Commonwealth Consolidated Acts Commonwealth Consolidated ActsPart 1 -- Client money and property
1 Section 761A
Insert:
"authorised clearing and settlement facility" means:
(a) a licensed CS facility; or
(b) a clearing and settlement facility that satisfies the following requirements:
(i) the operator of the facility is authorised to operate the facility in the foreign country in which the operator's principal place of business is located;
(ii) any requirements specified in regulations made for the purposes of this subparagraph.
"derivative retail client money" : money paid as mentioned in subsection 981A(1) is derivative retail client money if:
(a) either:
(i) the financial service referred to in subparagraph 981A(1)(a)(i) is or relates to a dealing in a derivative; or
(ii) the financial product referred to in subparagraph 981A(1)(a)(ii) is a derivative; and
(b) the financial service or product would be provided to the client as a retail client if:
(i) the service or product were provided to the client when the money is paid; and
(ii) section 761GA (about sophisticated investors) did not apply.
"derivative retail client property" : property given as mentioned in subsection 984A(1) is derivative retail client property if:
(a) either:
(i) the financial service referred to in subparagraph 984A(1)(a)(i) is or relates to a dealing in a derivative; or
(ii) the financial product referred to in subparagraph 984A(1)(a)(ii) is a derivative; and
(b) the financial service or product would be provided to the client as a retail client if:
(i) the service or product were provided to the client when the property is given; and
(ii) section 761GA (about sophisticated investors) did not apply.
2 Section 981D
Before "Despite", insert "(1)".
3 At the end of section 981D
Add:
(2) However, if the money is derivative retail client money, subsection ( 1) only applies to an obligation if:
(a) the entry into of the derivative referred to in paragraph ( 1)(a) or (b) was or will be cleared through an authorised clearing and settlement facility; and
(b) the licensee incurred the obligation, in connection with the derivative, under the operating rules of the facility.
4 At the end of section 984B
Add:
(3) However, if the property is derivative retail client property, subsection ( 2) only applies to an obligation if:
(a) the entry into of the derivative referred to in paragraph ( 2)(a) or (b) was or will be cleared through an authorised clearing and settlement facility; and
(b) the licensee incurred the obligation, in connection with the derivative, under the operating rules of the facility.
5 Before section 1637
Insert:
163 6A Application of subsections 981D(2) and 984B (3)
(1) Subsection 981D(2), as added by th e Treasury Laws Amendment (2016 Measures No. 1) Act 2017 , applies to a use of money on or after the commencement of this section , whether the money was paid to the licensee as mentioned in subsection 981A(1) before, on or after that commencement.
(2) Subsection 984B(3) , as added by the Treasury Laws Amendment (2016 Measures No. 1) Act 2017 , applies to a use of property on or after the commencement of this section , whether the property was given to the licensee as mentioned in subsection 984A(1) before, on or after that commencement.
Part 2 -- Client money reporting rules
6 Section 761A
Insert:
"client money reporting rules" has the meaning given by section 981J.
7 After paragraph 793B(2)(c)
Insert:
(d) the client money reporting rules;
8 At the end of subsection 793B(2)
Add:
Note 3: If there is an inconsistency between the market integrity rules, the derivative transaction rules or the derivative trade repository rules and the client money reporting rules, the market integrity rules, the derivative transaction rules or the derivative trade repository rules prevail: see subsection 981M(2).
9 After paragraph 822B(2)(b)
Insert:
(c) the client money reporting rules;
10 Subsection 822B(2) (note)
Omit "Note", substitute "Note 1".
11 At the end of subsection 822B(2)
Add:
Note 2: If there is an inconsistency between the derivative transaction rules or the derivative trade repository rules and the client money reporting rules, the derivative transaction rules or the derivative trade repository rules prevail: see subsection 981M(2).
12 At the end of subsection 901E(2)
Add:
Note 3: If there is an inconsistency between the derivative transaction rules and the client money reporting rules, the derivative transaction rules prevail: see subsection 981M(2).
13 At the end of section 903D
Add:
Note 6: If there is an inconsistency between the derivative trade repository rules and the client money reporting rules, the derivative trade repository rules prevail: see subsection 981M(2).
14 After Subdivision A of Division 2 of Part 7.8
Insert:
Subdivision AA -- Client money reporting rules
981J Client money reporting rules
(1) ASIC may, by legislative instrument, make rules (the client money reporting rules ) dealing with matters as permitted by this Subdivision, for purposes relating to derivative retail client money.
(2) The regulations may provide that the client money reporting rules:
(a) cannot impose requirements (or certain kinds of requirements) in relation to certain classes of persons or money; or
(b) can only impose requirements (or certain kinds of requirements) in relation to certain classes of persons or money in certain circumstances.
981K Matters that may be dealt with in client money reporting rules
(1) The client money reporting rules may impose any of the following kinds of requirements:
(a) requirements to report information (see also paragraph ( 2)(b));
(b) reconciliation requirements (see also paragraph ( 2)(c));
(c) requirements that are incidental or related to the requirements mentioned in paragraph ( a) or (b).
