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Exemption from Part VII of Act for interests in listed securities as a result of securities lending arrangements

Securities and Futures (Disclosure of Interests) Regulations 2012

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—(1) Part VII of the Act shall not apply to ––(a)any person who is —(i)the holder of a capital markets services licence for dealing in securities;(ii)an exempt person in respect of dealing in securities; or(iii)a person who is licensed, approved, authorised or otherwise regulated under the laws, codes or other requirements of any foreign jurisdiction in respect of dealing in securities, or who is exempted therefrom in respect of dealing in securities,and who acts as a securities lending intermediary under a securities lending arrangement pursuant to which listed securities are transferred into and out of his securities account within 2 business days, in respect of his interest in those listed securities and any change in that interest as a result of such transfer; or(b)any substantial shareholder or substantial unitholder (referred to in this regulation as the lender) who is not a person referred to in sub-paragraph (a) and who transfers any listed securities for which he is such a substantial shareholder or unitholder to another person (referred to in this regulation as the borrower) under a securities lending arrangement to which this paragraph applies, in respect of any change in his interest in the listed securities.(2) Paragraph (1)(b) applies to a securities lending arrangement under which the lender is entitled to —(a)receive all interest, dividends or other distributions of any kind that are paid or made in relation to the listed securities during the term of the arrangement;(b)require the borrower to exercise any voting rights attached to the listed securities in accordance with the lender’s instructions during the term of the arrangement; and(c)require the borrower to return the listed securities —(i)at an agreed point in time;(ii)within an agreed period of time; or(iii)within a specified time upon the lender giving notice to the borrower,during the term of the arrangement.(3) For the purposes of paragraph (2), “interest, dividends or other distributions of any kind” includes an amount equivalent to such interest, dividends or other distributions which is factored into —(a)the price payable to the borrower for the return of the listed securities to the lender by way of a corresponding reduction of the price; or(b)the transaction costs or fees payable to the lender for lending the listed securities to the borrower by way of a corresponding increase of the costs or fees.(4) In this regulation —“securities account” includes a sub-account of a securities lending intermediary in a securities lending arrangement;“securities lending arrangement” means an arrangement in writing where the owner of listed securities is to transfer part or all of the securities to another person for an agreed period of time after which the second-mentioned person is to transfer those securities back to the first-mentioned person;“securities lending intermediary” means a person who, pursuant to a securities lending arrangement, acquires listed securities in order to on-deliver them to a customer, and does not acquire the listed securities for his own proprietary needs.

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