Background on CHESS, the operator of the CHESS Sponsorship Agreement with you and Sponsorship of your Holdings.
Except for a very few financial products traded on the ASX‟s Integrated Trading System (ITS), holdings of financial products tradable on the ITS “Cash Product‟ Market are held in uncertificated, electronic form. Each ASX listed company or other issuer has a Register of holders. Each Register is made up of an Issuer Sponsored Sub-register and a Participant Sponsored Sub-register. All holdings of ITS traded financial products which are not Derivatives must be sponsored by either means. You have a choice of holding those products in electronic form sponsored by the Issuer of the product (i.e. Issuer Sponsored) or by a CHESS Participant (i.e. Participant Sponsored). We are a CHESS Participant and sponsor client holdings on CHESS. CHESS is the Clearing House Electronic Sub-register System and is the infrastructure ASX Group Participants, such as ourselves, use to control and to administer Sponsored Client holdings.
Security of your Holdings
If we change, in accordance with your written instructions, your registration details for holdings CHESS Sponsored by us, CHESS itself will also notify or confirm to you directly that your holding name/address has changed, that your Sponsoring Participant has changed or of other matters relating to your holding, whatever the case may be. This is an effective security measure. If you receive such a notice and you have not instructed us to make those changes, contact us immediately. We and our duly appointed agent have access to and administer CHESS holdings sponsored by us. Each CHESS Holding Statement identifies us by our Participant Number. It also identifies you by listing your HIN. You must keep your HIN confidential because it is the key to your holdings, not unlike your PIN to access your bank account. Your Security holder Reference Number (SRN) for Issuer Sponsored Holdings (if you have any) must also be kept confidential. If, for any reason, an unauthorised transfer of some or all of your holdings occurs, we are obliged by the ASX Settlement Rules to reinstate the holding(s). Behind us stands the National Guarantee Fund. If we do not reinstate holding(s), a claim for unauthorised transfer can be made to the National Guarantee Fund for compensation.
Explanation of Sponsorship
Agreement Terms This explanation is only a summary of the Agreement (see clause 7.4 of the Sponsorship Agreement). It is not a substitute for, or part of, the Sponsorship Agreement, nor is it another agreement in its own right. By signing the Sponsorship Agreement, you appoint us as your Sponsoring Participant for ITS traded non-Derivative financial products you purchase through us. We would be pleased to sponsor other holdings you may have which are Issuer Sponsored or sponsored by another ASX Group Participant (i.e. ASX Stockbroker). FinEx is a party to an Equities and Derivates Clearing Agreement with FinClear Pty Ltd (Clearing Participant). The Clearing Participant is obliged to settle as principal and has the settlement obligations for all ASX Transactions. As your Sponsoring Participant on CHESS, only we and our duly authorised agent can give instructions to CHESS in relation to administration or conversion of your holdings sponsored by us, or transfers to or from your sponsored holdings following settlement of your transactions or following your Withdrawal Instructions. Furthermore, we or our duly authorised agent only have authority to access your holdings following your express instructions to do so (e.g. sell my BHP Billiton shares). On CHESS, your holdings are identified by your HIN which is allocated to you if you accept in clause 8 the terms and conditions of our sponsorship agreement. We will notify you of your HIN by return a copy of clause 8 for your records.
Sponsorship Agreement: This Agreement has 14 clauses, Its terms are very largely determined by the ASX Settlement Operating Rules applying to CHESS Sponsorship. The“Definitions and Interpretation‟, clauses, 1 (“Appointment of FinEx Clear Execution Limited‟), 10 (“Claims for Compensation‟), 13 (“Indemnity‟) and 14 (“Miscellaneous‟) are selfexplanatory.
