ASIC Corporations (Exchange-Traded Derivatives: Multiple Issuers) Instrument 2016/883

The instrument operates around a small set of interlocking concepts found in the Corporations Act:

• Exchange‑traded derivative covered by subsection 1013A(5). The instrument relies on the existing statutory fiction in s 761E(6) that can cause both a market participant (a participant in the relevant market) and an intermediary (a licensee who is not a market participant) to be taken to be issuers of the same product. Where both are taken to be issuers for a derivative entered into or acquired on a financial market, the instrument treats the market participant as the "responsible person" for the derivative for purposes of the Division (new s 1013A(7)).

• Product Disclosure Statement (PDS) allocation. Normally Part 7.9 requires the issuer to prepare and provide a PDS. The instrument enables the PDS to be prepared only by the market participant even when the intermediary is also, by statute, an issuer (new s 1013A(5)). At the same time it requires the intermediary to take steps to ensure the retail client receives certain information and statements (s 1012L; s 1013A(6)).

• Carve‑out for PDS content. The instrument permits omission from a PDS of statements that would not be required if the derivative were issued only by the responsible person (i.e. the market participant). However, where such omission occurs the PDS must include specific notice statements about intermediary acquisition, lack of direct relationship with the market participant, potential additional risks, fees, terms and the availability of a dispute resolution system maintained by the intermediary, and a pointer that further information can be obtained from the intermediary (new s 1013D(5)(a)-(d)).

• Timing and delivery obligations. The intermediary licensee must ensure the client is given, in writing, the statements and information that would otherwise have been required by s 1013D(1) (subject to the modified s 1013D(5)) at or before the time the intermediary makes the offer, arranges the issue, or recommends acquisition, or when the derivative is actually issued under that offer or recommendation (new s 1012L).

• Short‑Form PDS requirements. If a Short‑Form PDS summarises a PDS that has omitted information in reliance on s 1013D(5), the Short‑Form PDS must itself include the supplementary statements required by s 1013D(5)(a)-(d) (new s 1017I(2A)). The instrument cross‑references regulation 7.9.61AA and Part 3 of Schedule 10BA, which contain the Short‑Form PDS mechanics (note to s 5).

• Contractual interface. The intermediary and market participant must have a written agreement under which the intermediary agrees to take reasonable steps to ensure the client is given both (d) a document including the statements and information referred to in s 1012L and (e) the PDS or Short‑Form PDS prepared by the market participant (new s 1013A(6)). The statutory language is "reasonable steps", not strict liability for every omission.

These changes aim to preserve the PDS production role of the market participant while allocating delivery and disclosure responsibilities to the intermediary. The instrument distinguishes the content of the PDS (prepared by the market participant) from the separate written statements and information the intermediary must deliver to retail clients (s 1012L, s 1013A(6)(d)). It also prescribes mandatory summary statements in circumstances where the PDS omits certain issuer‑specific details (s 1013D(5)).

The instrument creates duties and interacts with rights for three identifiable groups within the exchange‑traded derivative chain, plus an indirect effect on retail clients:

• Intermediary licensees (non‑participants in the relevant market). These are financial services licensees that, because of s 761E(6), are taken to be issuers for the derivative. The instrument imposes on them a positive duty to ensure retail clients are given specified written statements and information at or before the relevant transaction times (s 1012L). They must also enter into a written agreement with the market participant that includes a covenant to take reasonable steps to ensure retail clients are given the PDS/Short‑Form PDS and the statements required by s 1012L (s 1013A(6)). The intermediary is also referenced in the mandatory PDS statements (s 1013D(5)(a)-(d)), including the statement that the person will have access to a dispute resolution system maintained by the intermediary licensee (s 1013D(5)(c)(iv)).

• Market participants (participants in the relevant market). Where both a market participant and an intermediary are deemed issuers, the instrument permits the PDS to be prepared only by the market participant (new s 1013A(5)). The instrument labels the market participant the "responsible person for the derivative" for purposes of the Division (s 1013A(7)). The market participant therefore becomes the primary drafter of the PDS and is likely to bear the drafting, disclosure and any PDS‑related compliance costs that flow from preparing the PDS.

