Sydney Futures Exchange Limited (SFE) maintains compensation arrangements, to provide a fidelity fund for losses suffered by clients of SFE participants where a client has given money or other property to a participant in connection with effecting a transaction on SFE and the participant has misappropriated or fraudulently misused the money or other property.
Compensation is not available for trading losses or for losses arising as a result of poor advice given by a futures broker.
Who manages the funds?
The Board of SFE manages SFE's fidelity fund. Moneys in the fidelity fund are held on trust by SFE for the purposes for which the fund was established, and are kept separate from the funds of SFE.
Persons who may claim
Persons who are entitled to make a claim against a fidelity fund are clients who have suffered loss because of misappropriation or fraudulent misuse of money or other property by a participant of SFE Corp or of SFE, or by a director, partner, officer or employee of such a participant, where the participant or the person received the money or property in connection with dealing in futures contracts.
A successful claimant will, subject to the limits on payments, be entitled to receive from a fund the amount of the actual loss, all reasonable costs in making and proving the claim and interest on the actual loss (less any benefit which may be received from any other source in reduction of the loss).
Limits on payments
The fund may pay compensation as follows in respect of a claim or claims arising from a particular event or set of related events:
- up $250,000 per claimant;
- up to $2,000,000 per participant;
- up to $4,000,000 in the aggregate (ie if more than one participant is involved).
A person will not have a claim against the fund in where the money or property has, in the due course of administration of a trust, ceased to be under the sole control of a participant.
Powers of SFE to pay compensation
A claim which is made in accordance with the procedures below will be considered by the board or a management committee appointed by the board, which has power to settle proper claims for compensation out of the relevant fidelity fund.
If the board (or the management committee) settles the claim, payment of the appropriate amount will be made as soon as possible. If the board disallows a claim, the claimant may apply to the Court for leave to commence proceedings against the exchange.
How to make a claim
An application for compensation from a fidelity fund should be in writing and present the material facts in a clear and logical manner. There is no specific form of application, but the claimant should provide the information set out below to the Company Secretary:
- names of the parties involved;
- circumstances of the trade and the date, time, place and type of contract traded;
- a statement of the alleged defalcation or misuse of funds;
- details of the pecuniary loss suffered as a result of the defalcation, including precise details as to now the amount was calculated;
- details of all efforts which have been made to recover the amount of the loss from the participant concerned, and any other proceedings taken to recoup the loss prior to the application being made;
- all correspondence, documentation and supporting evidence concerning the matters listed in 1-5.