A Market Participant must notify ASIC as soon as practicable upon becoming aware that a Market operator or a regulatory agency is investigating or has instituted proceedings against it.
Part 2.2 Supervision and risk management
2.2.1 Limits and connections
(1) Limits
A Market Participant must demonstrate prudent risk management procedures including, but not limited to:
(a) set and document appropriate pre-determined Order and/or position limits on each of its Client Accounts, including a volume per Order limit, an aggregate loss limit and an aggregate net session limit, based on the Market Participant’s analysis of the Clients’ financial resources or other relevant factors;
(ab) set and document appropriate pre-determined Order and/or position limits on each of its House Accounts, including a volume per Order limit, an aggregate loss limit and an aggregate net session limit, based on the Market Participant’s analysis of its financial resources or other relevant factors;
(b) set and document maximum price change limits;
(c) the limits determined in paragraphs (a), (ab) and (b) must be input by a Market Participant’s risk manager into Trading Platform account maintenance and will be established as preset accounts;
(d) limit setting capability must exist in the Market Participant’s Order System which reflects prudent account risk management and the Order System must have Order rejection capability where Orders are in excess of limit parameters set by the Market Participant;
(e) the Market Participant may amend the pre-determined Order and/or position limit based on the Market Participant’s analysis of the Clients’ financial resources (in the case of a Client Account) or its financial resources (in the case of a House Account) or other relevant factors;
(f) Orders in excess of the agreed pre-determined limits must be rejected by the Market Participant’s Order System and may be rejected by the Trading Platform.
(2) Connections
(a) A Market Participant who has permitted its Client to connect to a Terminal will be responsible under these Rules for any Orders entered through the Terminal by the Client.
(ab) A Market Participant who has connected to a Terminal for the purposes of trading for a House Account will be responsible under these Rules for any Orders entered through the Terminal.
(b) ASIC may at any time by notice to a Market Participant, require a Market Participant to terminate a connection referred to in paragraph (a) or (ab) either generally or in relation to a particular individual, Client, system or device or class of system or device.
(c) As soon as a Market Participant receives notification under paragraph (b), it must promptly take all steps necessary to terminate such connection.
Part Part 2 - ASIC Market Integrity Rules (Futures Markets) 2017 - Market Participants | Zoe
(3) Obligations prior to Client connection
Prior to permitting any Client to connect to a Terminal a Market Participant must:
(a) satisfy itself that the Client has the necessary skills, facilities and procedures to operate such a facility;
(b) satisfy itself that the Client understands the risks and obligations attached to the use of such a facility;
(c) ensure that each Order so placed, and any Order System complies with the Rules;
(d) provide appropriate controls on the connection of its Clients and its staff to such systems;
(e) provide appropriate controls on the access to passwords of its Clients and its staff to such systems; and
(f) ensure appropriate controls are implemented for the security of its Clients’ premises and physical access of its Clients and its staff to such systems.
(4) Obligations in relation to proprietary connection
Prior to connecting to a Terminal for the purpose of trading for a House Account, and at all times while connected to a Terminal for the purpose of trading for a House Account, a Market Participant must:
(a) have the necessary skills, facilities and procedures to operate such a facility;
(b) understand the risk and obligations attached to the use of such a facility;
(c) ensure that each Order so placed, and any Order System, complies with the Rules;
(d) provide appropriate controls on the access to passwords of the Market Participant and its Employees to such systems; and
(e) ensure appropriate controls are implemented for the security of its premises and physical access of the Market Participant and its Employees to such systems.
2.2.2 Concentration of risk
(1) A Market Participant other than a Principal Trader must not permit any one Client to represent such a percentage of the trading by the Market Participant as may prejudice or diminish the ability of the Market Participant to meet its obligations under these Rules and at law.
(2) For the purposes of this Rule, Client includes all persons, partnerships and corporations related to, associated with or affiliated with the Client or otherwise financially dependent upon the Client.
