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provision is repealed on the day after that period of time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
Parliamentary Library
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