ASIC Corporations (Design and Distribution Obligations—Exchange Traded Products) Instrument 2020/1090

The instrument operates through a small set of legal concepts drawn from the Act and Regulations and redefined or applied to exchange traded funds and exchange traded products as defined in section 4.

Definitions (section 4)

• “Act” means the Corporations Act 2001 (section 4).
• “Exchange traded fund” is defined by a conjunctive list of features in section 4: it may be either a registered scheme or an unmanaged managed investment scheme (subparagraph (a)(i)), or a foreign open-ended investment company with the economic features of a managed investment scheme and registered with the US SEC (subparagraph (a)(ii)). It must also satisfy trading, issuance power, application/redemption capability and underlying price transparency conditions in paragraphs (b)-(e). The definition therefore ties the instrument’s reach to particular organisational forms and operational features (section 4).
• “Exchange traded product” in relation to such a fund is an interest in the fund, or a share in a foreign open-ended fund, or a legal/equitable right in those interests (see section 4, paragraphs (a)-(c)).
• “Regulations” means the Corporations Regulations 2001 (section 4).

Target market determinations (TMDs)

• The instrument substitutes the content of subsection 994B(8) (section 5(1)(a)). The replacement requires that a TMD for a financial product must be such that it is reasonable to conclude either that issuing or selling the product in a regulated sale to a retail client in accordance with distribution conditions would (i) make it likely the retail client is in the target market and (ii) be consistent with the likely objectives, financial situation and needs of a retail client in the target market, or, alternatively, that selling the product within 12 months of issue to a retail client in accordance with distribution conditions would meet the same two-part requirement. This introduces an explicit 12-month sale-window test for newly issued products (section 5(1)(a)).

Review obligations and triggers

• The substituted subsection 994C(2) (section 5(1)(b)) frames contraventions in terms of failing to review a TMD during the review period where the product will be tradable on a licensed market at or after the end of that review period; and in terms of failing to act “as soon as practicable, but no later than 10 business days” after discovering a review trigger or event indicating the TMD may no longer be appropriate. It requires not only review but, if no longer appropriate, making a new TMD in accordance with section 994B (section 5(1)(b)(iv)(B)).

Record-keeping, notification and distribution

• The instrument removes or alters specific subparagraphs and subsections in sections 994E and 994F of the Act (see section 5(1)(e)-(i)), and modifies subregulation 7.8A.09(1)(c) in the Regulations to change how the issuer’s purpose is expressed (see section 5(2)). Those textual changes narrow or redirect the statutory record-keeping and notification obligations so that they are tied to whether the product “is able to be traded on a licensed market” (see section 5(1)(f)-(g)).

Application limit

• Section 6 expressly excludes the modified Part 7.8A obligations where an ETP is offered for acquisition by issue or for regulated sale to retail clients other than on a licensed market (section 6). That is a categorical carve-out for offers to retail clients that are not on a licensed market.

Authority and commencement

• The instrument is made under subsection 994L(2) of the Act (section 3) and commences on the later of 5 October 2021 and registration on the Federal Register (section 2).

These are the central technical concepts. The instrument does not elaborate policy objectives or provide external explanatory material within the text; its operational effect is to treat ETPs as a subset of financial products that attract the Act’s design-and-distribution architecture but under the adapted textual conditions set out above.

The instrument changes legal duties and review/recording obligations that attach to certain actors involved with exchange traded funds and exchange traded products. The source text identifies the affected categories by reference to the Act’s existing terms (“person who makes a target market determination”, “issuer”, “operator”, etc.) and by its definitions of exchange traded fund and exchange traded product (section 4, section 5).

Directly affected parties

• Persons who make target market determinations: The substituted subsection 994C(2) uses “the person” who “makes a target market determination” and establishes circumstances in which that person “contravenes this subsection” if review obligations are not met (section 5(1)(b)). Practically, the group of persons who will be subject to these duties are those creating TMDs for ETPs, which in most cases will be issuers, sponsors or responsible entities of the relevant funds; the instrument references “issuer” explicitly in its regulatory modification (section 5(2)).
• Issuers and operators of exchange traded funds: The definition of “exchange traded fund” in section 4 includes references to the operator of the scheme or foreign company having the power and approval to issue ETPs and allowing applications and redemptions (section 4(c)-(d)). The regulatory substitution in section 5(2) also expressly ties the issuer’s purpose to provisions in the Act (subparagraph 707(3)(b)(i) or 1012C(6)(c)(i)).

