Operating Standards for Pool Operators GTA Advisory and Compliance Workshop 2017
GTA Mission“To facilitate & promote trade by providing products,
services and advocacy for the Australian grain value chain.”
Outline
• Role of GTA & Industry Framework
• Code of Practice
• Background to TGD Review
• Activity so far
• Issues & Obligations
• Outcomes
Industry Driven and Managed Framework to Facilitate Trade
Grain
Trading
Standards
Trade
Rules &
Contracts
Dispute
Resolution
Services
Trade &
Market
Access
Industry
Skills &
Capability
Reflect
Requirements
and capabilities
in:
1. Regulation
2. Production
Sector
3. Supply Chain
4. Consumptive
Sector
Improves
Market
Efficiency.
Ensures
confidence in
commercial
dealings by
providing legal
rigour
Underpins
Contractual
Arrangements &
Performance
Engaging with
Policy makers to
ensure fair &
equitable trade
and access to
domestic &
global markets
Increase
Industry
capacity by
providing
vocational
training and
development
programs
Industry driven and managed
Code of Practice
• COP protects the standards, reputation and confidence in the Aust Grains Industry
• Australia only country with COP• All GTA Members required to
adhere to COP• Pool Providers must adhere to
TGD#4 (sec2.7.4)• COP Complaints Process (2.9)
– 2.9.1 Customer Complaints– 2.9.2 Complaints against Code
Signatories
• COP Review 2017/18
Background
Events• ASIC Exemption
– Sunset 2016– Member Update 13/16 view on exemption
& self regulatory framework– GTA Submission to ASIC
• GTA Submission to ASIC:– Robust & Effective Self Regulation– Regulation would entail higher costs to
growers, and not improve returns– Noted concerns around “unrealistic” EPRs
& cost transparency– Code Of Practice & TGD4
• Support Exemption• Noted industry concerns on “inflated
EPRs” & transparency of fees
• Unfair Contract Laws (ACCC)• Last TGD review in 2013
ASIC Exemption – from MIS • “Ordinarily, grain pools are generally
captured under the definition of a managed investment schemes. Such schemes attract a number of compliance requirements under the Act, however for the past 10 years ASIC has granted relief to Schemes through the Class Order. The regulatory provisions in the Act that the Class Order exempts Schemes from are:
• the requirement to register the scheme with ASIC (subsection 601ED(5));
• he requirement for a person to hold an AFSL (subsection 911A(1));
• the prohibition of hawking (unsolicited marketing of managed investment schemes) (section 992A); and
• the obligation to provide a Product Disclosure Statement (Part 7.9).”
Unfair Contract laws
• Balance in contracts – unilateral rights to amend, indemnities
• GTA Legal advice on GTA SFGCs
• Member Update 12/16 – Awareness & information to Members
• ACCC Reviewing grain and pooling contracts– Balance of power in contracts
– Unilateral changes to contracts (prices and fees)
– Indemnity/limitation of liability within contracts
Timeline & Activity so far…
Time Activity
8/16 Pool Operating Sub-Committee (of Commerce) formed• Members from Pool Ops, Risk Advisors, Non-Pool Ops, Prod Sector
9/16 1. Member Update - ASIC Exemption Submission
12/16 2. GTA Member Update – Review of Pool Operating Stds (TGD4)• Submission from members of pool issues
12/16 to 7/17
4. Sub-Committee Meetings• 9 meetings • ~15-20 hours, several sub-com submission/out of committee work
7/17 5. GTA Member Submission Process- Round 2• Draft TGD, PPGD, Issues for further input
Still to come
• Review Submissions and issues for further input• Finalise draft Docs• Commerce Committee => GTA Board => Release to Industry
Issues Considered and Discussed by Sub-Committee…so far
• Definitions of key terms• Enforceability under the COP• Accountability and Transparency• Product information descriptions and disclosures• Hawking and potential for Misleading Statements• Estimated Silo Returns (ESRs) • Publicly available and accessible historical Pool results/data • Publicly stated closure dates of Pools• Segregation (“Ring Fencing”) of Funds and Activities from Pool Providers
and Pool Managers• Audit of Pools and Guideline documents• Inclusion, or not, of GTA Dispute Resolution and Arbitration services into
Product Terms and Conditions• Inclusion, or not, of GTA Trade Rules into Product Terms and Conditions • Projections and forward looking statements.• Development of template Pool Product Disclosure Guide
Issues Summary
Submissions
• EPRs
• Transparency
• Consistency
• Disclosure
Sub-Committee
• Clear and Common Definitions
• Accountability
• “inflated EPRs”
• Comparative Prices
• Product Disclosure
• Audit
“WVID”….Volume weighted Issues Discussion index!!
