ASIC gives regulatory nod to new Chi-X product

The Australian Securities and Investments Commission (ASIC) has updated market integrity rules to enable the introduction of a new type of financial product that Chi-X Australia Limited (Chi-X) is introducing to the market, known as transferable custody receipts (TraCRs).

According to the regulator, TraCRs are units of beneficial ownership in equities listed on certain overseas exchanges, where the foreign equities are held in custody for the issuer of the TraCRs.

They are “unsponsored” in the sense that TraCRs are issued and quoted on the Chi-X market without the consent or involvement of the overseas equity issuer, ASIC said.

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The updated rules include TraCRs in the definition of “cash market products” in the regulator’s new consolidated rulebook, the ASIC Market Integrity Rules (Securities Markets) 2017, which ASIC said will allow appropriate market supervision arrangements for TraCRs by bringing these products into the market supervision framework.

In order to quote and trade TraCRs on the Chi-X market, Chi-X has also obtained regulatory approvals for a variation to its Australian market licence and a declaration under the Corporations Act for TraCRs amendments to the Chi-X operating rules, ASIC said.

The issuer of TraCRs, Deutsche Access Investments Limited, has also obtained relief in relation to the TraCR product, the regulator said.

ASIC said it also made amendments to several instruments, which included relief for product issuers, authorised participants and market makers of Chi-X exchange-traded funds (ETFs).

It also made changes to the ETF definition in these instruments to ensure that it reflected the key characteristics of this product and was market neutral in relation to the ASX and Chi-X markets.

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