(1) A Market Participant must, in relation to its conduct, and that part of its business that it conducts, on or in relation to the Market, wherever the conduct occurs or the business is located and regardless of the number of offices operated or intended to be operated by the Market Participant, have appropriate management structures in place to ensure that:
it has operations and processes in place that are reasonably designed, implemented, and that function, so as to achieve compliance by the Market Participant with these Rules and the Market Operating Rules;
(b) the design, implementation, functioning and review of those operations and processes are subject to the supervision of one or more Responsible Executives; and
(c) each Responsible Executive has sufficient seniority and authority within the Market Participant to exert control, leadership, influence and supervision over those operations and processes.
(2) A Market Participant must keep accurate records of its management structure and its allocation of responsibilities among its Responsible Executives.
Maximum penalty: $1,000,000
2.1.2 Notification of management structure
(1) A Market Participant that is a Market Participant as at the Commencement Date must give to ASIC a document that sets out its management structure and its allocation of its responsibilities among its Responsible Executives, within 3 months of the Commencement Date.
(2) A Market Participant that was not a Market Participant as at the Commencement Date must give to ASIC a document that sets out its management structure and its allocation of its responsibilities among its Responsible Executives, within 10 Business Days of becoming a Market Participant.
(3) A Market Participant that has given to ASIC a document under subrule (1) or (2) must notify ASIC in writing, within 10 Business Days, of any significant change in the management structure or its allocation of its responsibilities among its Responsible Executives shown in that document.
Maximum penalty: $20,000
2.1.3 Supervisory procedures
A Market Participant must have appropriate supervisory policies and procedures to ensure compliance by the Market Participant and each person involved in its business as a Market Participant with these Rules, the Market Operating Rules and the Corporations Act.
Maximum penalty: $1,000,000
2.1.4 Persons involved in the business—Good fame and character requirement
(1) A Market Participant must ensure that any Employee or other person who is or will be involved in the business of the Market Participant in connection with the Market and, in the case of a body corporate, each director or Controller, is of good fame and character and high business integrity having regard to subrule (2).
(2) In assessing whether a person is of good fame and character and high business integrity for the purpose of subrule (1):
a person will not be of good fame and character if he or she is disqualified from managing a corporation under the Corporations Act or under the law of another country, or is an insolvent under administration or its equivalent in another country; and
(b) a person may not be of good fame and character or high business integrity if the person has been:
convicted of any offence;
(ii) disciplined or adversely mentioned in a report made by, or at the request of, any government or governmental authority or agency;
(iii) adversely mentioned in a report made by, or at the request of, the Market Operator, a Clearing Facility, a Settlement Facility or any other exchange, market operator or clearing and settlement facility; or
(iv) disciplined by the Market Operator, a Clearing Facility, a Settlement Facility or any other exchange, market operator or clearing and settlement facility.
Maximum penalty: $1,000,000
2.1.5 Unprofessional Conduct
(1) A Market Participant must not engage in Unprofessional Conduct.
(2) A Market Participant must ensure that its Responsible Executives do not engage in Unprofessional Conduct.
Maximum penalty: $1,000,000
2.1.6 Responsibility for individuals involved in business
A Market Participant is responsible for all actions and omissions of its Employees.
Note: There is no penalty for this Rule.
Part 2.2 Insurance and information requirements
2.2.1 Insurance requirements—Obligation to have insurance
(1) Subject to Rule 2.2.2, every Market Participant must, where the Market Participant acts for any person other than itself or a Related Body Corporate, take out and maintain, at all times, a professional indemnity (or equivalent) insurance policy that the Market Participant determines (acting reasonably) to be adequate having regard to the nature and extent of the business carried on by the Market Participant in connection with its business as a Market Participant and the responsibilities and risks assumed or which may be assumed by the Market Participant in connection with that business.
(2) The professional indemnity (or equivalent) insurance referred to in subrule (1) must include insurance against a breach of duty the Market Participant owes in a professional capacity, whether owed in contract or otherwise at law, arising from any act or omission of the Market Participant and its Employees.
Maximum penalty: $100,000
2.2.2 Insurance requirements—Insurance with Related Body Corporate
If the insurance referred to in Rule 2.2.1 is provided by a Related Body Corporate, the Market Participant must provide ASIC with the following information by no later than 10 Business Days after the issue or renewal of the insurance:
the name of the Related Body Corporate and a copy of evidence sufficient to establish that it is a Related Body Corporate; and
(b) confirmation from the Related Body Corporate that it is the insurer or the self-insurer covering and indemnifying the Market Participant against the liabilities referred to in Rule 2.2.1 and a copy of the certificate evidencing the insurance.
Maximum penalty: $20,000
2.2.4 Insurance requirements—Notification of claims
In relation to any liability or potential liability of the type referred to in Rule 2.2.1, a Market Participant must immediately notify ASIC of any notification to its insurer of any claim, potential claim or circumstance that might give rise to a claim and must include the following details:
any circumstance which is likely to give rise to a claim or potential claim against the Market Participant;
(b) the receipt of a notice from any person of any intention to make a claim or potential claim against the Market Participant; and
(c) the details of any claim, potential claim or circumstance against the Market Participant, including the gross contingent liability, the net contingent liability, the full name of the Market Participant’s insurer and the date the Market Participant notified its insurer of the claim, potential claim or circumstance.