2.2.3 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 that 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) 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:
(i) convicted of any offence;
(ii) disciplined by 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, a Market operator, a Clearing Facility, a Settlement Facility or any other exchange, market operator or clearing and settlement facility; or
(iv) disciplined by a Market operator, a Clearing Facility, a Settlement Facility or any other exchange, market operator or clearing and settlement facility.
Note: Market operators are subject to an equivalent rule (see: Part 4.4).
2.2.4 Order records and accounting records
(1) Client Orders
A Market Participant, other than a Principal Trader, must maintain internal records of instructions received from Clients and trades executed for Clients for a period of not less than five years from the date of the trade, containing the following information:
(a) the nature of the instructions received, including information about: the commodity, the name of the Market, delivery Month, buy or sell, number of lots and price/limit;
(b) the Client name/account number and Client ID;
(c) the person who gave the instructions;
(d) the time and date of receipt of the instructions, and the person who received the instructions;
(e) the time and date of transmission of the instructions, and the person who transmitted the instructions; and
(f) the time and date of execution of the instructions, the Market those instructions were executed on, and the person who executed the instructions.
(2) Proprietary Orders
A Market Participant must maintain records of its Representatives’ trading for a House Account for a period of not less than five years from the date of a trade, containing the following information:
(a) the time and date of receipt of instructions;
(b) the nature of the instructions received;
(c) the person who received the instructions;
(d) the time and date of transmission of those instructions, and the person who transmitted the instructions; and
(e) the time and date of execution of those instructions, the Market those instructions were executed on and the person who executed the instructions.
(3) Error Trades
A Market Participant must maintain a separate record of all Error Trades for a period of not less than five years from the date of a trade, containing the following information:
(a) a description of the trade including the Market where the trade was executed and the deal number supplied by the relevant Market operator (if any);
(b) the name of the Representative responsible for the Error Trade;
(c) the name of the Representative responsible for the execution of the trade;
(d) a detailed explanation as to how the trade occurred, including details of the original Client Order (if any) which precipitated the error;
(e) any subsequent action taken by the Market Participant in relation to that trade; and
(f) the financial result of the trade.
(4) Accounting records
(a) A Market Participant must maintain such accounting records as correctly record and explain the transactions of the Market Participant and the financial position of the Market Participant.
(b) In relation to Calls, a Market Participant must at all times maintain such accounting records as accurately indicate in respect of each Call for Initial Margin or Variation Margin made upon Clients:
(i) the date and time at which such Call was received;
(ii) the amount of such Call;
(iii) the extent to which the Call was payable by reason of:
(A) trading undertaken by the Market Participant on its own account or an account of a related corporation; and
(B) trading undertaken by the Market Participant for Clients, so that the amount of any such Call is apportioned accordingly;
(iv) the extent to which the Call was met from:
(A) monies in the Clients’ segregated account; and
(B) other sources (specifying those sources and the amount satisfied from each such source); and
(c) the date and time at which such Call was met.
2.2.5 Client documentation
(1) Subject to subrule (2), a Market Participant must have in force, prior to the commencement of trading for a Client, a duly signed agreement with that Client, containing minimum terms to the following effect:
(a) Client to provide information
In relation to the Client’s trading on a Market, the Client will upon the Market Participant’s request, provide all information and documentation relevant to that trading, to the Market Participant and the Market Participant is authorised by the Client to provide the information and documentation to ASIC.
(b) Margins
Unless the Market Participant is performing executing business only and the Client has an agreement in place with a Clearing Participant for the Market where the Client’s trading will occur, or is otherwise exempted under these Rules, an acknowledgment by the Client that:
(i) the Market Participant may Call for payment of Margin such money or property (or Call for the lodgement of Approved Securities in lieu thereof) as the Market Participant, in its absolute discretion, feels is necessary to protect itself from the personal obligation incurred by dealing in Contracts on behalf of the Client;
(ii) should the Client fail to meet the Call (or lodge Approved Securities) then the Market Participant may (without prejudice to any other rights or powers under the agreement) and without creating an obligation to do so, Close Out, without notice, all or some of the Client’s Contracts;
(iii) the time for payment of Margins is of the essence and if no other time is stipulated by the Market Participant prior to Calling a Margin then the Client is required to comply within 24 hours;
(iv) liability to pay the Initial Margin accrues at the time the trade is executed regardless of when a Call is made;
(v) liability to pay Variation Margin accrues at the time the Margin comes into existence regardless of when a Call is made; and
(vi) the Client is responsible to pay in cash any deficit owing to the Market Participant after closure and that if the Client defaults in payment of such deficit, the Market Participant may realise any securities held by the Market Participant and apply the proceeds against that deficiency.
