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Notice
As foreshadowed in December, ASX is introducing a number of amendments to the ASX Operating Rules and ASX Settlement Operating Rules to expand the scope of the mFund Settlement Service (“mFund”). The rule amendments expand the range of Managed Fund Products that can be settled through mFund to include registered managed investment schemes that meet the requirements in ASX Operating Rule10A.3.3(h)(ii) as follows:
the price of units in the Managed Fund must be determined and published on a daily basis;
redemption of Managed Fund Products must generally occur within ten (10) Business Days of the AQUA Product Issuer receiving a redemption request from an investor;
in the two (2) years prior to the date that ASX receives the application for admission for settlement through the Service, the AQUA Product Issuer has not suspended or cancelled investors’ rights to withdraw from the Managed Fund on the basis that the Managed Fund is not liquid (as defined in s 601KA of the Corporations Act); and
the Managed Fund must invest at least eighty (80) percent of its assets: (i) in money in an account or on deposit with a bank on the basis that the money is available for withdrawal immediately during the bank’s normal business hours or at the end of a fixed-term period that does not exceed three (3) months; or (ii) under one or more arrangements by which the AQUA Product Issuer for the Managed Fund can reasonably expect to realise the investment, at the market value, within ten (10) days.
The rule amendments also include the following additional controls that will apply to all Managed Fund Products settled through the mFund Settlement Service:
Illiquid Managed Funds: ASX Operating Rule 10A.4.5(e) will be introduced to prohibit AQUA Product Issuers from issuing Managed Fund Products that are settled through the mFund Settlement Service where the Managed Fund is not liquid (as defined in section 601KA of the Corporations Act) and the AQUA Product Issuer has restricted investors’ rights to withdraw from the Managed Fund on this basis. The Product Issuer Settlement Participant will be subject to a separate obligation under the new ASX Settlement Operating Rules 18.3.3(c) and 18.4.3(c) to reject any new applications for issue of the Managed Fund Products in these circumstances. An AQUA Products Issuer will also be required to disclose where it has restricted investors’ rights to withdraw from a Managed Fund on the basis that it is not liquid under ASX Operating Rule 10A.4.2(b).
Additional Disclosures: ASX Operating Rules Procedure 4655 will be amended to require Trading Participants that seek to transact Managed Fund Products based on client instructions received through an online broker interface to prominently display on that online interface a reminder to clients that, “You may not be able to convert your investment to cash as quickly as you can for shares”.
Product Disclosure Statements & Supplementary Product Disclosure Statements: A number of clarifications will be made to the existing rule framework to ensure that clients are provided with a copy of the most recent Product Disclosure Statement or, if there is one or more Supplementary Product Disclosure Statements, a document that combines the Product Disclosure Statement and all Supplementary Product Disclosure Statement(s) (known as the “Combined Product Disclosure Statement”).
The following rule books will be amended:
Marked up versions of these rule books are attached.
ASIC Class Order [CO 13/1621] has also been amended by ASIC Corporations (Amendment) Instrument 2016/1212.
What do I need to do by when?
QUA Product Issuers, Trading Participants, Settlement Participants and Product Issuer Settlement Participants should read the attached amendments to the ASX Operating Rule and Procedures, and the ASX Settlement Operating Rules, to understand the new requirements and introduce any processes or procedures into their organisation so as to be compliant with them by 6 February 2017.
Effective date
These changes become effective from 6 February 2017
Need more information?
View more information in the following attachments:
Issued by
Andrew Weaver,
Manager, Investment Products
Contact information
Andrew Weaver
+61 (02) 9227 0575
andrew.weaver@asx.com.au