• COLL Division 8.1.B COLL Division 8.1.B Dealing—QFC Retail Schemes

    Notes for div 8.1.B

    1 The operator of a QFC retail scheme is responsible for issuing and redeeming units on behalf of the scheme. The provisions of this division are intended to ensure that the operator treats persons fairly if they give instructions to the operator to issue or redeem units.
    2 This division also sets out common standards for how the amounts in relation to unit transactions are to be paid. These arrangements include the initial offer of units and the exchange of units for scheme property.
    Derived from QFCRA RM/2010-05 (as from 1st January 2011)

    • COLL 8.1.10 Application of Div 8.1.B to Umbrella Schemes—QFC Retail Schemes

      (1) This division applies to each subscheme of a QFC retail scheme that is an umbrella scheme as if it were a separate QFC retail scheme.

      Note Umbrella scheme and subscheme are defined in r 1.2.11.
      (2) The currency of a subscheme may, if appropriate, be used for the subscheme instead of the base currency of the umbrella scheme.

      Note 1 Base currency is defined in the glossary.

      Note 2 Details of the initial offer must be provided in any prospectus available during the initial offer period (see r S4.16 (c) (Dealing)).
      Derived from QFCRA RM/2010-05 (as from 1st January 2011)

    • COLL 8.1.11 Initial Offers—QFC Retail Schemes

      (1) During the initial offer period for a QFC retail scheme, units may only be issued at the initial price.

      Note Initial offer and initial price are defined in the glossary.
      (2) The length of the initial offer period must not be unreasonable, taking into account the characteristics of the scheme.
      (3) The period of the initial offer comes to an end if the operator believes on reasonable grounds that the price that would reflect the current value of the scheme property would differ from the initial price by more than 2%.
      Derived from QFCRA RM/2010-05 (as from 1st January 2011)

    • COLL 8.1.12 How Units are Issued and Redeemed Etc—QFC Retail Schemes

      (1) Units in a QFC retail scheme are issued or redeemed on behalf of the scheme by the operator making a record of—
      (a) the issue or redemption; and
      (b) the number or percentage of the units in each class that are issued or redeemed.

      Note Issue, redemption and class are defined in the glossary.
      (2) Units in a QFC retail scheme cannot be issued or redeemed in any other way.
      (3) The time of an issue or redemption under subrule (1) is the time the record is made.
      (4) The operator of a QFC retail scheme may arrange for the independent entity to issue or redeem units on behalf of the scheme if the operator would otherwise be obliged to issue or redeem the units on behalf of the scheme.
      Derived from QFCRA RM/2010-05 (as from 1st January 2011)

    • COLL 8.1.13 Controls Over Issue and Redemption of Units—QFC Retail Schemes

      (1) The operator of a QFC retail scheme must ensure that at each valuation point there are at least as many units in issue of any class as there are units registered to unitholders of that class.

      Note Valuation point and class are defined in the glossary.
      (2) In issuing or redeeming units, the operator must not do, or fail to do, anything that would, or might, give the operator, or an associated person for the operator, a benefit or advantage at the expense of a unitholder or a potential unitholder.

      Note Issue, redemption and associated person are defined in the glossary.
      (3) The operator must, as required by these rules and the latest filed prospectus—
      (a) issue and redeem units on behalf of the scheme; and
      (b) arrange for the payment of money or transfer of assets to or from the independent entity for the scheme.

      Note Money and latest filed prospectus are defined in the glossary.
      (4) The operator must keep a record of the issues and redemptions it makes.
      (5) If the operator breaches subrule (1) or (2), it must—
      (a) correct the breach as quickly as possible; and
      (b) reimburse the scheme any costs the scheme may have incurred in correcting the breach, subject to any reasonable level for reimbursement provided in the latest filed prospectus.

      Note Breach is defined in the glossary.
      (6) The operator must have systems and controls to ensure compliance with subrule (1).