Indirectly affected parties

• Licensed markets and market participants: The instrument’s tests and duties are repeatedly tied to whether a product “is able to be traded on a licensed market” (see, e.g., section 5(1)(b)(ii), section 5(1)(f)). That linkage means that the timing and coverage of DDO obligations for ETPs depends on market listing status and therefore on the actions of market operators and market participants who effect trading.
• Retail clients and financial advisers/distributors: While the instrument does not directly impose duties on advisers in its text, it alters the content and review cadence of TMDs (section 5(1)(a)-(b)), which are the core documents used to determine distribution conditions. Retail clients will be the reference point for the “likely objectives, financial situation and needs” assessment the substituted subsection 994B(8) requires (section 5(1)(a)). Distributors who rely on TMDs will implicitly be affected through changed TMD content and review frequency.
• Entities involved in record-keeping and notifications: Changes to sections 994E and 994F (omissions and substitutions listed at section 5(1)(e)-(i)) alter the statutory triggers for record-keeping or notification obligations, which affects compliance teams, legal counsels and outsourced record-keepers.

Who does not bear the instrument’s duties

• Offers to retail clients off a licensed market: Section 6 explicitly excludes the modified Part 7.8A obligations for ETPs where the product is offered for acquisition by issue, or for regulated sale, to retail clients other than on a licensed market. Therefore, where an ETP is offered directly to retail clients off-market, the tailored DDO modifications in this instrument do not apply (section 6).

Practical locus of responsibility

• The instrument frames contraventions in terms of conduct by “the person” who makes the TMD and refers to the issuer’s purpose (section 5(1)(b), section 5(2)). That textual structure places primary compliance responsibility on those drafting and maintaining TMDs (commonly issuers, responsible entities, or persons designated under the Act). The operator/issuer role appears in definitions (section 4) and in the modified regulation text (section 5(2)), signalling that issuers will be central to compliance.

The instrument does not expand or define enforcement agencies beyond existing Act structures; it is made by ASIC under the Act (section 3) and therefore sits within the Act’s enforcement and remedy framework rather than creating a parallel enforcement mechanism.

The instrument modifies the content and timing of particular duties in Part 7.8A of the Act for exchange traded products. It is important to read those duties as statutory obligations that apply “as if” the specified textual substitutions and omissions had been made (section 5(1)). The instrument does not itself create a new class of rights for investors; rather, it changes the statutory duties of persons who make TMDs, and those changes have downstream effects on distributors and record-keepers.

Primary duties created or modified by the instrument

• TMD content duty: Under the substituted subsection 994B(8), the TMD for a financial product must be such that it is reasonable to conclude one of two alternative tests is satisfied: either (a) issuance or regulated sale to a retail client in accordance with distribution conditions would likely mean the retail client is in the target market and sale to a retail client in the target market would likely be consistent with their likely objectives, financial situation and needs; or (b) the same two-part test applies to a sale occurring within 12 months of issue (section 5(1)(a)). The duty is framed as a reasonableness test about the TMD’s content.

• Review duty and timing: The substituted subsection 994C(2) creates a contravention where a person who makes a TMD does not complete a review during the review period if the product will be able to be traded on a licensed market at or after the end of that review period (section 5(1)(b)(a)(i)-(iii)). It also creates a contravention where, if the product is able to be traded on a licensed market at any time during a review period, and the person knows or ought reasonably to know a review trigger has occurred or that an event suggests the TMD is no longer appropriate, the person fails to review the determination and, where needed, make a new TMD “as soon as practicable, but no later than 10 business days” after first knowing of the trigger (section 5(1)(b)(b)(iii)-(iv)). The duty is both to review and, if necessary, to remake the TMD under section 994B.

• Record-keeping and notification duties, and distribution conditions: The instrument omits or alters specific parts of sections 994E and 994F so that certain record-keeping and notification obligations reference whether the product “is able to be traded on a licensed market” (see section 5(1)(e)-(i)). For example, section 5(1)(f) substitutes paragraph 994F(2)(b) with “the product is able to be traded on a licensed market”, which conditions some obligations on tradability status.