Tape recordings
An acknowledgment by the Client that the Client’s telephone conversations with the Market Participant can be recorded by the Market Participant. The Client is to be given the right to listen to any recording in the event of a dispute or anticipated dispute.
Right to refuse to deal
An acknowledgment by the Client that the Market Participant reserves the right to refuse to deal on behalf of the Client in relation to any dealings in Contracts (other than Closing Out existing Open Positions held in the Market Participant’s account on behalf of the Client) or limit the number of Open Positions held on behalf of the Client or both. The Market Participant will inform the Client of any refusal at or before the time of the Client placing the Order or as soon as possible thereafter.
Termination and Closing Out
An acknowledgment that:
(i) without affecting any existing obligations or liabilities, either the Client or the Market Participant may terminate the agreement at any time by giving the other notice in writing to that effect; and
(ii) upon termination of the Client agreement that unless otherwise agreed in writing the Market Participant will Close Out all the Client’s Futures Market Contracts and Close Out, abandon or exercise any Options not yet exercised.
(2) Exception
Subrule (1) does not apply:
(a) to a Principal Trader;
(b) where the Client is another Market Participant of the same Market, and the operating rules of the relevant Market provide that an agreement containing the terms of subrule (1) is deemed to have been entered and come into effect immediately upon the Market Participant accepting the first instruction from the Client to enter a Contract; or
(c) where the Market Participant is performing execution business only and has an agreement in place with the Client that incorporates the provisions set out in the International Uniform Brokerage Execution Services (“Give-Up”) Agreement 2008 (both client and trader versions).
2.2.6 Clients’ segregated account obligations
A Market Participant, who holds Client monies, must comply with the following:
Client money
(i) All money received by the Market Participant from its Clients or by a person acting on behalf of the Client under these Rules or the operating rules of a Market must be deposited in an account maintained by the Market Participant and designated as a Clients’ segregated account.
(ii) If the account is operated outside Australia and the law in force in the jurisdiction where it is maintained requires the account to be designated in a particular way, the Market Participant must designate the account in that way.
(iii) Where omnibus accounts are operated by a Market Participant (e.g. on behalf of another broker), a House Account and Client Account are to be maintained separately at all levels in the chain to the clearing and settlement facility level.
(iv) A Market Participant must not net off the Client Account against the House Account.
(b) Type of money to be paid into an account
Only the following monies are permitted to be paid into a Clients’ segregated account:
(i) all money received by the Market Participant from its Client or by a person acting on behalf of its Client;
(ii) interest on the amount from time to time standing to the credit of the account;
(iii) interest or other similar payments on an investment, and the proceeds of the realisation of an investment; and
(iv) any other money as required by the Rules or operating rules of a Market or the law to be paid by the Market Participant into a Clients’ segregated account.
(c) When money must be paid into an account
The money must be paid into a Clients’ segregated account on the day it is received by the Market Participant, or on the next business day.
(d) Permitted withdrawal
Withdrawals from a Clients’ segregated account made in any of the following circumstances are permissible:
(i) paying Margins and the settling of dealings;
(ii) making a payment to, or in accordance with the written direction of, a person entitled to the money;
(iii) defraying brokerage and other proper charges;
(iv) paying to the Market Participant money to which the Market Participant is entitled, whether at law or under the Rules or under the operating rules of the Market where the Futures Market Contract or Option Contract was acquired, entered into or disposed of for the Client; and
(v) making a payment that is otherwise authorised by law.