• Retail clients (persons acquiring the derivative as retail clients). Retail clients are the target recipients of the written statements and PDS/Short‑Form PDS. The instrument specifically addresses information asymmetries for retail clients by requiring statements that an acquisition may be an intermediary acquisition, that the holder may not have direct contact with the market participant, that additional risks/fees/rights may attach, and that the intermediary maintains a dispute resolution system accessible to the client (s 1013D(5)(a)-(d); s 1012L).

• Issuance and disclosure ecosystem. The instrument also affects other actors indirectly: authorised representatives of intermediary licensees (the intermediary may provide the statements through an authorised representative; s 1012L note), compliance teams who must ensure written agreements and "reasonable steps" are in place (s 1013A(6)), and persons preparing Short‑Form PDSs (new s 1017I(2A)).

Allocation of costs and responsibilities in practice: the market participant concentrates the work of PDS drafting and bears costs of producing the primary disclosure documents. The intermediary bears costs associated with ensuring delivery of the written statements and information, entering into and overseeing the written agreement with the market participant, and maintaining systems to demonstrate it took reasonable steps. Retail clients will face the disclosure outcomes: a PDS produced by a market participant, plus separate written statements or an integrated Financial Services Guide if the intermediary chooses to include the information there (s 1012L note). The statutory language that statements must be "given, in writing" (s 1012L) creates a documentation and record‑keeping requirement for intermediaries.

The instrument creates or clarifies the following principal duties and related rights:

• Duty to ensure written client information (new s 1012L). Where a retail client is given a PDS or Short‑Form PDS for a derivative covered by subsection 1013A(5), the intermediary licensee that is taken to be an issuer must ensure the client is given, in writing, the statements and information that would have been required by s 1013D(1) but for s 1013D(5). The timing is defined: at or before the time the intermediary offers to issue, offers to arrange for the issue, or makes a recommendation to acquire the derivative, or when the derivative is issued under such offer or recommendation (s 1012L). The subsection also notes that the intermediary may satisfy this by including the relevant information in a Financial Services Guide if one is required to be given (s 1012L note).

• Requirement for a written agreement and "reasonable steps" (new s 1013A(6)). The market participant and intermediary must have a written agreement for the PDS to be prepared only by the market participant. Under that agreement, the intermediary licensee agrees to take reasonable steps to ensure a retail client is given both (d) a document including the s 1012L statements and information, and (e) the PDS or Short‑Form PDS prepared by the market participant. The statutory bar is "reasonable steps", which is lower than an absolute guarantee; the instrument does not define the term further.

• Authorisation of market participant as responsible person (new s 1013A(7)). Where the PDS is prepared by the market participant under s 1013A(5), the market participant is the "responsible person" in the Division. This is an internal label for applying other provisions as if the derivative were issued only by that responsible person (s 1013E as modified in s 5(d)).

• PDS content flexibility plus required summarising statements (new s 1013D(5)). A PDS for a derivative covered by s 1013A(5) need not include any statement or information that would not be required if the derivative were only issued by the responsible person; but the PDS must include specific statements: that acquisition may be an intermediary acquisition; that a person who makes an intermediary acquisition may not have direct contact with the market participant; that additional risks, fees, rights, terms and conditions may apply; that the person will have access to a dispute resolution system maintained by the intermediary; and that further information may be obtained from the intermediary (1013D(5)(a)-(d)). This creates a minimum set of mandatory summary warnings and an information pointer.

• Application of other provisions as if single issuer (s 1013E modification). If the PDS is covered by s 1013A(5), s 1013E is to be applied as if the derivative were only issued by the responsible person (s 5(d)). This means certain obligations tied to the issuer will be treated as if the market participant were the sole issuer for the relevant purposes of the Division.

• Short‑Form PDS supplement requirement (new s 1017I(2A)). Where a Short‑Form PDS summarises a PDS that has omitted information in reliance on s 1013D(5), the Short‑Form must include the same statements required in s 1013D(5)(a)-(d). The instrument references the Short‑Form PDS rules in the Regulations (note to s 5(e)).

Rights implicit from the instrument:

• The market participant has the right to prepare the PDS for the derivative in the specified multiple‑issuer scenario (s 1013A(5)), concentrating that drafting role with the exchange participant.

• Retail clients have a right to receive, in writing, specified statements and be able to access a dispute resolution system maintained by the intermediary (as stated in the PDS per s 1013D(5)(c)(iv) and to receive the statements directly per s 1012L).

