Clause 64

after subsection (2), insert —“(2A) The Authority may, if it thinks it necessary or expedient in the interests of the public or a section of the public or for the protection of investors, issue written directions, either of a general or specific nature, in relation to the conduct of any additional business by any holder of a capital markets services licence, or class of such licence holders, to any of the following:

a holder of a capital markets services licence or a class of such licence holders;

an additional business representative of a holder of a capital markets services licence or a class of such additional business representatives.(2B) In issuing any direction under subsection (2A), the Authority must have regard to the need to avoid or reduce any risk (including any credit risk, asset risk, liquidity risk, market risk, operational risk, technology risk, market conduct risk, legal risk, reputational risk or regulatory risk) —

that has arisen or may arise from the conduct of the additional business by the licence holder or class of licence holders; and

that may affect the business in a regulated activity of the licence holder or class of licence holders.(2C) Without limiting subsection (2A), any written direction may be issued with respect to —

the standards to be maintained by a holder of a capital markets services licence in the conduct of, and in respect of the risk management of, any additional business;

the manner, method and place of soliciting any additional business by a holder of a capital markets services licence and its additional business representatives, and the conduct of such solicitation;

the manner in which a holder of a capital markets services licence and its additional business representatives makes recommendations to customers in respect of any additional business and the duties of the holder and its representatives when making such recommendations; (d)the manner in which a holder of a capital markets services licence deals with its customers in respect of any additional business of the holder, and any conflicts of interests between the holder and its customers in respect of any additional business of the holder;

the type and frequency of submission of financial returns and other information to the Authority in respect of any additional business carried on by a holder of a capital markets services licence;

the qualifications, experience and training of additional business representatives of a holder of a capital markets services licence in respect of any additional business; and

the maximum amount of capital or financial resources that may be maintained by a holder of a capital markets services licence in respect of any additional business (expressed as an absolute amount or as a percentage of an amount (determined by the Authority) required to address risks arising from the activities of the holder), and the manner in which such amount is to be determined.(2D) In this section —“additional business” means a business in —

dealing in additional financial products; or

providing custodial services in relation to additional financial products;“additional business representative”, in relation to a holder of a capital markets services licence —

means a person, by whatever name called, in the direct employment of, or acting for or by arrangement with the holder, who carries out for the holder any additional business (other than work ordinarily performed by accountants, clerks or cashiers), whether or not the person is remunerated, and whether the person’s remuneration (if any) is by way of salary, wages, commission or otherwise; and

includes, where the holder is a corporation, any officer of the holder who performs for the holder any additional business, whether or not the officer is remunerated, and whether the officer’s remuneration (if any) is by way of salary, wages, commission or otherwise;“additional financial product” means —

any contract or arrangement that is not traded on an organised market that is established or operated by an approved exchange, under which —

a party to the contract or arrangement is required to, or may be required to, discharge all or any of its obligations under the contract or arrangement at some future time; and (ii)the value of the contract or arrangement is determined (whether directly or indirectly, or whether wholly or in part) by reference to, is derived from, or varies by reference to, either of the following:

the value or amount of one or more payment tokens;

fluctuations in the values or amounts of one or more payment tokens;

any spot foreign exchange contract for a purpose other than leveraged foreign exchange trading; or (c)any other product prescribed by the Authority;“dealing in additional financial products” means doing any of the following (whether as principal or agent):

making with any person, or offering to make with any person, any agreement for or with a view to acquiring, disposing of, entering into, effecting, arranging, subscribing for, or underwriting those additional financial products;

inducing any person, or attempting to induce any person, to enter into such agreement;

inducing any person, or attempting to induce any person, to offer to enter into such agreement;“payment token” means any digital representation of value —

that is expressed as a unit;

the value of which is determined in any way, other than being permanently fixed by the issuer of the digital representation of value at the time when the digital representation of value is issued to either a single currency or 2 or more currencies;

that is, or is intended to be, a medium of exchange accepted by the public, or a section of the public, as payment for goods or services or for the discharge of a debt; and

that can be transferred, stored or traded electronically;“providing custodial services”, in relation to additional financial products, means providing or agreeing to provide a service to a person of taking possession or control of those products under an arrangement to carry out any of the following functions for the person:

settlement of transactions relating to the additional financial products;

collecting or distributing dividends or other pecuniary benefits derived from ownership or possession of the additional financial products;

paying tax or other costs associated with the additional financial products;

exercising rights, including without limitation voting rights, attached to or derived from the additional financial products;

any other function necessary or incidental to the safeguarding or administration of the additional financial products,but does not include —

the provision of services to a related corporation or connected person of the service provider, except where the additional financial products in respect of which such services are provided are —

held on trust for another person by the related corporation or connected person;

held as a result of any custodial services provided by the related corporation or connected person to another person; or

beneficially owned by any person other than the related corporation or connected person; and

any other conduct that the Authority may, by order, prescribe.”; and

in subsections (3) and (4), replace “subsection (1)” with “subsection (1) or (2A)”.