Note: Expressions have the same meaning in this instrument as in the Corporations Act 2001 as in force from time to time—see paragraph 13(1)(b) of the Legislation Act 2003.
For these rules:
assessed as having an acceptable risk, in relation to a holding of assets and arrangements by a passport fund, means when the operator has performed the following within a period of no more than 1 month before the most recent acquisition of the asset or arrangement and subsequent to any event that gives the operator reason to doubt the previous assessment performed:
(a) assessed the creditworthiness of the issuers, guarantors or counterparties of the assets or arrangements in accordance with written policies and procedures which include having regard to independent sources of information; and
(b) assessed the risk for members of the passport fund of holding the proposed concentration of the assets given the creditworthiness of the issuers, guarantors or counterparties; and
(c) concluded there was no disproportionate risk relative to the risks associated with the passport fund’s investment strategy; and
(d) documented the assessments and the reasons for the conclusion.
assessed central clearing counterparty: see section 27.
benchmark fund means a passport fund that has publicly disclosed that it has an investment strategy of seeking to achieve returns that meet or exceed an eligible index.
business day means a day that banks in the place are generally open for business.
CIS: see collective investment scheme.
collective investment scheme or CIS means a scheme or an arrangement that is intended to have the following features:
(a) at least 2 persons or a person acting on behalf of more than one beneficiary or group of beneficiaries (members) contribute money or money’s worth for the right to the benefits produced by the scheme;
(b) the contributions are pooled to produce financial benefits or an interest in property for the contributors or persons directly or indirectly acquiring their rights from the contributors (members);
(c) not all the members, in their capacities as members take part in day to day management of the scheme;
(d) the pool is managed as a whole for the benefit of the members collectively.
conflict: includes an actual or potential conflict.
eligible index: an index is an eligible index for a passport fund if:
(a) it predominantly relates to financial assets or commodities that are regularly traded; and
(b) it has a clearly defined objective or the market or sector which it aims to represent is clearly defined; and
(c) it represents a reasonable benchmark for a market or market sector for which it is widely used; and
(d) it is made up entirely of constituents that, with the exception of those related to commodity prices are investments that a passport fund would be permitted to hold under these rules; and
(e) it is defined and calculated by a person who is not a related party of the operator of the passport fund unless, where the 2 parties are related parties, there are adequate arrangements in place for managing the specific conflicts of interest that might arise in this situation; and
(f) it has no:
(i) constituent; or
(ii) for commodity indexes—group of constituents relating to substantially the same commodity;
exceeding 25% of the index; and
(g) information about it (including information about the composition of the index and the methodology used to construct and rebalance the index) is readily accessible to the public.
embeds a derivative and embedded derivative: see section 26.
fair value, in relation to an asset or an interest, is the market price of the asset or an interest, or the value that the operator would reasonably expect to receive if it were sold on the current market if it is:
(a) an asset that is not traded on a financial market; or
(b) an asset of a passport fund in relation to which the valuation entity under section 53 is satisfied that the market price is either unavailable or does not reasonably represent the value of the asset.
financial asset CIS means a CIS that predominantly holds assets that a passport fund is permitted to hold under Division 6.2 and may not be reasonably regarded as predominantly a vehicle for investment in:
(a) physical assets, other than depository receipts over gold; or
(b) derivatives where the value is determined by or varied with respect to the price of physical assets, other than gold.
financial asset regulated CIS means a financial asset CIS:
(a) whose members are generally able to redeem their interests from the scheme or arrangement or sell their interests on a financial market for a price that is not materially different from the net asset value per interest; and
(b) that is either:
(i) a regulated CIS; or
(ii) a CIS that in the opinion of the home regulator for the passport fund holding an interest in the CIS, notified in writing to the operator of the fund by the home regulator, is subject to regulation that is broadly similar in effectiveness to that applying to a regulated CIS in the home economy for the passport fund having regard to the IOSCO Principles relating to collective investments.
financial market means a facility through which offers to acquire or dispose of assets in which a passport fund may invest under section 19 are regularly made or accepted that is regulated in an IOSCO jurisdiction.
independent oversight entity: see section 14.
index fund means a passport fund that has publicly disclosed that it has an investment strategy of seeking to achieve returns that track an eligible index excluding on a leverage or an inverse basis.
interest means the right to a benefit produced by a CIS.
