to reduce the current LVR of the facility.
(6) The current LVR of a non - standard margin lending facility at a particular time is the ratio, percentage, proportion or level (however described) that:
(a) is determined under the terms of the facility; and
(b) under the terms of the facility, represents a particular relationship between:
(i) an amount determined at that time under the terms of the facility by reference to the value of the transferred property and any amount owing by the client to the provider; and
(ii) the value of the transferred securities determined at that time under the terms of the facility.
(7) A non - standard margin lending facility is in margin call when paragraph (5)(e) applies in relation to the facility.
ASIC declarations in relation to margin lending facilities
(8) ASIC may declare that a particular kind of facility is a margin lending facility . The declaration must give the meanings of margin call and limit in relation to that kind of facility.
(9) ASIC may declare that a particular kind of facility is not a margin lending facility .
(10) A declaration made under subsection (8) or (9):
(a) must be in writing; and
(b) is a legislative instrument.
Meaning of limit of a margin lending facility
(11) The limit of a margin lending facility:
(a) in relation to a standard margin lending facility--means the maximum amount of credit that may be provided by the provider to the client under the facility; and
(b) in relation to a non - standard margin lending facility--means the maximum amount of property that may be transferred by the provider to the client under the facility; and
(c) in relation to a facility of a kind that ASIC has declared to be a margin lending facility under subsection (8)--has the meaning given in the declaration.