Under the Corporations Act 2001, operators of financial markets must have an eligible compensation scheme to protect investors.
The National Guarantee Fund (NGF) is a compensation scheme that applies to members of the Securities Exchanges Guarantee Corporation. The NGF provides compensation for retail and wholesale clients who incur a loss in their dealings with participants in four circumstances, as set out in the Corporations Regulation 2001.
Currently only claims relating to an insolvent participant are capped, with the three other circumstances uncapped. This means that the NGF could be depleted by one or more large claims.
To ensure the sustainability of the NGF, this draft Regulation proposes to make three changes to the exisitng regime:
- introduce a cap of $1 million for claims made by the same claimant that relate to the same participant and the same event;
- introduce a sub-cap of $250,000 in relation to cash held with a participant; and
- amend the existing per participant cap which applies to the insolvent participant head of claim (15 per cent of the prescribed minimum size of the NGF) to cover all heads of claim in the event of an insolvency.
You can submit responses to this consultation up until 02 May 2019.
Interested parties are invited to comment on this consultation.
While submissions may be lodged electronically or by post, electronic lodgement is preferred. For accessibility reasons, please submit responses sent via email in a Word or RTF format. An additional PDF version may also be submitted.
All information (including name and address details) contained in submissions will be made available to the public on the Treasury website unless you indicate that you would like all or part of your submission to remain in confidence. Automatically generated confidentiality statements in emails do not suffice for this purpose. Respondents who would like part of their submission to remain in confidence should provide this information marked as such in a separate attachment.
Legal requirements, such as those imposed by the Freedom of Information Act 1982, may affect the confidentiality of your submission.
How To Respond
Address written submissions to:
Banking and Capital Markets Unit
Financial System Division
Parkes ACT 2600