(e) Payment to another Australian financial services licensee
(i) If payment referred to in subparagraph (ii) is made by a Market Participant to the holder of an Australian financial services licence, the Market Participant must ensure that Australian financial services licensee is notified, at the same time as the payment is made or as soon as practicable after, that the money:
(A) has been withdrawn from an account of the Market Participant maintained for this Rule; and
(B) should be paid into an account of the Australian financial services licensee maintained for this Rule.
(ii) If the Australian financial services licensee who receives the payment in subparagraph (i) is also a Market Participant, it must, not later than the day after it receives the payment, pay the money received into an account maintained by it for this Rule.
(f) Requirement to deposit additional monies in Clients’ segregated account
(i) Where five clear business days (inclusive of the day of the Call) after a Call has been made on a Client for Initial Margin or Variation Margin in accordance with the operating rules of the Market where the Futures Market Contract or Option Contract was acquired or entered into, or such Call should have been made in accordance with those operating rules, the Call which was or should have been made has not been satisfied by payment of monies into a Clients’ segregated account or lodgement of Cover, then the Market Participant must pay into the Clients’ segregated account an amount of money not less than either:
(A) the liability of the Client under such a Call; or
(B) the amount which the Market Participant would be obliged to Call the Client on the day after five clear business days (inclusive of the day of the Call) have elapsed,
(C) whichever is the lesser.
(ii) Subject to paragraph (f) such monies may only be withdrawn in accordance with paragraph (d) and only after such monies have been received by the Market Participant.
(iii) The Market Participant must pay into the Clients’ segregated account after five clear business days, any amount (which has not been met by the Client), which arises as a result of debit balances of a Client resulting from realised losses or otherwise.
(g) Prohibited agreements
A Market Participant is prohibited from making any agreement with a Client that the Client’s money is not to be held or does not need to be held in a segregated account for the benefit of the Client.
(h) Permissible investments
Where a Market Participant invests money from a Clients’ segregated account, the following kinds of investments may be made:
(i) investment in any manner in which trustees are for the time being authorised by law to invest trust funds;
(ii) investment on deposit with an eligible money market dealer;
(iii) investment on deposit at interest with:
(A) an Australian ADI; or
(B) an Approved Foreign Bank;
(iv) the acquisition of cash management trust interests;
(v) investment in a security issued or guaranteed by the Commonwealth or a State or Territory;
(vi) investment on deposit with a licensed clearing and settlement facility; or
(vii) an investment in accordance with the specific direction of a Client.
(i) Monies invested
Where a Market Participant invests money from a Clients’ segregated account then:
(i) the Market Participant must, prior to investing any amount, obtain the Client’s written agreement to the following matters:
(A) the making of the investment;
(B) how earnings on the investment are to be dealt with;
(C) how the realisation of the investment is to be dealt with;
(D) how any losses made on the investment are to be dealt with; and
(E) the fee (if any) that the Market Participant proposes to charge for the investment; and
(ii) such investment must be readily realisable and no less than 50% of monies invested must be on 24-hour call.
(j) Separation of Market Participants’ trading liabilities from Clients’ trading liabilities
A Market Participant must not use a Clients’ segregated account to meet any Initial Margin or Variation Margin liabilities which relate to trading by that Market Participant on its own behalf or on behalf of a related corporation.
(k) Accounting records for withdrawals
A Market Participant must at all times maintain such accounting records as accurately indicate each withdrawal from a Clients’ segregated account.
(l) Definition of Client
For the purposes of this Rule, Client excludes a related body corporate or a division of the Market Participant.
(m) Property
(i) For the purposes of paragraph (m), property includes credit facilities and securities.
(ii) On the receipt of property, a Market Participant must:
(A) deposit the property in safe custody on or before the next business day after the property is received or deposited;
(B) create and maintain the following records:
(I) date property received/deposited in safe custody; and
(II) particulars of the property so deposited.
(iii) A Market Participant must keep Client property segregated from the Market Participant’s own property and Market Participants must be able to liquidate Client property as soon as practicable when required.