Maximum penalty: $20,000
2.2.5 Information requirements—Obligation to notify of legal proceedings
If:
a Market Participant commences legal proceedings against, or has legal proceedings commenced against it by, another Market Participant, a Clearing Participant, a regulatory authority or a client in connection with their role as a Market Participant; and
(b) those legal proceedings may affect the operations of the Market Operator, or the interpretation of these Rules or the Market Operating Rules,
the Market Participant must, upon commencing or upon becoming aware of the proceedings, immediately notify ASIC and the Market Operator in writing of the particulars of the proceedings.
Maximum penalty: $100,000
Part 2.3 Responsible Executives
2.3.1 Appointment or resignation of Responsible Executives
(1) A Market Participant must notify ASIC within 10 Business Days if the Market Participant appoints a new Responsible Executive, or if a person ceases to be a Responsible Executive of the Market Participant.
(2) A Market Participant must not appoint a person as a Responsible Executive unless:
the person has skills, knowledge and experience that are appropriate having regard to the supervisory role that the person will perform as a Responsible Executive in the business of the Market Participant; and
(b) if the person was a Responsible Executive prior to the Commencement Date:
the person had satisfied the requirements of rule 3.6.5 of the operating rules in effect on the day immediately preceding the Commencement Date; and
(ii) the Market Participant is satisfied on reasonable grounds that the person has completed an appropriate level of Compliance Education from the date the person passed the examination as required under the rule referred to in subparagraph (i) to the date the Market Participant appoints the person as Responsible Executive;
(c) if the person becomes a Responsible Executive for the first time on or after the Commencement Date, the person has:
attained a mark of at least 65% in an examination approved by ASIC under subrule (3), in the 12 months preceding the date the Market Participant appoints the person as a Responsible Executive; and
(ii) satisfied the Compliance Education Requirements from the date the person passed the examination as referred to in subparagraph (i) to the date the Market Participant appoints the person as a Responsible Executive, pro-rata to the number of full months in that period.
(3) For the purposes of subparagraph (2)(c)(i), ASIC may approve, in writing, one or more examinations that, in the opinion of ASIC, assess knowledge and competency in the application of the provisions of these Rules, the Market Operating Rules and the Corporations Act that govern the operation of the Market and are relevant to the role performed by Responsible Executives.
Maximum penalty: $20,000
2.3.2 Ongoing responsibilities of Market Participants in relation to Responsible Executives
A Market Participant must ensure that each of its Responsible Executives:
supervises the design and implementation activities and the functioning and review of the operations and processes referred to in Rule 2.1.1 for the Relevant Activities of that Responsible Executive;
(b) is accountable to the Market Participant for the effective design, implementation, functioning and review of the operations and processes referred to in paragraph (a).
Maximum penalty: $20,000
2.3.3 Annual review and representation to Market Participant
(1) A Market Participant must ensure that each of its Responsible Executives:
maintains the currency of his or her knowledge of these Rules, the Market Operating Rules and the Corporations Act related to the business that the Market Participant conducts in the Market;
(b) by 10 July each year, performs a review as at 30 June of that year, including all matters reasonably considered by the Responsible Executive to be necessary in the circumstances, of the supervision and control procedures involved in the business of the Market Participant and other relevant documentation concerning the Market Participant’s compliance with these Rules and the Market Operating Rules for the 12 month period ending on 30 June that year;
(c) by 10 July each year, determines whether, based on the enquiries referred to in paragraph (b), the controls over the operations and processes of the Relevant Activities have been, during the period referred to in paragraph (b), and continue to be, reasonably designed, implemented and functioning to achieve compliance by the Market Participant with these Rules and the Market Operating Rules;
(d) by 10 July each year, provides a signed and dated representation to the Market Participant as to whether:
the requirements of paragraphs (a) and (b) have been met for the period referred to in paragraph (b); and
(ii) the controls over the operations and processes of the Relevant Activities have been, for the period referred to in paragraph (b), and continue to be, reasonably designed, implemented and functioning to achieve compliance by the Market Participant with the Market Operating Rules and these Rules.
(2) The Market Participant must retain copies of the representation referred to at paragraph (1)(d), and of the documentation concerning the Market Participant’s compliance with these Rules and the Market Operating Rules on which the representation is based, for 7 years from the date the representation is provided to the Market Participant.
Maximum penalty: $20,000
2.3.4 Continuing education requirements for Responsible Executives
(1) Subject to subrule (2), a Market Participant must ensure that, during the period from 1 July each year until 30 June the following year, each of its Responsible Executives meets the Compliance Education Requirements pro-rata to the number of complete months during that period in which that person is a Responsible Executive of the Market Participant.
