Document ID: chunk:federal_register_of_legislation:C2005C00498:clause:1_1020b:p1
Version: federal_register_of_legislation:C2005C00498
Segment Type: clause
Provision Reference: sch 1 cl 1020B (pt 1/3)
Character Range: 640077–642708

1020B  Short selling of securities, managed investment products and certain other financial products

 (1) In this section and section 1020C:

section 1020B products means:
 (a) securities; or
 (b) managed investment products; or
 (c) financial products referred to in paragraph 764A(1)(j); or
 (d) financial products of any other kind prescribed by regulations made for the purposes of this definition.

 (2) Subject to this section and the regulations, a person must only, in this jurisdiction, sell section 1020B products to a buyer if, at the time of the sale:
 (a) the person has or, if the person is selling on behalf of another person, that other person has; or
 (b) the person believes on reasonable grounds that the person has, or if the person is selling on behalf of another person, that other person has;
a presently exercisable and unconditional right to vest the products in the buyer.

Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).

 (3) For the purposes of subsection (2):
 (a) a person who, at a particular time, has a presently exercisable and unconditional right to have section 1020B products vested in the person, or in accordance with the directions of the person, has at that time a presently exercisable and unconditional right to vest the products in another person; and
 (b) a right of a person to vest section 1020B products in another person is not conditional merely because the products are charged or pledged in favour of another person to secure the repayment of money.

 (4) Subsection (2) does not apply in relation to:
 (a) a sale of section 1020B products by a financial services licensee who is a participant in a licensed market and specialises in transactions relating to odd lots of section 1020B products, being a sale made by the licensee on their own behalf solely for the purpose of:
 (i) accepting an offer to buy an odd lot of section 1020B products; or
 (ii) disposing of a parcel of section 1020B products that is less than one marketable parcel of section 1020B products by means of a sale of one marketable parcel of those products; or
 (b) a sale of section 1020B products as part of an arbitrage transaction; or
 (c) a sale of section 1020B products by a person who, before the time of sale, has entered into a contract to buy those products and who has a right to have those products vested in the person that is conditional only upon all or any of the following:
 (i) payment of the consideration in respect of the purchase;
 (ii) the receipt by the person of a proper instrument of transfer in respect of the products;
 (iii) the receipt