Rights and procedural implications expressly present in the instrument

• Right to clarity on issuer purpose: The modified regulation text in section 5(2) replaces paragraph (c) of subregulation 7.8A.09(1) to require that “the issuer issued the product with the purpose mentioned in subparagraph 707(3)(b)(i) or 1012C(6)(c)(i) of the Act” and replaces the Note to cross-refer to subsections 707(4) and 1012C(7) affecting whether an issuer is taken to have a particular purpose (section 5(2)). This ties the TMD and issuance purpose analysis to other Act provisions, giving issuers a textual reference point when articulating purpose.

Duties not imposed or removed

• Omitted provisions: The instrument omits subsections 994C(3)-(7), omits section 994D, omits subsection 994E(3) and omits subsection 994F(6) for ETPs (section 5(1)(c), (d), (e), (i)). Those omissions remove particular obligations that would otherwise apply under Part 7.8A; the precise content of the omitted subsections is not in the instrument, but the result in the instrument is that those parts do not apply to ETPs.

Delegation and enforcement context

• The instrument is made by ASIC under the authority of subsection 994L(2) (section 3); enforcement of contraventions created or altered by the instrument remains within the Act’s enforcement architecture rather than establishing separate enforcement obligations in the instrument itself.

Practical interpretation

• The duties are outcome-oriented (reasonableness and timely review) and are triggered by product tradability on a licensed market and knowledge of review triggers. Those duties create operational monitoring obligations (to know when a product becomes tradable and to detect review triggers), and they condition what must be documented in a TMD at creation and upon review.

The instrument itself does not create new separate penalty regimes; instead it modifies the content and application of provisions within Part 7.8A of the Corporations Act so that contraventions under that Part arise in the specified circumstances for exchange traded products (see section 5(1)). Enforcement therefore follows the Act’s existing enforcement pathways for contraventions of Part 7.8A, as modified by the instrument. The instrument was made by ASIC under subsection 994L(2) of the Act (section 3), which situates it within ASIC’s statutory powers to make declarations altering the application of Part 7.8A.

What the instrument does as to contraventions

• Substituted contravention wording: The instrument substitutes subsection 994C(2) with language that explicitly states “A person contravenes this subsection if” and then sets out two disjunctive scenarios in which failure to meet review and remediation duties constitutes a contravention (section 5(1)(b)). Those scenarios attach statutory contravention status to specific failures to review and to act within timing requirements (including the “as soon as practicable, but no later than 10 business days” deadline) when products are or will be tradable on a licensed market. The instrument therefore converts the specified failures into statutory contraventions under the Act.

Where penalties live

• The Act, not the instrument, contains the penalty and enforcement framework that applies to contraventions of Part 7.8A. The instrument’s role is to alter the content of the contraventions applicable to ETPs; it does not itself set penalty quantum, criminal or civil character, or procedural enforcement steps. Because the instrument is made under the Act, contraventions created by the modified text are enforceable under whatever civil, administrative or criminal remedies the Act assigns to breaches of Part 7.8A (the instrument itself does not restate those remedies).

Enforcement actors

• ASIC is the maker of the instrument (section 3) and is the primary regulator responsible for administering the Corporations Act regime. The instrument does not add new enforcement agencies or private enforcement rights; it modifies statutory obligations that ASIC may investigate and regulate under the Act. Any civil or criminal consequences for contraventions would be governed by the Act’s enforcement provisions (not repeated in this instrument).

Practical enforcement implications in the instrument

• The instrument introduces a short, hard deadline for response where a review trigger occurs while the product is able to be traded on a licensed market: review and remedial action must occur “as soon as practicable, but no later than 10 business days” after knowledge of the trigger (section 5(1)(b)(iv)(A)). That timeframe creates an operationally significant compliance window that could be central to enforcement assessments about whether a person has contravened the Act for ETPs.
• By conditioning various notification and record-keeping elements on whether the product “is able to be traded on a licensed market” (see section 5(1)(f)-(g)), the instrument links enforcement exposure to the tradability status of an ETP.