(2) For the period that commences on the Commencement Date and ends on 1 July in the following year, the Market Participant must ensure that each person that was a Responsible Executive of the Market Participant on the Commencement Date meets the Compliance Education Requirements pro-rata to the number of complete months in that period.
Maximum penalty: $20,000
2.3.5 Annual continuing education and compliance self-assessment
(1) Subject to subrule (2), a Market Participant must provide a written notification to ASIC by 31 July each year that contains the following information:
the name of each person who was a Responsible Executive of the Market Participant during the period from 1 July in the preceding calendar year to 30 June in the calendar year in which the notification is provided;
(b) if the person was a member of a professional body or bodies during the period referred to in paragraph (a), the name of that body or those bodies;
(c) a statement in relation to each person that the Market Participant confirms that, during the period referred to in paragraph (a), the person:
has satisfied; or
(ii) has not satisfied,
as the case may be, each of the requirements of subrule 2.1.4(1) (good fame and character), paragraphs 2.3.1(2)(a) and (b) or (c) (skills, knowledge, experience and qualifications), subrule 2.1.5(2) (Unprofessional Conduct), paragraph 2.3.3(1)(d) (annual representation) and Rule 2.3.4 (continuing education), while the person was a Responsible Executive of the Market Participant during that period;
(d) if subparagraph (c)(ii) applies, an explanation of the reason that the person has not satisfied the requirement.
(2) A notification provided under subrule (1) prior to 1 August 2011 need only relate to the period from the Commencement Date to 30 June 2011.
(3) The Market Participant must retain copies of the records upon which the notification referred to in subrule (1) is based for 7 years from the end of the period to which the notification relates.
Maximum penalty: $20,000
Part 2.4 Retail Client Adviser Accreditation
2.4.1 Accreditation required
(1) A Market Participant must ensure that each of its Representatives who provides Financial Product Advice to a Retail Client in relation to:
Options Market Contracts;
(b) Futures Market Contracts; or
(c) Warrants,
holds the relevant accreditation required by these Rules.
(2) A Market Participant must not, and must ensure that a Representative does not, hold himself or herself out as holding a type of accreditation under these Rules if they do not hold that type of accreditation.
(3) A person:
accredited as a Level One Accredited Derivatives Adviser under the Rule 2.4.7 of the ASIC Market Integrity Rules (Chi-X Australia Market) 2011 holds the relevant accreditation required by these Rules for the provision of Financial Product Advice to a Retail Client in relation to subscribing for, buying, selling and exercising Warrants;
accredited as a Level Two Accredited Derivatives Adviser under the Rule 2.4.8 of the ASIC Market Integrity Rules (Chi-X Australia Market) 2011 holds the relevant accreditation required by these Rules for the provision of Financial Product Advice to a Retail Client in relation to subscribing for, buying, selling and exercising Warrants, and in relation to all trading strategies relating to Warrants.
Maximum penalty: $100,000
2.4.2 Extent of advice to clients—Level One Accredited Derivatives Adviser
(1) A Market Participant must ensure that each of its Representatives who provides Financial Product Advice to a Retail Client in relation to:
taking Options Market Contracts (other than Futures Options);
(b) writing Options Market Contracts (other than Futures Options), but only for the purpose of closing out a position or writing Covered Call Options under paragraph (e);
(c) subscribing for and buying and selling Warrants;
(d) exercising Warrants and Options Market Contracts (other than Futures Options); and
(e) the Covered Call Option writing strategies as set out in Rule 2.4.3,
is accredited as a Level One Accredited Derivatives Adviser or a Level Two Accredited Derivatives Adviser.
(2) A Market Participant must ensure that each of its Representatives who is only accredited as a Level One Accredited Derivatives Adviser does not advise or make recommendations in relation to LEPOs.
Maximum penalty: $100,000
2.4.3 Covered Call Option Strategy
(1) For the purposes of Rule 2.4.2, “a Covered Call Option” writing strategy entails either:
a client who already owns Underlying Financial Products in a particular Class writing Call Options over those Underlying Financial Products up to the number of Underlying Financial Products which the client owns and either prior to, or simultaneously with writing the Call Options, providing to the Clearing Facility those Underlying Financial Products as cover for the written Call Option obligations; or
a client buying a particular Class of Underlying Financial Products and simultaneously writing Call Options over those Underlying Financial Products on the understanding that the client will provide, to the Clearing Facility, within 3 Trading Days of entering into the strategy, the simultaneously purchased Underlying Financial Products as cover for the written Call Option obligations.
(2) For the purposes of subrule (1), “Call Option” means an Options Market Contract that gives the taker a right, but not an obligation, to buy the Underlying Financial Products.
Note: There is no penalty for this Rule.
2.4.4 Extent of advice to clients—Level Two Accredited Derivatives Adviser
(1) A Market Participant must ensure that each of its Representatives who provides Financial Product Advice to a Retail Client in relation to:
taking, writing and exercising all Derivatives Market Contracts (other than Futures Market Contracts and Futures Options);
(b) subscribing for, buying, selling and exercising Warrants;
(c) all trading strategies relating to Derivatives Market Contracts (other than Futures Market Contracts and Futures Options); and
(d) all trading strategies relating to Warrants,
is accredited as a Level Two Accredited Derivatives Adviser.