• Intermediaries retain the right to include the required intermediary statements in a Financial Services Guide if they are required to give one (s 1012L note).

The instrument does not itself create a freestanding new statutory right to compensation; it shifts disclosure duties and sets minimum content obligations for PDS and Short‑Form PDS in the multiple‑issuer context.

The instrument varies how Part 7.9 of the Corporations Act applies but does not, on its face, create new penalty provisions or unique enforcement sanctions within the instrument text. The text indicates that the modifications operate by altering the application of existing Part 7.9 obligations (s 5). From the instrument alone the following points can be drawn:

• The instrument is made under subsection 1020F(1) of the Corporations Act (s 3). It modifies how Part 7.9 applies to specified transactions; it does not itself set out civil or criminal penalties. Therefore, liability for non‑compliance will arise under the Act's existing civil, administrative and criminal regimes as applied to the modified obligations in Part 7.9, not from this instrument creating new standalone offences.

• Enforcement mechanisms available under the Corporations Act (for example civil penalties, injunctions, ASIC administrative action, and criminal provisions) are not altered or restated in the instrument text. The instrument prescribes duties (for example the duty of an intermediary to ensure a client is given certain information under s 1012L and the requirement for agreements and reasonable steps under s 1013A(6)). Consequences for failing to perform those duties would therefore be those contained in the Act and its enforcement regime, as applied to the modified textual obligations.

• The instrument inserts content requirements for PDSs and Short‑Form PDSs (s 1013D(5); s 1017I(2A)). Failure to include required statements in a PDS or Short‑Form PDS when applicable may result in breaches of the statutory disclosure obligations in Part 7.9 as modified. The instrument does not itself indicate remedial pathways, pecuniary amounts, or administrative penalties.

• Administrative procedure and ASIC oversight continue to apply by operation of the Act and the statutory power under which the instrument is made. The instrument includes an internal note directing readers to the Regulations for Short‑Form PDS provisions (note to s 5(e)), indicating that regulatory instruments remain relevant to enforcement and compliance expectations.

Practical enforcement implications for affected parties drawn from the instrument: intermediaries should expect that failure to ensure delivery of the written statements required by s 1012L, or failure by the market participant to include the mandatory summary statements in a PDS where allowed, could be treated by ASIC or civil courts as breaches of the relevant Part 7.9 obligations as modified. The instrument does not qualify "reasonable steps" in s 1013A(6), so fact sensitive inquiry by regulators or courts would determine whether the intermediary met that standard in any enforcement action.

The instrument explicitly ties to and modifies the Corporations Act 2001 and cross‑references the Corporations Regulations 2001. It depends on and interacts with several existing statutory concepts and regulatory instruments:

• Corporations Act 2001, Part 7.9. The instrument directly amends how Part 7.9 applies by inserting and modifying sections within that Part (s 5). All duties and content rules set out in the instrument are embedded into Part 7.9 via the instrument's declaration.

• Section 761E(6) (issuer attribution). The instrument is premised on the operation of s 761E(6) which can cause both a market participant and an intermediary to be taken to be issuers for the same derivative. The instrument explicitly applies where both entities are "because of subsection 761E(6), taken to be the issuer" (new s 1013A(5)(b)).

• Section 1013D(1), s 1013E and s 1017I. The instrument inserts new material after s 1013D(4), adds s 1012L after Subdivision B of Division 2, and inserts a new subsection 1017I(2A). It requires that s 1013E be applied in the circumstances as if the derivative were issued only by the responsible person (s 5(d)). It also ties Short‑Form PDS obligations to existing Regulations provisions (note to s 5(e) referencing reg 7.9.61AA and Part 3 of Schedule 10BA).

• Corporations Regulations 2001 (Short‑Form PDS mechanics). The instrument notes that Short‑Form PDS provisions are set out in regulation 7.9.61AA of the Regulations and Part 3 of Schedule 10BA (note to s 5(e)). The new Short‑Form requirement (s 1017I(2A)) is therefore to be read alongside those regulatory mechanics.

• Instruments power under s 1020F(1). The instrument is made under that specific subsection of the Act (s 3). The legislative instrument therefore operates within the delegated law framework created by the Act, and interacts with any other delegated instruments and regulations that apply to Part 7.9.

