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The fund

The ASX Supplemental Compensation Fund (the Fund) is designed to provide a degree of financial protection for retail clients who have entrusted property to a stockbroker in respect of actual or proposed dealings in futures on ASX Limited (ASX).

This is a brief overview of the provisions governing the operation of the Fund, in particular the key sections that deal with your rights to make a claim. You should not rely on the information set out below as legal advice, or as a precise definition of your right to make a claim through the Fund, or limits on those rights in a particular case. If you have any doubts about whether the Fund will protect you in a particular circumstance you should seek specific legal advice.

What is the ASX Supplemental Compensation Fund

The Fund is designed to provide fidelity protection to retail investors arising out of business in connection with the ASX futures market.

The initial amount of the Fund is $2,000,000. If the amount of the Fund falls below $2,000,000, further funding will be provided by levies on Market Participants in accordance with the rules of the Fund and the Corporations Act. 

The relevant legislation that deals with Approved Compensation Arrangements is Division 3 of Part 7.5 of the Corporations Act 2001 and the regulations in respect of those provisions. In particular section 885C (which is subject to section 885D) outlines the losses to be covered.

What types of claims can be made?

The Fund is essentially a fidelity fund. Claims on the Fund are likely to be made by clients of Market Participants (stockbrokers) who have trading permission to deal in futures on behalf of clients. 

The Fund is designed to deal with claims that arise from a client suffering a loss as a result of giving money or other property to a stockbroker and that money or property being misappropriated. Also covered is the situation where a client gives a stockbroker authority over property and there is subsequent fraudulent misuse of the authority by the stockbroker.

Privacy

To enable processing of claims, the Fund is required to collect personal information. Where possible, collection will occur from the individual, but it may be necessary to collect information from share registries, brokers, the Australian Stock Exchange and its subsidiaries, among others. It will only use that personal information for the primary purpose for which it was collected and will only disclose that information in the course of processing a claim.

Important disclaimer

This information is general information only and has been prepared to provide a basic outline of the operation of the ASX Supplemental Compensation Fund. It is not intended as a precise statement of the legislative provisions that govern the operation of the Fund and the availability of claims. Specific legal advice should be sought as to the operation of the Fund in individual circumstances.