(2) For the avoidance of doubt, a person accredited as a Level Two Accredited Derivatives Adviser may advise and make recommendations in relation to the Products and strategies set out in Rules 2.4.2 and 2.4.3.
Maximum penalty: $100,000
2.4.5 Extent of advice to clients—Accredited Futures Adviser
A Market Participant must ensure that each of its Representatives who provides Financial Product Advice to Retail Clients in relation to:
taking, writing and exercising Futures Market Contracts;
(b) taking, writing and exercising Futures Options;
(c) all trading strategies relating to Futures Market Contracts; and
(d) all trading strategies relating to Futures Options,
is accredited as an Accredited Futures Adviser.
Maximum penalty: $100,000
2.4.6 Accreditation—Accredited Futures Adviser
(1) ASIC may, subject to any conditions ASIC considers appropriate, accredit a person as an Accredited Futures Adviser for a period of time if:
the person is a Representative of a Market Participant and the Market Participant nominates the person to be an Accredited Futures Adviser under subrule (2);
(b) the person:
is a Level Two Accredited Derivatives Adviser;
(ii) has successfully completed an educational module or subject, or series of educational modules or subjects, approved by ASIC in accordance with subrule (4);
(c) the person has read and understood:
these Rules;
(ii) the Market Operating Rules; and
(iii) other reading materials approved by ASIC in accordance with subrule (4); and
(d) ASIC has no reason to believe that the person does not have the requisite skill, knowledge and integrity to give Financial Product Advice of the kind covered by Rule 2.4.5.
(2) A Market Participant may nominate a person to be an Accredited Futures Adviser by submitting a written application to ASIC that includes:
the full name and date of birth of the applicant, a statement that the applicant is a Representative of the Market Participant, and a description of the nature of the relationship of the applicant to the Market Participant (for example, employee);
the name, business address and AFSL number of the Market Participant nominating the applicant to be an Accredited Futures Adviser;
(c) the name, position and contact telephone number of the person referred to in subrule (3);
(d) a declaration, signed by the applicant, that the applicant has met the requirements of paragraphs (1)(b) and (c); and
(e) if subparagraph (1)(b)(ii) applies, evidence that the applicant has met the requirements of that subparagraph.
(3) A director, partner, Responsible Executive or Compliance Manager of the Market Participant must sign and date the application referred to in subrule (2).
(4) For the purposes of paragraphs (1)(b) and (c), ASIC may approve, in writing, educational modules, subjects and reading materials that are relevant to Financial Product Advice of the kind covered by Rule 2.4.5.
Note: There is no penalty for this Rule.
2.4.7 Accreditation—Level One Accredited Derivatives Adviser
(1) ASIC may, subject to any conditions ASIC considers appropriate, accredit a person as a Level One Accredited Derivatives Adviser for a period of time if:
the person is a Representative of a Market Participant and the Market Participant nominates the person to be a Level One Accredited Derivatives Adviser under subrule (2);
(b) the person:
unless the person is applying for, or has been granted, an exemption under subrule 2.4.11(1), has obtained a score of 80% or more for an Accreditation Examination for Level One Accredited Derivatives Advisers approved by ASIC in accordance with subrule (4);
(ii) has successfully completed an educational module or subject, or a series of educational modules or subjects, approved by ASIC in accordance with subrule (4); and
(c) ASIC has no reason to believe that the person does not have the requisite skill, knowledge and integrity to provide Financial Product Advice of the kind covered by Rules 2.4.2 and 2.4.3.
(2) A Market Participant may nominate a person to be a Level One Accredited Derivatives Adviser by submitting a written application to ASIC that includes:
the full name, date of birth, business address and email address of the applicant, a statement that the applicant is a Representative of the Market Participant and a description of the nature of the relationship of the applicant to the Market Participant (for example, employee);
(b) the name, business address and AFSL number of the Market Participant nominating the person to be a Level One Accredited Derivatives Adviser;
(c) the name, position and contact telephone number of the director, partner, Responsible Executive or Compliance Manager of the Market Participant referred to in subrule (3);
(d) unless the person has been granted, or is applying for, an exemption under subrule 2.4.11(1), a declaration by the Market Participant that the applicant meets the requirements of paragraph (1)(b);
(e) if subparagraph (1)(b)(ii) applies, evidence that the applicant has successfully completed the educational subject or module, or series of educational subjects or modules, referred to in that subparagraph; and
(f) an acknowledgement by the Market Participant that accreditation as a Level One Accredited Derivatives Adviser will only authorise the applicant to provide Financial Product Advice of the kind covered by Rules 2.4.2 and 2.4.3.
(3) A director, partner, Responsible Executive or Compliance Manager of the Market Participant must sign and date the application referred to in subrule (2).
(4) For the purposes of subrule (1), ASIC may approve examinations, educational modules or subjects, or a series of educational modules or subjects, that are relevant to Financial Product Advice of the kind covered by Rules 2.4.2 and 2.4.3.
