Commonwealth legislation

ASIC Class Order [CO 03/1112]

RepealedCTH

This Act has been repealed and is no longer in force. It is retained for historical reference.

Jurisdiction

Commonwealth

Collection

legislative instrument

Plain English Summary

3/10 complexity

This rule lets Australian banks (ADIs) contract out of the usual legal requirement to hold client money in a protected trust when dealing with wholesale (sophisticated) clients, provided there’s a written agreement saying the bank does not hold the funds on trust. It also removes a provision that would otherwise void such agreements, making them legally effective.

It affects ADIs and wholesale clients by stripping statutory client-money protection in those cases, reducing regulatory burdens for large, negotiated commercial transactions.

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Current sections

Direct links to the current provisions in ASIC Class Order [CO 03/1112].

ASIC Class Order [CO 03/1112]

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Australian Securities and Investments Commission

Corporations Act 2001 — Paragraphs 992B(1)(a) and 992B(1)(c) — Exemption and Declaration

1. Under paragraph 992B(1)(a) of the Corporations Act 2001 (the “Act”) the Australian Securities and Investments Commission (“ASIC”) exempts each person (the “licensee”) who is an Australian ADI from paragraph 981B(1)(c) of the Act in the case referred to in the Schedule to the extent that that paragraph requires the licensee to hold money to which Subdivision A of Division 2 of Part 7.8 of the Act applies on trust for the benefit of the person who is entitled to the money.

2. Under paragraph 992B(1)(c) of the Act ASIC declares that Part 7.8 of the Act applies in relation to the licensee in the case referred to in the Schedule as if section 981H of the Act were omitted.

Schedule

Where:

(a) money to which Subdivision A of Division 2 of Part 7.8 of the Act applies is paid to the licensee in connection with:

(i) a financial service that has been provided, or that will or may be provided, to a person (the “client”) as a wholesale client; or

(ii) a financial product acquired by a person (the “client”) as a wholesale client; and

(b) the licensee and the client have agreed in writing that the licensee does not hold the money on trust for the benefit of the client.

Interpretation

In this instrument “wholesale client” has the meaning given by subsection 761G(4) of the Act.

Dated this 16th day of December 2003

Signed by Brendan Byrne

as a delegate of the Australian Securities and Investments Commission

Source text

Sourced from the Federal Register of Legislation (legislation.gov.au), CC BY 4.0.