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This page provides a summary of the transition process to bring authorised stock and futures markets under the FSR regime.

From 11 March 2002, the seven categories of authorised stock and futures markets which existed under the pre-FSR regime became subject to the FSR regime. For more details of what this means for market regulation, please see our markets licensing page.

The table below summarises the way in which FSR provides for the transition of existing markets to the new regulatory regime.

Last updated 11 March 2003. Note transition ended on 10 March 2004.

Market Transition provisions
ASX and other main stock1 and futures2 markets (s1413) An Australian Market Licence (AML) was granted with effect from 11 March and reflects services these markets were previously entitled to provide under the pre-FSR regime. 

Most of the FSR requirements started to apply to these markets from that date. However, those relating to the matters to be included in a market's operating rules and procedures (s793A) and to the new compensation regimes (Part 7.5) did not apply immediately. 

Instead, the pre-FSR Corporations Act provisions (the Old Corporations Act) continue to apply to these matters during the transition period, ie until the earliest of: 

  • the end of two years, starting from 11 March 2002 (the two year transition period); or
  • the licensee applies to have their AML varied, revoked or to have additional conditions added; or
  • the licensee notifies ASIC that it wishes to take advantage of the compensation arrangements in Division 3 of Part 7.5 of the Corporations Act 2001 (the Corporations Act).

This type of holder of an AML is required to include in their Annual Reports information about the steps they are taking to ensure they comply with the requirements introduced by FSR under s793A and Part 7.5 of the Corporations Act by the end of the transition period.

Unregulated services provided by the ASX and other main stock and futures markets under the pre-FSR framework (see above) (s1417) If financial products, other than those which are specified on the licence, were lawfully traded on one of these markets immediately prior to 11 March 2002, the FSR requirements do not apply in relation to these products until the earliest of:
  • the end of the two year transition period; or
  • until the licensee applies to have their AML varied, revoked or to have additional conditions added.

(This current approach may at some stage be modified by the Regulations, which may provide that specific FSR provisions will apply to the market and the financial products during some or all of the transition period.)

Exempt stock3and futures4 markets (s1418)
Stock markets of approved securities organisations5 (s1420)
Special stock markets for unquoted interests in registered schemes6 (s1421)		 Operators of these markets must either apply for an AML or for an exemption from the need to have one (s790C) within two years of the commencement of FSR.

The Old Corporations Act continues to apply to these markets until the earliest of:

  • the two year transition period expires; or
  • the operator is granted an AML; or
  • the operator obtains a new exemption; or
  • the existing exemption or approval is revoked
at which point the FSR requirements apply without qualification.
Exempt stock7 and futures8 markets which do not have a single identifiable operator (s1419 and s1431) 
ie markets and participants:
  • which, prior to the commencement of FSR, were exempt; but
  • whose activities would (but for this exemption), after commencement of FSR, require a Financial Services Providers Licence (FSPL), rather than an AML
 For these markets and participants, the Old Corporations Act continues to apply until:
  • the two year transition period expires; or
  • the regulated principal is granted an FSPL; or
  • the regulated principal starts to be covered by the exemptions to the requirement to hold a FSPL contained in s911A(2) of the Corporations Act; or
  • the regulated principal ceases to have the status of a regulated principal.
Where only some of the activities of a regulated principal are covered either by a FSPL or an exemption under s911A(3), the transitional provisions continue to apply to their other pre-FSR activities.
Operators of other markets which were not unauthorised under the Old Corporations Act (s1422) 
ie markets which:
  • fall within the meaning of a "financial market" under the Corporations Act but are not markets to which ss1413, 1418, 1419,1420 or 1421 of the Corporations Act apply; and 
  • were being operated immediately before the commencement of FSR; but 
  • were not either an unauthorised stock market or unauthorised futures market [as defined in s9 of the Old Corporations Act]
 These markets are not required to obtain an AML until:
  • the two year transition period expires; or
  • the operator is granted an AML; or
  • the operator is granted an exemption under s791C;
  • the market starts to provide services in relation to financial products which it did not previously provide under the pre-FSR regime.
(This current approach may at some stage be modified by the Regulations, which may provide that specific FSR provisions will apply to the market during some or all of the transition period.)
A proposed market

This category applies to any market that is:

  • operated by the Bendigo Stock Exchange Ltd or ASX Futures Exchange Pty Ltd and which is identified in writing by the Minister (in this case the Minister  would have been required to be notified before 11 March 2002); or
  • identified in the Regulations. The regulations have so far identified:
  1. markets in futures contracts proposed to be operated by:
    • Atriax Limited;
    • Hong Kong Futures Exchange Limited;
    • The London Metal Exchange Limited; and
    • Credit Suisse First Boston (Europe) Limited;
    • Eurex Deutschland, and
  2. a market in securities proposed to be operated by:
    • Bloomberg LP; and
    • Eurex Deutschland

    yet which was not operational before FSR commenced but which is proposed to commence operating in the future.

 FSR deals with a proposed market in the following way:
  1. the proposed market is considered as though it were, in fact, operating as a market immediately before 11 March 2002;
  2. based on the type of market which the proposed market is considered to be, the transition provisions apply to the proposed market as if it were operating as a market.

A proposed market will only be treated as a proposed market for a period of six months from 11 March 2002.

For example, a proposed market that, if operational, would otherwise be unregulated will be regarded as an unregulated market if it begins to operate within six months of the commencement of FSR and subject to the same transitional relief from the FSR requirements.
References
  1. under s769(2) of the Old Corporations Act. 
  2. under s1126(2) of the Old Corporations Act.
  3. under s771(1) of the Old Corporations Act.
  4. under s 1127(2) of the Old Corporations Act.
  5. under s770(2) of the Old Corporations Act.
  6. under s770A(2) of the Old Corporations Act.
  7. under s771(1) of the Old Corporations Act.
  8. under s 1127(2) of the Old Corporations Act.