TGD #4 Draft DocumentIssue Content Summary
Purpose & Objective Outline Industry accepted base operating standards
Participants Encourage due diligence & awareness (read & research)
Definitions Transparency & consistencyfocus has been on EPRs/ESRs & Ring Fencing
Duties of Pool Provider
• Honesty, integrity, care, diligence, fiduciary responsibility• Disclosure• Abide by definitions• Arbitration• PPDG
TGD #4 Draft Document (cont)Issue Content Summary
EPR • Disclosure Fees & charges• Regular Updates & publish• Justifiable• Adverse material change
Reporting & auditing • 1/4ly report on performance & operations• Publish EPR history• Final Audit (records & compliance)• Consequences……
PPDG • Consistent & Comparative• Explanatory• Principles – timely, relevant, sufficient & important info
General Principles • Statements – past & present• False/misleading /deceptive
• Justifiable forecasts• Opinions / ambiguity / promises• Likely impressions• Examples• Disclosure & accuracy
Specific Issues in Member Update1. EPRs- Whether, or not, Estimated Pool Returns (EPRs) should be made available
or published by Pool Providers while a Pool is open for contracting, and whether the TGD should specifically prohibit the availability or publication of EPR’s while a Pool is open for contracting.
2. Audit - The time period upon which a final audit of a pool must be undertaken (and published) from the final payment of the Pool to Pool Participants.
3. Tonnage - Whether or not the tonnage delivered into each Pool Product should be included in the Final Audit Report. The purpose of this would be to ascertain the relative significance of particular products and performance.
4. Arbitration - Whether GTA Dispute Resolution and Arbitration processes be incorporated into the TGD and Pool Terms and Conditions (noting the Sub-Committee supports this)
5. Trade Rules - Whether GTA Trade Rules be incorporated into the TGD and Pool Terms and Conditions. The Sub-Committee requests further guidance from Industry noting that many of the GTA Trade Rules may not be relevant to Pools and that Pool Providers own terms and conditions cater to specific “Trade” related issues around Pools.
“Pool Product Disclosure Guide”
• Brief (30 word) explanations
• Yes/No
Who
Aim of Mandate of the pool
Legal entity operating the pool
Years this legal entity has run
pools
Legal Entity owning the pooled
grain
Name of responsible Pool
Manager
Pool manager’s years of
relevant experience
What
Aim of the pool
Period open for
deliveries/contracts
Length of pool
Area where pool is offered
Commodities/Grades accepted
Hedging tools used (if any)
Payment options
Fees charged by the pool manager
When will Final Audit be
Completed?
“Pool Product Disclosure Guide”Key Details
Will the pool be offered according to the GTA operating standard for pool
providers?
Does the pool provide participants with an Estimated Pool Return (EPR*)?
Does the pool provide participants with an Estimated Silo Return (ESR*)?
Does the pool provide participants with an Final Pool Return (FPR*)?
Does the pool provide participants with an Final Silo Return (FSR*)?
Does the Pool provide a Guaranteed Pool Return (GPR*)?
Does the Pool provide an Underwritten Pool Return (UPR*)?
Is there a potential for conflict between the pool manager and related
entities?
Are the pool assets owned in a separate entity from the pool manager’s
assets?
Are the pool activities conducted separately from the pool managers
activities
Desired Outcomes
• Updated TDG with revised drafting
• PPDG
• Improved:
– Rigour & consistency
– Consumer Protection
– Clarity & Min Industry accepted Stds
– Reputation & Confidence – Product & Industry
• Approvals:
– Sub-Committee, Commerce Committee, GTA Board
Summary
• Purpose
• Self Regulatory Framework
• Industry Driven- Committee and Consultation
• Key Issues
• Improved Outcome..
Questions & Discussion…..
GTA Contact Details
Pat O’Shannassy– CEOSheryl Brown – Office ManagerWendy Henry – Training Co-ordinatorConsultants:Rosemary Richards– TMA & Conference ConsultantGerard McMullen – Grain Quality
Level 7, 12 O’Connell Street, Sydney NSW 2000
PO Box R1829, Royal Exchange NSW 1225
Phone: 02 9235 - 2155Fax: 02 9235 - 0194Email: [email protected]: www.graintrade.org.au
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