The instrument does not discuss administrative penalties, pecuniary amounts, or criminal sanctions itself; those consequences must be located in the Act and are not reproduced in this instrument.

This instrument is explicitly declaratory and operates by modifying the application of Part 7.8A of the Corporations Act to ETPs; it also modifies one paragraph and a Note in Part 7.8A of the Corporations Regulations 2001 (see sections 5(1) and 5(2)). Its legal interactions are therefore entirely internal to the Corporations Act/Regulations framework as set out in the instrument.

Primary statutory cross-references and interactions

• Authority: The instrument is made under subsection 994L(2) of the Act (section 3). That situates it as a statutory instrument that determines how Part 7.8A applies to a class of products.
• Part 7.8A: The instrument states that Part 7.8A applies “as if” the specified textual changes had been made (section 5(1)). That means all other operative parts of Part 7.8A not omitted by this instrument continue to apply to ETPs in their unmodified form.
• Cross-references to other Act provisions: The substituted regulation paragraph in section 5(2) requires that “the issuer issued the product with the purpose mentioned in subparagraph 707(3)(b)(i) or 1012C(6)(c)(i) of the Act,” and the substituted Note points to subsections 707(4) and 1012C(7) that affect whether the issuer is taken to have a particular purpose (section 5(2)). These cross-references tie the instrument’s requirements on issuer purpose and consequent TMD content to other parts of the Act that deal with disclosure and prospectus/offer obligations.

Interaction with rule-making and market regulation

• Licensed market status as operational hinge: Multiple provisions in the instrument condition duties on whether a product “is able to be traded on a licensed market” (see section 5(1)(b)(ii), section 5(1)(f)). This makes the rules that govern listing and market operation relevant to DDO applicability for ETPs. The instrument therefore interacts indirectly with licensing and listing regimes (market operator rules, listing requirements), to the extent those regimes determine whether a product will be “able to be traded on a licensed market.”

Carve-out for off-market offerings

• Section 6 limits application: The instrument expressly does not apply to an ETP to the extent it is on offer for acquisition by issue, or for regulated sale, to retail clients other than on a licensed market (section 6). That creates an interaction point with other offer-and-disclosure provisions of the Act and Regulations that govern offers to retail clients made off-market , those other regimes will govern such offers instead of the modified Part 7.8A provisions the instrument provides for market-traded ETPs.

Omissions and their interaction

• The instrument omits specified subsections and sections within Part 7.8A (994C(3)-(7), 994D, 994E(3), 994F(6)) for ETPs (see section 5(1)(c), (d), (e), (i)). The interaction effect is that any duties, exceptions or mechanisms contained in those omitted parts are not available or applicable to ETPs , other non-omitted duties in Part 7.8A continue to apply unless expressly modified.

Regulatory note substitution

• The instrument substitutes the Note to subregulation 7.8A.09(1) to state that subsections 707(4) and 1012C(7) of the Act affect whether the issuer is taken to have a particular purpose (section 5(2)(b)). This is an interpretative interaction, directing readers to consider how purpose is attributed under other parts of the Act when applying the modified regulation.

No express interaction with external statutes

• The instrument contains no express references to statutes outside the Corporations Act and the Corporations Regulations. Any interaction with other federal or state statutes must be inferred from the broader regulatory environment, but the instrument itself limits its cross-references to the Act and Regulations.

In short, this instrument alters how Part 7.8A applies to ETPs and ties key duties to market tradability and issuer purpose as defined elsewhere in the Act; it interacts functionally with listing and offer regimes because tradability and off-market offers determine whether the modifications apply.

The instrument contains its own creation and commencement details but does not record prior amendments within its text. The relevant facts contained in the instrument are:

• Maker and date: The instrument was made by Grant Moodie, delegate of the Australian Securities and Investments Commission, on 10 December 2020 (front matter).
• Commencement: It commences on the later of 5 October 2021 and the day after it is registered on the Federal Register of Legislation (section 2). The instrument does not itself record any earlier versions or amending instruments.
• Authority: It is made under subsection 994L(2) of the Corporations Act 2001 (section 3).