IOSCO means the International Organization of Securities Commissions.
IOSCO assessment methodology means the IOSCO Methodology for Assessing Implementation of the IOSCO Objectives and Principles of Securities Regulation published in September 2011, as revised from time to time.
IOSCO financial services related business means an entity that carries on business in a financial, capital markets or financial services industry and is regulated in an IOSCO jurisdiction or an entity that provides legal, accounting or compliance services related to that kind of business or consultation services relating to, and addressing particular issues arising in, the operation of CIS.
IOSCO jurisdiction means a jurisdiction in which the securities regulator is an ordinary or associate member of IOSCO.
IOSCO Principles means the Objectives and Principles of Securities Regulation published by IOSCO, as revised from time to time.
jurisdiction includes any administrative region that has a securities regulator that is a member of IOSCO.
laws of a host economy for a passport fund means the laws of that host economy, to the extent that the laws are administered by the host regulator for the fund for that host economy.
Note: Laws include regulations and other regulatory requirements.
laws of the home economy for a passport fund means the laws of the home economy for the fund, to the extent that the laws are administered by the home regulator for the fund.
Note: Laws include regulations and other regulatory requirements.
market price, in relation to an asset or an interest, is the prevailing price at which it was last transacted or bid for on the financial market on which it was last traded at the time of valuation and if traded simultaneously the financial market determined by the valuation entity under section 53.
member of a CIS means a person who holds an interest in the CIS.
money market instrument: see section 24.
net asset value per interest of a passport fund means the market value of the assets of the passport fund, calculated in accordance with Division 7.2 less any liabilities, other than liabilities to members as members, divided by the number of interests in the passport fund and if there is more than one class of interest in a passport fund on the basis of the assets, liabilities and interests attributable to the class.
officer of an entity includes a director and a Chief Executive Officer of the entity, or their equivalents.
operator of a regulated CIS: see section 56.
Passport Regulator, for a participating economy, has the meaning shown in the following table and includes an entity that is a successor to the regulatory functions of a Passport Regulator:
Item
Participating economy
Passport Regulator
1
Australia
Australian Securities and Investments Commission
2
Japan
Financial Services Agency
3
Korea
Financial Supervisory Service and Financial Services Commission
4
New Zealand
Financial Markets Authority
5
Singapore
Monetary Authority of Singapore
6
Thailand
Securities and Exchange Commission
regulated CIS: see section 56.
related party: see section 57.
relevant hedging arrangements: see section 40.
relevant netting arrangements: see section 40.
risk‑assessed government securities: see section 30.
securities lending arrangement: see section 28.
sub‑fund: a CIS is a sub‑fund if:
(a) the CIS forms part of a regulated CIS that also includes another CIS; and
(b) the assets of the CIS cannot be lawfully applied under:
(i) if the CIS is a passport fund—any laws of the home economy for that passport fund; or
(ii) if a passport fund holds an interest in the CIS—any laws of the home economy for the passport fund holding the interest (whether or not the CIS is also a passport fund);
except in meeting liabilities or otherwise for the CIS or the entitlements of members in the CIS.
transferable security: see section 23.
unquoted transferable security means a transferable security that the operator does not reasonably believe on any business day in the place in which it is acquired by the passport fund, can be reliably valued and sold for that value and includes any transferable security that:
(a) is not traded on a financial market; and
(b) is not approved for trading on a financial market.
USD means the lawful currency of the United States of America.
value of the assets of a passport fund means the market value of the assets of the passport fund, including derivatives and securities lending arrangements, after deducting any liabilities of the passport fund other than liabilities to members as members.