      Guidance for controls
      1 GENE principle 4 requires an authorised firm to have effective systems and controls. GENE principle 7 requires an authorised firm to have regard to its customers' interests and to treat them fairly.
      2 The operator should agree a period with the independent entity during which the operator will issue or redeem units. A period up to the next valuation point, but in all cases within 24 hours, may be acceptable if the provisions mentioned in paragraph 1 are complied with.
      Amended by QFCRA RM/2014-3 (as from 1st January 2015)

    • COLL 8.1.14 Issue and Redemption of Units in Multiple Classes—QFC Retail Schemes

      (1) This rule applies to a QFC retail scheme if the scheme has 2 or more classes of units in issue.

      Note Class is defined in the glossary.
      (2) The operator may treat all, or any 2 or more, of the classes (the relevant classes) as a single class in deciding how many units are to be issued or redeemed by reference to a particular valuation point if—
      (a) either—
      (i) the relevant classes have the same entitlement to participate in the scheme property, and the same liability for charges, expenses, and other payments, that may be recovered from the scheme property; or
      (ii) the relevant classes differ only as to whether income is distributed or accumulated by periodic credit to capital, and the price of the units in each class is calculated by reference to undivided shares in the scheme property; and
      (b) the independent entity gives its prior agreement.
      Derived from QFCRA RM/2010-05 (as from 1st January 2011)

    • COLL 8.1.15 Changes to Number of Units Issued or Redeemed—QFC Retail Schemes

      (1) Any instructions to the operator of a QFC retail scheme for the issue or redemption of units may be altered to change the number of units issued or redeemed if the independent entity, after having taken reasonable care in considering the matter—
      (a) is satisfied that—
      (i) the alteration corrects an error in the instruction; and
      (ii) the error is an isolated error; and
      (b) agrees with the change.
      (2) However, the instruction may be altered only within the period within which payment must be made in relation to the unit under rule 8.1.16 (Payment for issued units—QFC retail schemes) or rule 8.1.19 (Payment for redeemed units—QFC retail schemes).
      Derived from QFCRA RM/2010-05 (as from 1st January 2011)

    • COLL 8.1.16 Payment for Issued Units—QFC Retail Schemes

      (1) The operator of a QFC retail scheme must not issue units in the scheme to a person unless the person has paid the independent entity the price of the units and any payments required under rule 8.2.16 (Dilution—QFC retail schemes).

      Note Issue and price are defined in the glossary.
      (2) Any payment made to the independent entity under this rule must be in cash or cleared funds unless rule 8.1.20 (Issue or redemption otherwise than for cash—QFC retail schemes) applies.
      (3) If the operator breaches this rule, the operator must reimburse the scheme for any lost interest unless the amount involved is not, in the independent entity's opinion, material to the scheme.
      Derived from QFCRA RM/2010-05 (as from 1st January 2011)

    • COLL 8.1.17 Issue and Redemption Generally—QFC Retail Schemes

      (1) The operator of a QFC retail scheme must, at all times during a dealing day, be willing to issue units on behalf of the scheme to any person in accordance with any conditions stated in the constitutional document and the latest filed prospectus, unless the operator has reasonable grounds to refuse the issue.

      Note Dealing day, issue and latest filed prospectus are defined in the glossary. Constitutional document is defined in r 3.1.1.
      (2) Conditions mentioned in subrule (1) must be fair and reasonable as between all unitholders and potential unitholders.
      (3) The operator of a QFC retail scheme must, at all times during a dealing day, be willing to redeem on behalf of the scheme units of a unitholder, unless the operator has reasonable grounds to refuse the redemption.

      Note Redemption is defined in the glossary.
      (4) Subject to rule 8.1.21 (Deferred redemption—QFC retail schemes), the operator of a QFC retail scheme must issue or redeem units at a price calculated at the next valuation point for dealing purposes after the operator receives instructions to issue or redeem the units.
      Derived from QFCRA RM/2010-05 (as from 1st January 2011)

    • COLL 8.1.18 When Instructions for Issue or Redemption Must be Given—QFC Retail Schemes

      (1) The latest filed prospectus of a QFC retail scheme must fix a time before a valuation point (the cut-off point) after which the operator must not accept instructions to issue or redeem units on behalf of the scheme at the valuation point.
      (2) The cut-off point must not be earlier than the close of business on the business day before the valuation point to which it relates.
      (3) However, if there are 2 or more valuation points on a day, the cutoff point for a valuation point must not be earlier than the valuation point immediately before it.