What the instrument does not do, as indicated by its text:

• It does not purport to amend the Corporations Act or Regulations directly; rather, it declares that Part 7.8A applies to exchange traded products “as if” specified textual variations were in place (section 5(1)-(2)). This is a declaratory instrument that modulates application rather than rewriting the Act.
• It does not include any savings, transitional or application provisions beyond the commencement and the carve-out in section 6. The instrument does not explicitly provide transitional arrangements for existing TMDs or products in the market; any transition would therefore depend on how the modified Part 7.8A is applied from commencement (sections 2 and 6 provide timing and application limit).

Absence of later amendments or repeal in the instrument

• The instrument itself does not list subsequent amendments or repeals. Any later amendments to this instrument would appear as separate legislative instruments or amending instruments; they are not present in the supplied text.

How to locate amendments

• The instrument notes that the Federal Register of Legislation may be accessed at www.legislation.gov.au (front matter). Any subsequent amending instruments or repeals would be registered on that site.

Because the instrument is a short declaration made under the Act, its amendment history in the supplied text is confined to the single making date and the specified commencement rule.

The instrument’s text does not cite any cases, judicial determinations, or litigation outcomes. It does not record any judicial consideration of the instrument itself or its modified provisions. The instrument is made by ASIC under statutory authority (section 3), but no litigation history is included in the instrument.

What the instrument contains relevant to litigation risk or future disputes

• Creation of contraventions: By substituting subsection 994C(2) to state “A person contravenes this subsection if …”, the instrument identifies specific conduct that will constitute a contravention under the Act for ETPs (section 5(1)(b)). That textual clarity could be expected to focus future disputes on questions of fact (when a review trigger was known, whether action occurred within 10 business days) and on statutory interpretation (the scope of terms such as “as soon as practicable”, “able to be traded on a licensed market”, and what constitutes “makes a target market determination”).
• Omitted subsections and sections: The omission of multiple subsections and an entire section (994C(3)-(7), 994D) may give rise to disputes about what remedial or procedural options remain available under Part 7.8A for ETPs, and whether certain obligations were intended to be replaced by other statutory or regulatory mechanisms (see section 5(1)(c)-(d)).
• Reliance on issuer purpose provisions: The substitution in the Regulations that ties issuer purpose to subparagraph 707(3)(b)(i) or 1012C(6)(c)(i) and the Note cross-referencing subsections 707(4) and 1012C(7) means litigation could involve construing those sections of the Act when assessing TMD content or issuer obligations (section 5(2)).

Absence of reported determinations

• No cases or tribunal decisions are referenced in the instrument. Any litigation arising from breaches of the modified Part 7.8A, or from disputes as to the instrument’s application, would therefore be future events not recorded in the text.

In sum, the instrument itself contains no litigation history; however, its textual changes identify likely focal points for future disputes about timing, knowledge, review obligations and issuer purpose , all of which would be resolved against the modified statutory text in the Act and Regulations.

This instrument contains several technical features that create operational or interpretive risks for persons responsible for TMDs, issuers and distributors. The following points are drawn directly from the instrument’s text and describe concrete mechanisms that may be overlooked.

1. “As if” application: The instrument makes Part 7.8A apply to ETPs “as if” specific textual changes were made (section 5(1)). That means practitioners must read Part 7.8A with the substitutions and omissions in place for ETPs rather than relying on the unamended text of Part 7.8A. Failure to consult the declaration when preparing TMDs or compliance frameworks will lead to misapplication of the duties. The instrument itself is the modifying text.

2. Tradability-based triggers: Multiple duties and exceptions are explicitly tied to whether the product “is able to be traded on a licensed market” (see section 5(1)(b)(ii), section 5(1)(f)-(g)). The definition of “able to be traded” depends on listing/timing in practice; issuers and TMD-makers must track precisely when an ETP becomes able to be traded because that status triggers short review deadlines and different record-keeping obligations.

3. Short statutory deadline for triggered reviews: If a review trigger occurs while the product is tradable on a licensed market during a review period, the substituted subsection 994C(2) imposes an obligation to review “from as soon as practicable, but no later than 10 business days, after the person first knew” of the trigger, and to make a new TMD where necessary (section 5(1)(b)(iv)(A)-(B)). Ten business days is a short operational window; systems for monitoring, decision-making and formalising a new TMD must be designed to meet that timeframe.