Clause 2 (“FinEx‟s Rights‟) imposes certain duties on you and gives us certain protections. Sufficient funds must be in your account to pay for any financial products purchased on your behalf, and associated transactional charges, before we will transfer the purchased products in to your name. We may charge you an administration fee for carrying your purchase until you pay for it in full (see “Buy Confirmation‟ terms). We have to pay for purchases you execute through us whether you‟ve paid or not. If you do not pay, after a demand for payment those products may be sold at your risk and expense. You will be liable for any outstanding loss. You can give us instructions at any time to withdraw your holdings from CHESS, and we must do so unless funds due from you are outstanding in which case we may continue to “control‟ holdings to the value (i.e. market value of the financial products we continue to hold) of 120% of the amount owed to us.
Clause 3 (“Your Rights‟) imposes certain duties on us and informs you of your right of access to both our internal and external (i.e. FOS) complaint handling mechanisms (if you are a Retail Client), and to lodge certain claims for compensation with the National Guarantee Fund. See also clause 7.1(b).
Clause 4 (“Supply of Information‟) obliges you to supply the information we require and to ensure it is, and remains, accurate and up to date..
Clause 5 (“Exchange Traded Options, Pledging & Sub-Positions‟) is only relevant to you if you intend to lodge your holdings as collateral for written options positions or if you intend to permit a charge or subposition over some or all of your holdings.
Clause 6 (“Fees) notifies you that we will charge you fees for our services.
Clause 7 (“Notifications & Acknowledgements‟) notifies you of, or has you acknowledge, various things, including: Once a holding is transferred by us, you cannot claim against the ASTC (the operator of CHESS) or the Issuer that it was not affected by us or that we were not authorised to make the transfer. You may report to us for a breach of any provision of the Agreement. You have certain rights if we are suspended from accessing CHESS. You will be given opportunity to instruct ASTC to move your holding to the control of another Sponsoring Participant or ASTC will make that choice for you.
Clauses 7.5 and 7.6 address what action we will take in the event of your death and/or bankruptcy.
Clause 8 (“Joint Holdings‟) addresses bankruptcy and/or death of one or more parties to a joint holding. Sponsored holdings may have up to 3 joint holders. In the event of bankruptcy of one, the interests of the bankrupt are excised from the interests of the others. The others may continue to operate as normally under a new holding. In the case of the death of one, the general legal principle is that the interests of the deceased pass to the remaining joint holders, not the estate of the deceased person.
Clause 9 (“Change of Controlling Participant‟) addresses a situation in which through the takeover or demise of our business, all our Sponsored Holdings on CHESS may be transferred in full to another Controlling Participant in the interests of minimising disruption to your investment or trading activities
Clause 10 (“Claims for Compensation”) sets out means of seeking compensation
Clause 11 (“Termination‟) sets out that both of us can terminate the Sponsorship Agreement by notice in writing, which will take effect upon receipt of the notice by the other party. In certain circumstances, the Agreement is terminated automatically.
Clause 12 (“Variation‟) permits variation by notification to you where variation is required because the terms of the Agreement have become or are becoming inconsistent with the ASX Settlement Operating Rules. In all other instances, a variation to the Agreement is only effective if agreed by us both in writing and verbally.
Clause 13(“Indemnity”) describes the indemnity that you will provide to FinEx
Definitions and Interpretations
Any term used in this Agreement which is defined in the ASX Settlement Operating Rules has the meaning given in the ASX Settlement Operating Rules. Should you require a copy of these definitions please contact FinEx. You can also view these Rules using the ASX website.
A “Participant Sponsored Holder‟ is a person whose Participant Sponsored Holding is sponsored on the Financial Product Issuer‟s CHESS Sub-register by FinEx or other Sponsoring Participant. “You‟ are a Participant Sponsored Holder. The Sponsoring Participant such as FinEx, or FinEx’s clearing participant, must be an ASX Clearing Participant. Your “Participant Sponsored Holding‟ means your FinEx sponsored CHESS Holding identified by a Holder Identifier Number (“HIN‟).
Words expressed in the singular include the plural and vice-versa. Words expressed in one gender include all genders. Words denoting an individual include a reference to a corporation, partnership, an association, an authority or trust, and vice-versa.