Areas of interaction and scope where cross‑rules matter:

• Issuer identity and liability. The instrument treats the market participant as the responsible person for PDS drafting, but it does not repeal the underlying statutory attribution that both entities are taken to be issuers under s 761E(6). It also directs that certain parts of Part 7.9 be applied as if a sole issuer existed (s 1013E application in s 5(d)), which will need to be interpreted alongside s 761E(6)'s attribution rule.

• Disclosure layering. The instrument creates two disclosure layers: the market participant PDS and the intermediary‑provided document comprising the s 1012L material. Parties must coordinate the content to avoid inconsistencies. The instrument contemplates that the intermediary may include the s 1012L material within a Financial Services Guide if one is required (s 1012L note), which engages FSG obligations and any rules in the Regulations about FSGs.

• Short‑Form summarisation. The Short‑Form PDS may summarise a PDS that has omitted issuer‑specific information in reliance on s 1013D(5). In that event the Short‑Form must nonetheless include the s 1013D(5) statements (s 1017I(2A)), interacting with regulatory requirements that govern what a Short‑Form can and cannot include.

• Dispute resolution systems. The PDS must indicate that the holder will have access to a dispute resolution system maintained by the intermediary licensee (s 1013D(5)(c)(iv)). This interacts with the broader regulatory requirements for Australian Financial Complaints Authority membership or internal dispute resolution systems to the extent those exist elsewhere in the legislative/regulatory framework, though the instrument itself does not restate those external requirements.

Overall, the instrument is a targeted modification of Part 7.9 and must be read together with the underlying Corporations Act provisions it amends or references, and with the Short‑Form PDS regulations. The instrument does not stand alone; compliance requires attention to the Act and relevant Regulations.

The instrument records the following discrete facts concerning its genesis and commencement:

• Instrument identity and maker. The document identifies itself as the ASIC Corporations (Exchange‑Traded Derivatives: Multiple Issuers) Instrument 2016/883. It is made by Grant Moodie, delegate of the Australian Securities and Investments Commission (cover page and signature block).

• Date of making. The instrument is dated 19 September 2016 (cover page).

• Power under which made. The instrument is made under subsection 1020F(1) of the Corporations Act 2001 (s 3).

• Commencement rule. The instrument commences on the day after it is registered on the Federal Register of Legislation (s 2). The instrument includes a note directing readers to the register (s 2 note).

• Scope of amendment. The instrument modifies the application of Part 7.9 of the Act in relation to financial services licensees by inserting new provisions (s 5). Specifically, it adds new ss 1012L and 1013A(5)-(7), inserts new subsection 1013D(5), amends s 1013E application, and inserts s 1017I(2A) into the Part.

There is no other textual material in the instrument indicating any prior versions or subsequent amendments. The instrument itself is the single amending instrument for the textual modifications it effects. The instrument contains cross‑references to existing regulation provisions (Short‑Form PDS provisions in reg 7.9.61AA and Part 3 of Schedule 10BA), indicating that those Regulations remain in force and are part of the compliance framework.

Because the instrument takes effect the day after registration, any market practice or contract formed after that start date must conform to the modified application of Part 7.9. The instrument does not set any transitional provisions or grandfathering rules within its text; the commencement clause is categorical (s 2).

The instrument text contains no references to litigation, court decisions, or judicial interpretation. It names no cases and does not cite judicial authorities. The only legal citations within the instrument are to provisions of the Corporations Act 2001 and to the Corporations Regulations 2001 where relevant (note to s 5(e)).

As a result, the instrument itself does not record any judgments, appeals, or litigated interpretations of the inserted provisions. Any adjudicative history interpreting these modifications would need to be sourced from separate judicial decisions or tribunal records, which are not part of the text provided.

Because the instrument changes disclosure duties and allocates responsibilities between market participants and intermediaries, future litigation could be anticipated over issues such as whether an intermediary took "reasonable steps" (s 1013A(6)), whether required written statements were truly provided at the correct time (s 1012L), or whether a market participant's PDS satisfied the new s 1013D(5) requirements. None of those hypothetical or subsequently litigated matters is recorded or addressed in the instrument itself.

If readers require a court or tribunal interpretation history, that must be sought from external databases and case law collections; the instrument does not contain or cite any such material.