4. 12-month sale test for new products: The substituted subsection 994B(8) inserts an alternative test that applies where the product is sold within 12 months of issue (section 5(1)(a)). For newly issued ETPs, this means that TMD content must address the 12-month post-issue sales profile. If distribution channels are likely to sell within that window, TMDs must be drafted to reflect that scenario; otherwise, the “issue” test may not capture the real distribution pathway.

5. Omitted substantive provisions: The instrument omits several subsections and a section from Part 7.8A for ETPs (994C(3)-(7), 994D, 994E(3), 994F(6)) (section 5(1)(c)-(d), (e), (i)). Those omissions may remove particular steps, defences or exemptions that apply to non-ETP products. Practitioners cannot assume that obligations or defences in the unamended Part 7.8A still apply to ETPs.

6. Narrow application carve-out: Section 6 excludes application of the modified Part 7.8A when ETPs are offered to retail clients other than on a licensed market (section 6). That means off-market offers to retail clients fall outside the instrument; compliance frameworks must therefore distinguish between on-market and off-market offers. It is possible for the same product to be subject to different DDO rules depending on the offer channel.

7. Issuer purpose interactions: The instrument’s regulatory change requires consideration of issuer purpose as set out in subparagraph 707(3)(b)(i) or 1012C(6)(c)(i) and notes the relevance of subsections 707(4) and 1012C(7) (section 5(2)). Determinations about an issuer’s purpose will therefore affect TMD content for ETPs; that may overlap with prospectus and disclosure analyses under other parts of the Act.

8. Who is “the person”? The substituted provisions repeatedly refer to “the person” who “makes a target market determination” (section 5(1)(b)). The statutory identity of that person is crucial for liability allocation. The instrument does not define “person” within its text; practitioners must therefore map, under the Act, who qualifies as the person responsible for making the TMD.

9. Record-keeping changes tied to tradability: The substitution of paragraph 994F(2)(b) to reference that “the product is able to be traded on a licensed market” (section 5(1)(f)) conditions certain record-keeping obligations on market tradability. If record-keeping workflows assume a different triggering event, they may fail to capture obligations or produce late notifications.

10. No transitional provisions inside the instrument: The instrument contains no explicit transitional arrangements (see sections 2 and 6). It therefore leaves timing and applicability at commencement to the combined operation of its commencement date and the operative statutory text, which practitioners must interpret and apply to existing TMDs and in-flight offers.

These are concrete operational and interpretive “gotchas” unambiguously present in the instrument text. They concern timing, who bears responsibility, event triggers linked to market tradability, omissions of existing statutory text for ETPs, and links to other Act provisions about issuer purpose.

Compliance for entities affected by this instrument requires reading Part 7.8A of the Corporations Act as modified by the instrument (section 5(1)) and implementing systems that reflect the modified duties, timeframes and tradability-linked triggers. The following steps flow directly from the instrument’s text.

1. Confirm product classification under section 4

• Before applying the modified Part 7.8A, determine whether the product meets the instrument’s definition of an “exchange traded fund” and therefore of an “exchange traded product” (section 4). The definition requires, among other things, that the fund be a registered scheme or certain foreign open-ended investment company, that its products are or will be able to be traded on a licensed market, that the operator has the power to issue and that the operator allows applications and redemptions, and that the underlying price or value is continuously disclosed or immediately ascertainable (section 4(a)-(e)). Document this classification decision in compliance records.

2. Draft TMDs to satisfy the substituted s994B(8)

• When preparing a target market determination for an ETP, ensure the TMD is such that it would be reasonable to conclude either of the two alternative tests in substituted subsection 994B(8) is satisfied: (i) issuance/regulated sale scenario; or (ii) sale within 12 months of issue scenario (section 5(1)(a)). Explicitly state which limb(s) of the either/or test the TMD relies upon and document the factual basis for reasonableness concerning the likely objectives, financial situation and needs of the retail client in the target market.

