Document ID: chunk:federal_register_of_legislation:F2024C01249:reg:4:p47
Version: federal_register_of_legislation:F2024C01249
Segment Type: reg
Provision Reference: reg 4 (pt 47/49)
Character Range: 1099024–1101828

establishing the margin lending facility.
 (2) For subregulation (1), the facility is a standard margin lending facility under the terms of which:
 (a) the credit provided must be applied wholly:
 (i) to acquire one or more marketable securities, or a beneficial interest in one or more marketable securities; or
 (ii) to repay another credit facility, under the terms of which the credit provided was applied wholly to acquire one or more marketable securities, or a beneficial interest in one or more marketable securities; and
 (b) the secured property mentioned in paragraphs (c) and (d) of that subsection:
 (i) consists wholly of one or more marketable securities, or a beneficial interest in one or more marketable securities; or
 (ii) consists:
 (A) partly of one or more marketable securities, or a beneficial interest in one or more marketable securities; and
 (B) partly of cash given to the provider and held in trust for the client for the sole purpose of servicing obligations under the facility; and
 (c) the liability of the client to the provider is limited to the rights relating to the secured property.

7.8.09  Reasonable inquiries etc about retail client: inquiries
 (1) For paragraph 985G(1)(c) of the Act, the following inquiries about a client are prescribed in relation to a margin lending facility, or a margin lending facility whose limit is proposed to be increased, within the meaning of subsection 761EA(1) of the Act:
 (a) reasonable inquiries as to whether the client has taken out a loan to fund the secured property or transferred securities contributed by the client for establishing the margin lending facility;
Note: This is sometimes referred to as 'double gearing'.
 (b) if a loan to fund the secured property or transferred securities contributed by the client for establishing the margin lending facility has been taken out—reasonable inquiries as to whether the security for the loan includes the primary residential property of the client;
 (c) if there is a guarantor for the margin lending facility—reasonable inquiries as to whether the guarantor has been appropriately informed of, and warned about, the risks and possible consequences of providing the guarantee;
 (d) reasonable inquiries as to the amount of any other debt incurred by the client;
 (e) any other matter that ASIC has specified in a legislative instrument for subregulation (2).
 (2) ASIC may specify in a legislative instrument any matter ASIC considers to be relevant for the purpose of establishing whether the margin lending facility, or the margin lending facility with the increased limit, is unsuitable for the client.

7.8.09A  Modification of section 985G of the Act
  For paragraph 992C(1)(c) of the Act, Part 7.8 of the Act applies as if section 985G of the Act were modified by