(iv) A Market Participant must not use property held in safe custody to satisfy a Market Participant’s debt.
2.2.7 Mandatory recording of information by Market Participants
(1) Recording by Market Participant
(a) A Market Participant dealing with Clients must record, via telephone lines and/or other electronic device, at its own expense, all conversations with Clients and other parties relating to Client instructions.
(b) A Market Participant must ensure that internal desks transmit all Orders to the futures desks in such a way that instructions are recorded via a telephone line or other electronic device.
(c) Should circumstances arise where a Client has placed instructions in a manner where there is no electronic or other record, a Market Participant must ensure that the Client’s instructions are recorded in some manner.
(d) Recordings and records maintained under this Rule must be retained for a minimum three month period.
(e) Where a Representative of a Market Participant having the relevant conversation is doing so from outside Australia, under an arrangement whereby the Market Participant arranges for other Representatives of the global group to take Orders on behalf of the Market Participant during certain hours each Trading Day (rolling the book), the Market Participant must maintain recordings and records for the period which is customary for regulated intermediaries conducting similar trades in that jurisdiction to retain such records.
(f) A Market Participant must ensure that all equipment used to record, including electronic devices, is functional at all times.
(g) For the purposes of this Rule in respect of a Market Participant which is a corporation, a Client includes a related body corporate or a division of the Market Participant—which is separate from the Market Participant’s futures division.
2.2.8 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 operating rules of each Market of which it is a Participant, and the Corporations Act.
2.2.9 Disclosure statement—Overseas clearing and settlement facility
(1) A Participant of a Market whose operator has clearing and settlement arrangements for transactions effected through the Market with a clearing and settlement facility licensed under subsection 824B(2) of the Corporations Act (overseas clearing and settlement facility) must disclose to each Client of the Participant located in Australia, before accepting the first order from the Client to enter into a transaction on the Market that will be cleared and settled by the overseas clearing and settlement facility, the differences between the Clients’ transactions being cleared and settled by the overseas clearing and settlement facility and a clearing and settlement facility licensed under subsection 824B(1) of the Corporations Act, including, but not limited to, the following:
(a) the foreign country where the operator of the overseas clearing and settlement facility has its principal place of business, and that the foreign clearing and settlement facility is regulated primarily under the regulatory regime of that foreign country; and
(b) that the rights and remedies of investors whose transactions are cleared and settled through the overseas clearing and settlement facility may differ from the rights and remedies of investors whose transactions are cleared and settled by a clearing and settlement facility licensed under subsection 824B(1) of the Corporations Act.
(2) Where a Participant is required to make disclosure to a Client under subrule (1) the Participant must obtain written acknowledgment from that Client that the disclosure required under subrule (1) has been made to it.
(3) A Participant must keep a record of each disclosure made under subrule (1) and each Client acknowledgment under subrule (2) for a period of five years.
Part 2.3 Account reconciliation obligations
2.3.1 Application of Part
(1) This Part applies to a Market Participant who holds Client monies.
(2) For the purposes of this Part:
ASX means ASX Limited (ACN 008 624 691).
ASX Clear means ASX Clear Pty Limited.
Client excludes a related body corporate or a division of the Market Participant.
Clients’ Segregated Account at Bank means the Total Third Party Client Monies held in the clients’ segregated account relating to futures contracts traded on any exchange.
Deposits with a Clearing Participant of FEX means the total amount of third-party client funds paid to a Clearing Participant for the FEX Market in relation to transactions in futures contracts.
Deposits with an Overseas Broker means the total amount of third-party client funds lodged with an Overseas Broker in relation to transactions in futures contracts.
Deposits with a Participant of ASX means the total amount of third-party client funds paid to a Participant of the ASX Market in relation to transactions in futures contracts.
Deposits with a Participant of ASX 24 means the total amount of third-party client funds paid to a Participant of the ASX 24 Market.
Deposits with a Participant of ASX Clear means the total amount of third-party client funds paid to a Participant of ASX Clear in relation to transactions in futures contracts.