Note: There is no penalty for this Rule.
2.4.8 Accreditation—Level Two Accredited Derivatives Adviser
(1) ASIC may, subject to any conditions ASIC considers appropriate, accredit a person as a Level Two Accredited Derivatives Adviser for a period of time if:
the person is a Representative of a Market Participant and the Market Participant nominates the person as a Level Two Accredited Derivatives Adviser in accordance with subrule (2);
(b) unless the person is applying for, or has been granted, an exemption under subrule 2.4.11(1), the person has obtained a score of 80% or more for each of the Accreditation Examinations for Level One Accredited Derivatives Advisers and Level Two Accredited Derivatives Advisers approved by ASIC in accordance with subrule (4); and
(c) ASIC has no reason to believe that the person does not have the requisite skill, knowledge and integrity to provide Financial Product Advice of the kind covered by Rules 2.4.2, 2.4.3 and 2.4.4.
(2) A Market Participant may nominate a person to be a Level Two Accredited Derivatives Adviser by submitting a written application to ASIC that includes:
the full name, date of birth, business address, email address and contact telephone number of the applicant, a statement that the applicant is a Representative of the Market Participant and description of the nature of the relationship of the applicant to the Market Participant (for example, employee);
(b) the name, business address and AFSL number of the Market Participant nominating the person to be a Level Two Accredited Derivatives Adviser;
(c) the name, position and contact telephone number of the director, partner, Responsible Executive or Compliance Manager of the Market Participant referred to in subrule (3);
(d) unless the person has been granted, or is applying for, an exemption under subrule 2.4.11(1), a declaration by the Market Participant that the applicant meets the requirements of paragraph (1)(b); and
(e) an acknowledgement by the Market Participant that accreditation as a Level Two Accredited Derivatives Adviser will only authorise the applicant to provide Financial Product Advice of the kind covered by Rules 2.4.2, 2.4.3 and 2.4.4.
(3) A director, partner, Responsible Executive or Compliance Manager of the Market Participant must sign and date the application referred to in subrule (2).
(4) For the purposes of subrule (1), ASIC may approve, in writing one or more examinations that are relevant to Financial Product Advice of the kind covered by Rules 2.4.2, 2.4.3 and 2.4.4.
Note: There is no penalty for this Rule.
2.4.9 Acceptance of application
(1) If ASIC is satisfied that:
an application for accreditation made by a Market Participant; and
(b) the person in respect of which the application for accreditation is made,
under Rule 2.4.6, 2.4.7 or 2.4.8, meets the applicable requirements of the Rule, ASIC will accredit the person in the relevant category of accreditation.
(2) ASIC will give the Market Participant a written notice that a person has been accredited under subrule (1), specifying:
any conditions to which the accreditation is subject;
(b) the Renewal Date.
(3) Nothing in subrule (1) prevents ASIC from seeking further information from the Market Participant for the purposes of satisfying itself that the person or the application meets the requirements of the relevant Rule.
Note: There is no penalty for this Rule.
2.4.10 Rejection of application
(1) Subject to subrule (2), if ASIC is not satisfied that:
an application for accreditation made by a Market Participant; or
(b) the person in respect of which the application for accreditation is made,
under Rule 2.4.6, 2.4.7 or 2.4.8, meets the applicable requirements of the Rule, ASIC will reject the application.
(2) ASIC will give the Market Participant a written notice that an application for accreditation has been rejected under subrule (1), specifying the reason or reasons why the application is rejected.
(3) Nothing in subrule (1) prevents ASIC from seeking further information from the Market Participant for the purposes of satisfying itself that the person or the application meets the requirements of the relevant Rule.
Note: There is no penalty for this Rule.
2.4.11 Exemption for other accreditation and experience
(1) ASIC may exempt a person, in writing, from the requirement to sit an Accreditation Examination if the person has:
completed a course listed on ASIC’s Training Register as a specialist course and which, in the opinion of ASIC, provides appropriate coverage of these Rules, the Market Operating Rules, the Trading Platform and the relevant Products;
(b) completed relevant training, other than a course listed on ASIC’s Training Register, and can demonstrate, to the satisfaction of ASIC, their knowledge of these Rules, the Market Operating Rules, the Trading Platform and the relevant Products; or
(c) extensive relevant industry experience and can demonstrate, to the satisfaction of ASIC, their knowledge of these Rules, the Market Operating Rules, the Trading Platform and the relevant Products.
(2) ASIC may require a Market Participant to provide further information which ASIC considers necessary to establish the experience, expertise and professional history of a person nominated under this Rule for exemption from the examination requirement.
(3) ASIC may require a person nominated for exemption under this Rule to complete and pass a modified version of an Accreditation Examination to demonstrate the person’s expertise and knowledge of the Rules, the Market Operating Rules, the Trading Platform and relevant Products.
Note: There is no penalty for this Rule.
2.4.12 Examinations
(1) Unless ASIC gives permission under this Rule, a person may sit an Accreditation Examination for a category of accreditation no more than three times.