      Examples

      If there are 3 valuations points at 10 am, 12 noon and 2 pm on a business day (the relevant day), the cut-off points for the valuations points must comply with the following:
      (a) the cut-off point for the 10 am valuation point cannot be earlier than the close of business on the business day before the relevant day;
      (b) the cut-off point for the 12 noon valuation point cannot be earlier than 10 am on the relevant day;
      (c) the cut-off point for the 2 pm valuation point cannot be earlier than 12 noon on the relevant day.

      Note Rule 8.1.21 (Deferred redemption—QFC retail schemes) allows, in certain circumstances, redemptions at a valuation point to be deferred to the next valuation point.
      (4) Different cut-off points may be used to differentiate between the methods of submitting instructions to redeem to the operator but not to differentiate between unitholders or potential unitholders.
      Derived from QFCRA RM/2010-05 (as from 1st January 2011)

    • COLL 8.1.19 Payment for Redeemed Units—QFC Retail Schemes

      (1) If the operator of a QFC retail scheme redeems units on behalf of the scheme, the operator must, before the close of business on the 4th business day after the day the units are redeemed (or, if later, as soon as practicable after delivery to the independent entity of the evidence of title to the units that the independent entity may reasonably require), request the independent entity to pay the former unitholder the price of the units less any deduction required under rule 8.2.16 (Dilution—QFC retail schemes).

      Note Redemption, business day and price are defined in the glossary.
      (2) The independent entity must make the payment to the unitholder before the close of business on the 6th business day after the day the independent entity receives the request under subrule (1).
      (3) If the scheme property does not, and will not within the period required by subrule (2), include sufficient cash to make the payment in the appropriate currency within that period and the scheme cannot borrow the amount needed to make the payment without breaching rule 7.7.3 (Borrowing limits—QFC retail schemes)), the period is extended, for the relevant currency, until the shortage is rectified.

      Note Borrowing is defined in the glossary.
      (4) If subrule (3) applies, the operator must take reasonable steps to rectify the currency shortage as quickly as possible.
      (5) This rule does not apply if the rule 8.1.20 (Issue or redemption otherwise than for cash—QFC retail schemes) applies.
      (6) This rule does not require the independent entity or operator to pay an amount or transfer scheme property for a redemption of units if an amount is owing on the earlier issue of the units.

      Note Redemption and issue are defined in the glossary.
      Derived from QFCRA RM/2010-05 (as from 1st January 2011)

    • COLL 8.1.20 Issue or Redemption Otherwise than for Cash—QFC Retail Schemes

      The independent entity of a QFC retail scheme may take into or transfer out of the scheme property assets other than cash as payment for the issue or redemption of units, but only if—

      (a) it has taken reasonable care to ensure that the assets would not be likely to result in any material prejudice to the interests of unitholders; and
      (b) the constitutional document and the latest filed prospectus permit it.

      Note Issue and redemption are defined in the glossary. Constitutional document is defined in r 3.1.1.
      Derived from QFCRA RM/2010-05 (as from 1st January 2011)

    • COLL 8.1.21 Deferred Redemption—QFC Retail Schemes

      (1) If a QFC retail schemes has at least 1 valuation point on each business day, the constitutional document and latest filed prospectus may permit deferral of redemptions at a valuation point to the next valuation point if the requested redemptions exceed—
      (a) 10% of the scheme's value; or
      (b) if the latest filed prospectus provides another reasonable percentage—that percentage of the scheme's value.

      Note Constitutional document is defined in r 3.1.1. Latest filed prospectus, business day, redemption and valuation point are defined in the glossary.
      (2) Any deferral of redemptions under subrule (1) must be undertaken in accordance with the procedures explained in the latest filed prospectus.
      (3) The procedures must ensure—
      (a) the consistent treatment of all unitholders who have sought to redeem units at any valuation point at which redemptions are deferred; and
      (b) that all deals relating to an earlier valuation point are completed before deals relating to a later valuation point are considered.

      Note Deal is defined in the glossary.
      Derived from QFCRA RM/2010-05 (as from 1st January 2011)