Deposits with a Participant of ASX Clear (Futures) means the total amount of third-party client funds paid to a Participant of ASX Clear (Futures) in relation to transactions in futures contracts.
Deposits with a Participant of FEX means the total amount of third-party client funds paid to a Participant of the FEX Market.
Deposits with ASX Clear (Futures) Client Account means the total amount of third-party client funds, including margin amounts, lodged with ASX Clear (Futures) in relation to transactions in futures contracts.
Deposits with FEX Clearer Client Account means the total amount of third-party client funds, including margin amounts, lodged for transactions in futures contracts effected through the FEX Market with the clearing and settlement facility with which the FEX Market operator has clearing and settlement arrangements.
Director/Employee Monies means, in respect of transactions in futures contracts dealt on any exchange, the total amount of money received from:
any director, or officer, of the Market Participant; and
any employee of the Market Participant.
Overseas Broker means a broker whose principal place of business is located outside Australia.
Total Deposits means:
in Rule 2.3.2, the sum of subparagraphs 2.3.2(2)(c)(i)–(xii); and
in Rule 2.3.3, the sum of subparagraphs 2.3.3(3)(c)(i)–(xii).
Total Futures Client Monies means the total amount of money received from Clients in respect of transactions in futures contracts, including amounts relating to futures contracts traded on any exchange.
Total Third Party Client Monies means Total Futures Client Monies less Director/Employee Monies.
Variation means Total Third Party Client Monies less Total Deposits.
2.3.2 Daily reconciliation of client funds
(1) A Market Participant must perform an accurate reconciliation, by 7.00 pm on the business day after the business day to which the reconciliation relates, of the aggregate balance held by it at the close of business on each business day in clients’ segregated accounts maintained under Rule 2.2.6 and the corresponding balance as recorded in the Market Participant’s accounting records.
(2) Each reconciliation referred to in subrule (1) must set out:
the date to which the reconciliation relates;
for both the day of the reconciliation and the prior day, the dollar amounts of:
Total Futures Client Monies;
Director/Employee Monies; and
Total Third Party Client Monies;
for both the day of the reconciliation and the prior day, the dollar amounts of:
Clients’ Segregated Account at Bank;
Deposits with ASX Clear (Futures) Client Account;
Deposits with FEX Clearer Client Account;
Deposits with ASX Clear Client Account;
Deposits with a Clearing Participant of FEX;
Deposits with a Participant of ASX Clear (Futures);
Deposits with a Participant of FEX;
Deposits with a Participant of ASX Clear;
Deposits with a Participant of ASX 24;
Deposits with a Participant of ASX;
Deposits with an Overseas Broker; and
funds invested in accordance with section 981C(a) of the Corporations Act; and
Total Deposits;
the dollar amount of the Variation for both the day of the reconciliation and the prior day;
the percentage amount of the Variation for both the day of the reconciliation and the prior day;
an explanation of the reason for a Variation, if the dollar amount of the Variation is more than, or less than, zero; and
where the movement in Total Futures Client Monies is greater than 20% from the prior day, an explanation of the reason.
2.3.3 Monthly reconciliation of clients’ funds
(1) A Market Participant must perform an accurate reconciliation, of the aggregate balance held by it at the close of business on the last business day of each calendar month in clients’ segregated accounts maintained under Rule 2.2.6 and the corresponding balance as recorded in the Market Participant’s accounting records.
(2) Each reconciliation referred to in subrule (1) must be given to ASIC by the last business day of the calendar month following the calendar month to which the reconciliation relates.