(2) If a person has not obtained the required pass level after sitting the Accreditation Examination three times, the Market Participant may apply to ASIC under subrule (3) for permission for the person to sit the Accreditation Examination again.
(3) A Market Participant may apply for permission for a person to sit an Accreditation Examination again by submitting a written application to ASIC that includes:
the full name, business and email address of the applicant;
(b) the name and business address of the Market Participant seeking permission for the applicant to sit the Accreditation Examination again;
(c) the type of Accreditation Examination that the Market Participant is applying for the applicant to re-sit;
(d) the date on which the person last sat the Accreditation Examination;
(e) reasons in support of the applicant being permitted to sit the Accreditation Examination again; and
(f) the name and position of the Responsible Executive referred to in subrule (4).
(4) A Responsible Executive of the Market Participant (or, if the applicant is a Responsible Executive, another Responsible Executive of the Market Participant) must sign and date the application referred to in subrule (3).
(5) After considering the application, ASIC may permit the person to sit the examination again.
(6) ASIC will not consider an application under this Rule unless 3 months have passed since the person last sat the Accreditation Examination.
Note: There is no penalty for this Rule.
2.4.13 Renewal of accreditation
(1) ASIC may renew the accreditation of an Accredited Adviser for a period of time with effect from the Renewal Date if:
the person is a Representative of a Market Participant and the Market Participant applies to ASIC during the Renewal Period to renew the person’s accreditation under subrule (2);
(b) the person has complied with the Continuing Professional Education Requirements pro-rata to the number of full months in the period from the date the Accredited Adviser was first accredited or last renewed their accreditation to the date of the application; and
(c) ASIC has no reason to believe that the person does not have the requisite skill, knowledge and integrity to provide Financial Product Advice of the kind covered by the relevant category of accreditation.
(2) A Market Participant may apply to ASIC to renew the accreditation of a person by submitting a written application to ASIC during the Renewal Period that includes:
the name and business address of the Market Participant seeking renewal of the accreditation of the persons named in the application;
(b) in respect of each Accredited Adviser seeking renewal of accreditation:
the name of the Accredited Adviser;
(ii) the category of accreditation held by the Accredited Adviser;
(iii) a declaration that the Accredited Adviser is a Representative of the Market Participant;
(iv) a declaration that the Accredited Adviser meets the requirements of paragraph (1)(b); and
(c) the name, position, contact telephone number, facsimile number and email address of the director, partner, Responsible Executive or Compliance Manager of the Market Participant referred to in subrule (3).
(3) A director, partner, Responsible Executive or Compliance Manager of the Market Participant must sign and date the application referred to in subrule (2).
Note: There is no penalty for this Rule.
2.4.14 Acceptance of application
(1) If ASIC is satisfied that:
an application for renewal of accreditation made by a Market Participant; and
(b) a person in respect of which the application has been made,
meets the requirements of Rule 2.4.13, ASIC will renew the accreditation of the person with effect from the Renewal Date.
(2) ASIC will give the Market Participant a written notice that a person’s accreditation has been renewed under subrule (1), specifying the next Renewal Date.
(3) Nothing in subrule (1) prevents ASIC from seeking further information from the Market Participant for the purposes of satisfying itself that the person or the application meets the requirements of the relevant Rule.
Note: There is no penalty for this Rule.
2.4.15 Rejection of application or renewal subject to conditions
(1) Subject to subrule (2), if ASIC is not satisfied that:
an application for renewal of accreditation; or
(b) a person in respect of which the application has been made,
meets the requirements of Rule 2.4.13, ASIC may:
reject the application for renewal in respect of one or more persons; or
(d) renew the person’s accreditation but subject to such conditions as ASIC considers appropriate.
(2) If ASIC rejects the application under paragraph (1)(c), ASIC will give the Market Participant a written notice that a person’s application for renewal has been rejected, specifying the reason or reasons that the application has been rejected.
(3) If ASIC renews the person’s accreditation subject to conditions under paragraph (1)(d), ASIC will give the Market Participant a written notice that a person’s accreditation has been renewed, specifying:
the conditions to which the renewed accreditation is subject; and
(b) the next Renewal Date.
(4) Nothing in subrule (1) prevents ASIC from seeking further information from the Market Participant for the purposes of satisfying itself that the person or the application meets the requirements of the relevant Rule.
Note: There is no penalty for this Rule.
2.4.16 Effect of non-renewal
If, by 1 Business Day after the Renewal Date, ASIC has not renewed the accreditation of an Accredited Adviser under subrule 2.4.14(1) or paragraph 2.4.15(1)(d), the person will cease to hold the relevant accreditation with effect from the Renewal Date.
Note: There is no penalty for this Rule.
2.4.17 Automatic withdrawal of accreditation
(1)An Accredited Adviser’s accreditation is automatically withdrawn when the Accredited Adviser ceases to be a Representative of the Market Participant that made the application for the person to be accredited.
(2)If an Accredited Adviser ceases to be a Representative of a Market Participant, the Market Participant must notify ASIC in writing within 5 Business Days of:
the name and date of birth of the Accredited Adviser; and
(b) the date the Accredited Adviser ceased to be a Representative of the Market Participant.