The instrument introduces targeted flexibility but creates concrete areas of implementation risk and points of potential mismatch between statutory attribution and practical disclosure that practitioners should note:

• Issuer attribution remains dual in law. The instrument permits the market participant to prepare the PDS (new s 1013A(5)) and directs that certain provisions be applied as if the market participant were the sole issuer (s 5(d)), but it does not repeal the statutory fiction in s 761E(6) that, in some contexts, takes both the intermediary and the market participant to be issuers. Practitioners should note that legal attribution and practical disclosure responsibilities are not identical after this instrument and may lead to uncertainty about who bears legal liability in contested cases.

• "Reasonable steps" is an interpretive hinge. The intermediary's contractual obligation to "take reasonable steps" (s 1013A(6)) to ensure clients receive the PDS/Short‑Form PDS and the s 1012L material is fact sensitive. The instrument does not define "reasonable steps", leaving intermediaries exposed to post‑hoc analysis by ASIC, courts, or complainants about whether their procedures, controls and delivery methods met the standard. The statutory choice lowers the standard below absolute liability, but creates evidentiary risk.

• Possible information fragmentation. The instrument envisages a split‑document approach: the market participant prepares the PDS while the intermediary provides additional written statements (s 1012L; s 1013A(6)(d)). That creates a risk that material information is fragmented across documents, increasing the chance retail clients may not read or connect the pieces. The PDS is permitted to omit issuer‑specific statements (s 1013D(5)), so the primary PDS may lack material about intermediary arrangements unless the prescribed summary statements are clear and sufficiently prominent.

• Statements versus substantive obligations. The PDS must state that the client will have access to a dispute resolution system maintained by the intermediary licensee (s 1013D(5)(c)(iv)). The instrument requires that the PDS include that statement, but it does not expressly impose a separate new statutory duty in the instrument text to maintain such a system. In practice, including this statement would be misleading unless the intermediary actually provides or guarantees access; regulators may take such misleading statements into account. Practitioners should therefore align statements in the PDS with actual dispute resolution arrangements.

• Timing compliance traps. The intermediary must ensure written statements and information are given "at or before" the time of offer, arrangement to issue, recommendation, or when the derivative is issued under such an offer or recommendation (s 1012L). That timing requirement creates operational checkpoints: if the intermediary's systems only deliver required material after execution, that may contravene the "at or before" timing.

• Short‑Form PDS summarisation constraint. Where a Short‑Form PDS summarises a PDS that has omitted information under s 1013D(5), the Short‑Form must itself include the s 1013D(5) statements (s 1017I(2A)). If market practice relies on Short‑Form PDSs circulating without these statements, compliance gaps may arise.

• Contract drafting necessity. The instrument requires a written agreement between the intermediary and the market participant (s 1013A(6)). Standard market documentation may lack the specific covenant language about taking reasonable steps to deliver s 1012L material. Parties relying on pre‑existing agreements should review and, if necessary, amend documentation to reflect the statutory wording.

• Record‑keeping evidence burden. The requirements that written statements be "given, in writing" and that reasonable steps be taken implies a record‑keeping obligation for intermediaries (though the instrument does not itself create a record‑keeping schedule). Intermediaries should not assume that informal or oral notices will satisfy the statutory requirement.

• Unchanged enforcement perimeter. The instrument does not include its own enforcement penalties and relies on Part 7.9 enforcement mechanisms. Parties should note that statutory duties modified by the instrument will still be enforceable under existing Act provisions.

These "gotchas" are direct mechanical consequences of the instrument's text and language choices (noted sections: ss 1012L, 1013A(5)-(7), 1013D(5), 1017I(2A)). Mitigating them requires careful contract drafting, operational adjustments, and documentation protocols.

Below is a practical, source‑grounded checklist of measures that implement the statutory obligations and reduce operational and compliance risk. Each step links back to the instrument text so practitioners can map actions to statutory language.

1. Confirm applicability and parties

   • Determine whether the derivative is entered into or acquired on a financial market and whether both the intermediary licensee (a non‑participant) and a market participant are taken to be issuers because of s 761E(6) (new s 1013A(5)(a)-(b)). If not, the instrument's modifications do not apply.