(3) Each reconciliation referred to in subrule (1) must set out:
the date to which the reconciliation relates;
for both the last business day of the month of the reconciliation and the last business day of the prior month, the dollar amounts of:
Total Futures Client Monies;
Director/Employee Monies; and
Total Third Party Client Monies;
for both the last business day of the month of the reconciliation and the last business day of the prior month, the dollar amounts of:
Clients’ Segregated Account at Bank;
Deposits with ASX Clear (Futures) Client Account;
Deposits with FEX Clearer Client Account;
Deposits with ASX Clear Client Account;
Deposits with a Clearing Participant of FEX;
Deposits with a Participant of ASX Clear (Futures);
Deposits with a Participant of FEX;
Deposits with a Participant of ASX Clear;
Deposits with a Participant of ASX 24;
Deposits with a Participant of ASX;
Deposits with an Overseas Broker;
funds invested in accordance with paragraph 981C(a) of the Corporations Act; and
Total Deposits;
the dollar amount of the Variation for both the last business day of the reconciliation and the last business day of the prior month;
the percentage amount of the Variation for both the last business day of the month of the reconciliation and the last business day of the prior month;
an explanation of the reason for a Variation, if the dollar amount of the Variation is more than, or less than, zero; and
where the movement in Total Futures Client Monies is greater than 20% from the last business day of the prior month, an explanation of the reason.
(4) Each reconciliation created for the purposes of this Rule must contain a statement signed by a director or a person authorised in writing by a director, stating that the signatory believes, and has no reason not to believe, that the reconciliation is accurate in all respects.
2.3.4 Obligation to notify ASIC about daily reconciliation
A Market Participant must notify ASIC, in writing, within two business days if:
(a) a reconciliation required to be performed under Rule 2.3.2 has not been performed in accordance with Rule 2.3.2;
(b) according to a reconciliation performed under Rule 2.3.2, Total Deposits is less than Total Third Party Client Monies; or
(c) if it is unable to reconcile its clients’ segregated accounts under Rule 2.3.2.
2.3.5 Annual declarations for clients’ funds
(1) A Market Participant must prepare and give to ASIC within three months of the end of the financial year of the Market Participant:
(a) a directors’ declaration containing the information set out in Form 1 Part 1 of these Rules, authorised in the manner specified in subrule (2); and
(b) an auditor’s report containing the information set out in Form 1 Part 2 of these Rules, signed by a partner or director of the audit firm.
(2) For the purposes of this Rule, a directors’ declaration must be authorised by:
(a) two directors of the Market Participant whose names appear in the declaration; or
(b) one director (first director) of the Market Participant and one representative of the Market Participant, whose names appear in the declarations, where the representative has been authorised by the board or by a director other than the first director.
(c) two representatives of the Market Participant whose names appear in the declaration and who have been authorised by the board or each authorised by a different director of the Market Participant to give the declaration.
2.3.6 Scope of audits
(1) A Market Participant must give its auditor access to its premises and Employees and all records, documents, explanations and other information required by the auditor in respect of any audit conducted under paragraph 2.3.5(1)(b).
(2) A Market Participant must:
(a) not impose any limitation on the extent of any audit required under paragraph 2.3.5(1)(b); and
(b) permit and direct the auditor to notify ASIC immediately if any limitation is imposed on the auditor, or if the auditor is hindered or delayed in the performance of the auditor’s duties.
(3) The records of each of the Market Participant’s nominee companies must be included in the audit under paragraph 2.3.5(1)(b).
Part 2.4 Foreign Participants
2.4.1 Minimum presence requirements
(1) This Rule applies to a Market Participant (Foreign Market Participant) that:
(a) is a foreign entity; and
(b) does not hold an Australian financial services licence.
(2) Before entering into a transaction on a Market, 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:
(a) that the deed is irrevocable except with the prior written consent of ASIC;
(b) that 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) that 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 a Market or in relation to financial products traded on a Market, including but not limited to any matter relating to the Foreign Market Participant’s obligations under:
the ASIC Act;
the Corporations Act;
the Corporations (Fees) Act 2001;
ASIC Supervisory Cost Recovery Levy Act 2017; and
ASIC Supervisory Cost Recovery Levy (Collection) Act 2017;
that 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;
resident in this jurisdiction; and
authorised to accept, on behalf of the Foreign Market Participant, service of process and notices;
the Foreign Market Participant must notify ASIC of any change to:
the agent; or
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
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;
that the deed applies notwithstanding that the Foreign Market Participant may have ceased to be a Market Participant; and
for such additional terms notified by ASIC in writing to the Foreign Market Participant.