3. Implement monitoring for review periods and tradability status

• The substituted subsection 994C(2) ties review duties to whether the product “is able to be traded on a licensed market” and to review periods (section 5(1)(b)). Establish processes to:
  • Track when an ETP becomes able to be traded on a licensed market.
  • Maintain a calendar of review periods and ensure reviews are completed during the review period where the product will be tradable at or after the end of that period.
  • Retain records demonstrating completion of reviews within required periods.

4. Set up fast-response procedures for review triggers

• The substituted review provision requires that, if a review trigger occurs while the product is tradable during a review period, the person making the TMD must review and, if necessary, make a new TMD “from as soon as practicable, but no later than 10 business days” after first knowing of the occurrence (section 5(1)(b)(iv)(A)-(B)). Compliance systems must therefore:
  • Define what constitutes knowledge of a review trigger and how that knowledge is recorded.
  • Establish a documented escalation path to ensure review and remediation within the 10 business day limit.
  • Keep decision records that demonstrate timing of knowledge and steps taken within the statutory window.

5. Adjust record-keeping and notification workflows

• The instrument modifies which record-keeping and notification obligations apply by tying them to tradability and omitting certain subsections (section 5(1)(e)-(i)). Review internal record-keeping and notification mapping against the modified paragraphs, especially paragraph 994F(2)(b) which now requires that “the product is able to be traded on a licensed market” for certain obligations to engage (section 5(1)(f)). Ensure digital systems and retention policies capture the required documents and that the “able to be traded” state is logged.

6. Review issuer purpose statements and disclosure alignment

• The regulatory substitution requires that the issuer issued the product with a purpose mentioned in subparagraph 707(3)(b)(i) or 1012C(6)(c)(i), and the Note points to subsections 707(4) and 1012C(7) (section 5(2)). Coordinate TMD content with issuer purpose statements and with disclosure/offer documents that reference issuer purpose to ensure consistency across compliance, legal and disclosure teams.

7. Differentiate on-market and off-market offers

• Section 6 excludes the instrument’s modified Part 7.8A obligations where the ETP is on offer for acquisition by issue, or for regulated sale, to retail clients other than on a licensed market (section 6). Compliance must distinguish between:
  • Offers and sales on licensed markets (where the modified Part 7.8A applies), and
  • Off-market offers to retail clients (where the instrument does not apply). Document the applicable regime for each distribution channel and maintain records linking the product’s distribution pathway to the applicable obligations.

8. Allocate responsibility for “the person” who makes a TMD

• The substituted provisions create contraventions for “the person” who makes a TMD (section 5(1)(b)). Ensure organisational responsibility for drafting and approving TMDs is clear in written delegations and job descriptions, and ensure that the legal entity identified as making the TMD is authorised to do so and holds the requisite information to continue to meet review obligations.

9. Maintain audit trails evidencing reasonableness and timing

• Given the reasonableness standard in substituted subsection 994B(8) and the time-sensitive review duty in substituted subsection 994C(2), maintain contemporaneous evidence of the factual and commercial bases for TMD choices, review triggers, dates of knowledge, steps taken within the 10 business day window, and any new TMDs produced. These audit trails are the primary documents for demonstrating compliance.

10. Engage legal counsel for interpretive issues

• The instrument omits several statutory provisions and ties parts of the regime to other Act provisions that may require interpretive work (section 5(1)(c)-(d); 5(2)). Where there is uncertainty,for example, whether a particular event constitutes a review trigger, or whether the product is “able to be traded on a licensed market”,seek a legal interpretation informed by the modified statutory text.

Record-keeping checklist (drawn from instrument)

• Classification decision that the product is an ETP under section 4 (documented).
• TMD drafted to satisfy substituted s994B(8) with reasoned basis.
• Records of review periods and completed reviews where applicable (substituted s994C(2)).
• Timestamped records of knowledge of any review trigger and steps taken within the 10 business day window (substituted s994C(2)).
• Documentation of issuer purpose aligned with the modified regulatory paragraph (section 5(2)).
• Clear mapping showing whether offers are on-market or off-market and therefore whether section 6 removes application.

Following these steps aligns practical compliance with the precise textual changes the instrument makes to Part 7.8A and to the related regulation. The instrument’s emphasis on market tradability and narrow timing windows should be central to any ETP compliance programme from commencement (see sections 2, 5 and 6).