Note: There is no penalty for this Rule.
2.4.18 Voluntary withdrawal of accreditation
(1)ASIC may withdraw the accreditation of an Accredited Adviser in one or more categories of accreditation if the Market Participant of which the person is a Representative requests that ASIC withdraw the accreditation under subrule (2).
(2) A Market Participant may request that ASIC withdraw the accreditation of an Accredited Adviser by submitting a written application to ASIC that includes:
the name and date of birth of the Accredited Adviser;
(b) the name and business address of the Market Participant requesting that the accreditation be withdrawn;
(c) the category of the accreditation which is to be withdrawn;
(d) the Trading Day on which the Market Participant wishes the withdrawal to take effect;
(e) the reasons for withdrawal of the accreditation; and
(f) the name, position and contact telephone number of the director, partner, Responsible Executive or Compliance Manager of the Market Participant referred to in paragraph (3)(a).
(3) The application must be signed and dated by:
a director, partner, Responsible Executive or Compliance Manager of the Market Participant; and
(b) the relevant Accredited Adviser.
Note: There is no penalty for this Rule.
2.4.19 Suspension or withdrawal by ASIC
(1) ASIC may suspend or withdraw the accreditation of an Accredited Adviser in a category of accreditation if ASIC has reason to believe that the person does not have the requisite skill, knowledge or integrity to provide Financial Product Advice of the kind covered by the relevant category of accreditation.
(2) ASIC will notify the relevant Market Participant and the Accredited Adviser in writing of a suspension or withdrawal of accreditation under subrule (1) and the reasons for the suspension or withdrawal.
Note: There is no penalty for this Rule.
2.4.20 Re-accreditation after withdrawal or expiry
(1) ASIC may re-accredit a person whose accreditation has been withdrawn or has expired, without the person sitting another Accreditation Examination if:
the person is a Representative of a Market Participant and the Market Participant applies to ASIC to re-accredit the person under subrule (2);
(b) the person became an Employee of, or was otherwise engaged by, a Market Participant within 2 years from the date their accreditation was withdrawn or expired, and within 2 months of being re-accredited will re-commence providing Financial Product Advice to clients of a Market Participant of a kind covered by Rules 2.4.2, 2.4.3, 2.4.4 or 2.4.5;
(c) the person has complied with the Continuing Professional Education Requirements pro-rata to the number of full months since the date their accreditation was granted or last renewed; and
(d) ASIC has no reason to believe that the person does not have the requisite skill, knowledge and integrity to provide Financial Product Advice of the kind covered by the relevant category of accreditation.
(2) A Market Participant may apply to ASIC to re-accredit a person whose accreditation has been withdrawn or has expired by submitting a written application to ASIC that includes:
the name, date of birth, business address and email address of the applicant, a statement that the applicant is a Representative of the Market Participant and a description of the nature of the relationship of the applicant to the Market Participant (for example, employee);
(b) the name, business address and AFSL number of the Market Participant seeking renewal of the accreditation of the applicant;
(c) the category of accreditation sought;
(d) a statement that the Market Participant requests the requirement for the person to sit the Accreditation Examination be waived;
(e) a declaration by the Market Participant that the applicant meets the requirements of paragraph (1)(c); and
(f) the name, position, contact telephone number, facsimile number and email address of the director, partner, Responsible Executive or Compliance Manager of the Market Participant referred to in subrule (3).
(3) A director, partner, Responsible Executive or Compliance Manager of the Market Participant must sign and date the application.
(4) If ASIC is satisfied that:
an application for re-accreditation made by a Market Participant; and
(b) the person in respect of which the application for re-accreditation is made,
meets the applicable requirements of this Rule, ASIC will re-accredit the person in the relevant category of accreditation.
(5) ASIC will give the Market Participant a written notice that the person has been re-accredited under subrule (4), specifying:
any conditions to which the accreditation is subject;
(b) the Renewal Date.
(6) Nothing in subrule (4) prevents ASIC from seeking further information from the Market Participant for the purposes of satisfying itself that the person or the application meets the requirements of the relevant Rule.
Note: There is no penalty for this Rule.
2.4.21 Continuing Professional Education Requirements for Accredited Advisers
(1) A Market Participant must ensure that all of its Accredited Advisers comply with any continuing professional education requirements approved by ASIC in accordance with subrule (2).
(2) For the purposes of subrule (1), ASIC may approve, in writing, continuing professional education requirements for Accredited Advisers that are relevant to the skills and knowledge required to provide Financial Product Advice of the kind covered by the relevant category of accreditation.
Maximum penalty: $20,000
2.4.22 Managed Discretionary Accounts—Derivatives Market Transactions and Warrants
A Market Participant must ensure that a Managed Discretionary Account for a Retail Client which involves dealing in Derivatives Market Transactions or Warrants is operated by an Accredited Adviser with the appropriate accreditation under these Rules.