2. Put in place the written agreement between intermediary and market participant (new s 1013A(6))

   • Execute a written agreement where the intermediary agrees to take "reasonable steps" to ensure retail clients receive: a) a document that includes the statements and information referred to in s 1012L; and b) the Product Disclosure Statement or Short‑Form PDS prepared by the market participant.
   • Ensure the agreement specifies responsibilities for delivery, timing, dispute‑resolution arrangements, record‑keeping and evidence of "reasonable steps".
   • Preserve copies of the executed agreement as regulatory evidence.

3. Define and document what "reasonable steps" mean in context

   • Although not defined in the instrument, design and document a compliance protocol that evidences the steps taken to deliver the required materials (e.g. automated delivery of documents, receipt acknowledgements, inclusion in FSG where applicable).
   • Maintain logs and records showing dates and mechanisms of delivery to demonstrate "reasonable steps" if audited or litigated (s 1013A(6) and s 1012L).

4. Ensure timely written delivery of required statements and information (new s 1012L)

   • Provide the s 1012L statements and information in writing at or before the time the intermediary: a) offers to issue the derivative; or b) offers to arrange for the issue; or c) makes a recommendation to acquire the derivative; or d) when the derivative is issued under such an offer or recommendation.
   • Consider including the s 1012L statements in the Financial Services Guide if one is required and if inclusion there meets the "at or before" timing requirement (s 1012L note).
   • Record timestamps and delivery confirmations.

5. Coordinate PDS drafting with the market participant (new s 1013A(5), s 1013D(5))

   • If the PDS is to be prepared by the market participant under s 1013A(5), agree on PDS content and ensure the PDS includes the mandatory summary statements required by s 1013D(5)(a)-(d) whenever issuer‑specific material is omitted.
   • Confirm that the PDS clearly states: a) that a person may enter or acquire the derivative as a result of an arrangement made by an intermediary (intermediary acquisition); b) that an intermediary acquirer may not have direct contact with the market participant; c) that additional risks, fees, rights, terms and conditions may apply, and that the holder will have access to a dispute resolution system maintained by the intermediary licensee; and d) that further information about these matters can be obtained from the intermediary (s 1013D(5)(a)-(d)).

6. Align Short‑Form PDS content where used (new s 1017I(2A))

   • Ensure any Short‑Form PDS summarising a PDS that has omitted material per s 1013D(5) itself sets out the s 1013D(5)(a)-(d) statements. Cross‑check Short‑Form templates against the Regulations referenced in the instrument (reg 7.9.61AA and Part 3 of Schedule 10BA).

7. Maintain or ensure access to dispute resolution mechanisms

   • The PDS must state that holders will have access to a dispute resolution system maintained by the intermediary licensee (s 1013D(5)(c)(iv)). Ensure either that the intermediary maintains such a system or that there is a validated, durable arrangement for holders to access appropriate dispute resolution processes. Document the mechanism so that the PDS statement is not misleading.

8. Establish internal control, training and record‑keeping systems

   • Train sales, advisory and operations teams on the timing requirements in s 1012L and on where the s 1013D(5) statements appear.
   • Keep written proof that the PDS/Short‑Form PDS and the s 1012L material were provided (date, method, recipient, copy of document).
   • Record decision notes about any omitted PDS content that relies on the s 1013D(5) carve‑out.

9. Review legacy agreements and standard forms

   • Update master service agreements between intermediaries and market participants to reflect the statutory written agreement requirement and to allocate responsibilities for PDS drafting, delivery and record‑keeping (s 1013A(6)).

10. Monitor regulatory guidance and enforcement practice

• The instrument does not include enforcement mechanics beyond embedding these duties in Part 7.9. Practitioners should monitor ASIC communications and supervisory expectations for how "reasonable steps" and the new delivery duties are interpreted.

11. Verify consumer‑facing clarity

• When designing the written statements and PDS language, ensure that the mandatory statements required by s 1013D(5) are prominent and comprehensible to a retail client so that the regulatory purpose of disclosure is practically achieved.

These compliance steps are directly driven by the textual obligations in the instrument: s 1012L (timing and written statements), s 1013A(5)-(7) (PDS preparation and written agreement), s 1013D(5) (PDS content requirements), and s 1017I(2A) (Short‑Form PDS obligations). They are practical measures for translating the statutory language into operational process and audit evidence.