(2) The client money reporting rules may also deal with matters incidental or related to requirements referred to in subsection ( 1), including any of the following:
(a) the classes of money in relation to which particular requirements apply;
(b) for requirements to report information:
(i) to whom information is required to be reported; and
(ii) the information that is required to be reported;
(c) for reconciliation requirements:
(i) the information that is required to be reconciled; and
(ii) how reconciliations are required to be reviewed or approved, including who is required to review or approve reconciliations; and
(iii) to whom reconciliations are required to be submitted;
(d) the financial services licensees who are required to comply with requirements imposed by the rules;
(e) the manner and form in which persons must comply with requirements imposed by the rules;
(f) the circumstances in which persons are, or may be, relieved from complying with requirements in the rules that would otherwise apply to them;
(g) the keeping of records, or the provision of records or other information, relating to accounts maintained for the purposes of section 981B;
(h) the keeping of records, or the provision of records or other information, relating to compliance with (or determining whether there has been compliance with) the rules;
(i) any matters that the regulations provide, for the purposes of this paragraph, may be dealt with in the client money reporting rules;
(j) any other matters that the provisions of this Act provide may be dealt with in the client money rules.
(3) The client money reporting rules may include a penalty amount for a rule. A penalty amount must not exceed $1,000,000.
981L ASIC to consult before making rules
(1) ASIC must not make a client money reporting rule unless ASIC has consulted the public about the proposed rule.
(2) Without limiting the ways in which ASIC may comply with the obligation in subsection ( 1) to consult the public about a proposed rule, ASIC is taken to comply with that obligation if ASIC, on its website:
(a) makes the proposed rule, or a description of the content of the proposed rule, available; and
(b) invites the public to comment on the proposed rule.
(3) A failure to consult as required by subsection ( 1) does not invalidate a client money reporting rule.
981M Complying with client money reporting rules
(1) Financial services licensees must comply with the client money reporting rules.
Note: This subsection is a civil penalty provision (see section 1317E). For relief from liability to a civil penalty relating to this subsection, see section 1317S.
(2) If there is an inconsistency between the client money reporting rules, and any of the following other rules:
(a) the market integrity rules;
(b) the derivative transaction rules;
(c) the derivative trade repository rules;
those other rules prevail to the extent of the inconsistency.
Note: If there is an inconsistency between the client money reporting rules and the operating rules of a licensed market or of a licensed CS facility, the client money reporting rules prevail: see subsections 793B(2) and 822B(2).
981N Alternatives to civil proceedings
(1) The regulations may provide for a person who is alleged to have contravened subsection 981M(1) (complying with client money reporting rules) to do one or more of the following as an alternative to civil proceedings:
(a) pay a penalty to the Commonwealth;
(b) undertake or institute remedial measures (including education programs);
(c) accept sanctions other than the payment of a penalty to the Commonwealth;
(d) enter into a legally enforceable undertaking.
(2) The penalty payable under regulations made for the purposes of paragraph ( 1)(a) in relation to a client money rule must not exceed three - fifths of the penalty amount set out in the client money rules for the rule.
(3) Without limiting regulations that may be made for the purposes of paragraph ( 1)(d), those regulations may provide for one or more of the following kinds of undertakings:
(a) an undertaking to take specified action within a specified period;
(b) an undertaking to refrain from taking specified action;
(c) an undertaking to pay a specified amount within a specified period to the Commonwealth or to some other specified person.
If:
(a) a financial services licensee, or a person acting on behalf of a financial services licensee:
(i) provides data or information to ASIC; or
(ii) otherwise allows ASIC access to data or information; and
(b) the licensee or person does so, in good faith, in compliance with a requirement imposed by or under a provision of the client money reporting rules;
the licensee or person is not liable to an action or other proceeding, whether civil or criminal, for or in relation to the conduct mentioned in paragraph ( a).
15 At the end of paragraph 1100A(1)(b)
Add "or 981M(1) (complying with client money reporting rules)".
16 Paragraph 1101B(1)(d)
After "subsection 798H(1) (complying with market integrity rules)", insert "or 981M(1) (complying with client money reporting rules)".
17 Paragraph 1101B(4)(b)
Omit "or of the derivative transaction rules or the derivative trade repository rules", substitute "of the derivative transaction rules, of the derivative trade repository rules or of the client money reporting rules".
18 Subparagraphs 1101B(4)(c)(i) and (d)(i)
Omit "or of the derivative transaction rules or the derivative trade repository rules", substitute "of the derivative transaction rules, of the derivative trade repository rules or of the client money reporting rules".
19 After paragraph 1317C(gdc)
Insert:
(gdd) a decision by ASIC to make client money reporting rules under section 981J; or
(gde) a decision by ASIC to do or not do anything under regulations made for the purposes of section 981N (alternatives to civil proceedings for contraventions of client money reporting rules); or
20 Section 1317DA ( paragraph ( b) of the definition of financial services civil penalty provision )
Repeal the paragraph, substitute:
(b) items 23 to 31;
(c) items 32 to 45.
21 Subsection 1317E(1) (after table item 31)
Insert:
31A | subsection 981M(1) | complying with client money reporting rules |
22 Subsection 1317G(1C) (heading)
Repeal the heading, substitute:
Market integrity rules and client money reporting rules
23 At the end of paragraph 1317G(1C)(b)
Add "or 981M(1) (complying with client money reporting rules)".
24 Subsection 1317G(1D)
Omit "is the penalty amount set out in the market integrity rules", substitute "or client money reporting rule is the penalty amount set out in the market integrity rules or client money reporting rules".
25 Section 1317HB (heading)
Repeal the heading, substitute:
1317HB Compensation orders--market integrity rules and client money reporting rules
26 Paragraph 1317HB(1)(a)
After "subsection 798H(1) (complying with market integrity rules)", insert "or 981M(1) (complying with client money reporting rules)".
27 Section 1324B
After "subsection 908CF(1)", insert "or 981M(1)".
28 Subsections 1325(1), (2) and (3)
Omit "or 908CF(1)" (wherever occurring), insert ", 908CF(1) or 981M(1)".