Maximum penalty: $1,000,000
Part 2.5 Designated Trading Representatives (DTRs)
2.5.1 Trading in a Trading Platform
A Trading Participant must ensure that all trading in a Trading Platform by the Trading Participant is carried out either:
by DTRs; or
(b) in accordance with the Automated Order Processing Requirements.
Maximum penalty: $1,000,000
2.5.2 Trading Participant must have a DTR
A Trading Participant must have at least one DTR in respect of any one or more Products for which the Trading Participant has Trading Permission.
Maximum penalty: $1,000,000
2.5.3 DTRs may submit Trading Messages
A Trading Participant must ensure that only its DTRs submit Trading Messages into the Trading Platform through the Trading Participant’s system, unless the trading is conducted in accordance with the Automated Order Processing Requirements.
Maximum penalty: $1,000,000
2.5.4 Responsibility of Trading Participant
A Trading Participant is responsible for the accuracy of details, the integrity and bona fides of all Trading Messages containing their unique identifier that are submitted into the Trading Platform, regardless of whether a DTR of the Trading Participant was involved in their submission.
Note: There is no penalty for this Rule.
2.5.5 DTR criteria
A Trading Participant must ensure that:
each of its DTRs is at all times a Representative of the Trading Participant authorised to deal in the Products in respect of which the DTR submits orders on behalf of the Trading Participant either:
under the Trading Participant’s AFSL; or
(ii) under the person’s own AFSL (unless the person is a Principal Trader not required to hold an AFSL);
(b) each of its DTRs is suitably qualified and experienced to deal in the Products referred to in paragraph (a), by submitting orders on behalf of the Trading Participant;
(c) prior to submitting Trading Messages on behalf of the Trading Participant, each DTR has demonstrated to the Trading Participant knowledge of the Dealing Rules governing the process of dealing and reporting Market Transactions on the Trading Platform, and the relevant practices of the Market Operator;
(d) each of its DTRs does not:
execute any order in a Trading Platform for or on behalf of, or which will benefit, directly or indirectly, the DTR or any associate or Relative of the DTR, without the prior written approval of the Trading Participant;
(ii) intentionally take advantage of a situation arising as a result of:
a breakdown or malfunction in the Market Operator’s procedures or systems;
(C) an error made over the National Voiceline System; or
(D) an error in entries made by the Market Operator within a Trading Platform.
Maximum penalty: $1,000,000
2.5.6 Trading Participant must allocate unique identifier
A Trading Participant must allocate a unique identifier to each DTR of the Trading Participant.
Maximum penalty: $100,000
2.5.7 Records—DTRs
A Trading Participant must maintain a record of:
the name, contact details and DTR identifier of each of its DTRs, while the person remains a DTR of a Trading Participant; and
(b) the information in paragraph (a) for a period of 7 years from the date the person ceases to be a DTR of the Trading Participant.
Maximum penalty: $100,000
Part 2.6 Foreign Participants
2.6.1 Minimum presence requirements
(1) This Rule applies to a Market Participant (“Foreign Market Participant”) that:
is a foreign entity; and
(b) does not hold an AFSL.
(2) Before entering into a Market Transaction, a Foreign Market Participant must provide ASIC with a deed of the Foreign Market Participant for the benefit of and enforceable by ASIC and the other persons referred to in subsection 659B(1) of the Corporations Act, which deed provides that:
the deed is irrevocable except with the prior written consent of ASIC;
(b) the Foreign Market Participant submits to the non-exclusive jurisdiction of the Australian courts in legal proceedings conducted by ASIC (including under section 50 of the ASIC Act) and, in relation to proceedings relating to a financial services law, by any person referred to in subsection 659B(1) of the Corporations Act and whether brought in the name of ASIC or the Crown or otherwise;
(c) the Foreign Market Participant covenants to comply with any order of an Australian court in respect of any matter relating to the activities or conduct of the Foreign Market Participant in relation to the Market or in relation to Financial Products traded on the Market, including but not limited to any matter relating to the Foreign Market Participant’s obligations under:
the ASIC Act;
(ii) the Corporations Act; and
(iii) the Corporations (Fees) Act 2001;
(d) if the Foreign Market Participant is not registered under Division 2 of Part 5B.2 of the Corporations Act:
the Foreign Market Participant must have at all times an agent who is:
a natural person or a company;
(B) resident in this jurisdiction; and
(C) authorised to accept, on behalf of the Foreign Market Participant, service of process and notices; and
(ii) the Foreign Market Participant must notify ASIC of any change to:
the agent; or
(B) the name and address of the agent (if the agent is a company, address means the address of the registered office of the company); and
(iii) service of process on the Foreign Market Participant in relation to legal proceedings conducted by ASIC (including under section 50 of the ASIC Act), and in relation to proceedings relating to a financial services law, by any person referred to in subsection 659B(1) of the Corporations Act and whether brought in the name of ASIC or the Crown or otherwise, can be effected by service on the agent;
(e) the deed applies notwithstanding that the Foreign Market Participant may have ceased to be a Market Participant; and
(f) such additional terms notified by ASIC to the Foreign Market Participant.