Request for proposals – Trading of commonwealth government securities on financial markets in Australia

AOFM Coat of Arm

Contents

Request for Proposals – Trading of Commonwealth Government Securities on Financial Markets in Australia

Version 2.026 June 2012

PART I – INTRODUCTION

1 Purpose of this Request For Proposals

1.1 The Commonwealth, represented by and acting through the Australian Office of Financial Management (the AOFM), is seeking proposals for the trading of Commonwealth Government Securities (CGS) on financial markets in Australia that can be readily accessed by retail investors.

1.2 Consistent with the aim of promoting competition in the provision of financial services more than one proposal may be accepted (that is, CGS could be traded on more than one financial market accessible to retail investors). Contractual arrangements for the provision of this service will therefore be on a non-exclusive basis.

1.3 This is a standing RFP and remains current unless replaced by an amended RFP for these services or is withdrawn.

2 Background

2.1 The AOFM is a specialised agency responsible for the management of Australian Government debt, including the issue of CGS. The AOFM also manages the Government’s cash balances and invests in financial assets.

2.2 The Australian Government wishes to facilitate the trading of CGS on financial markets accessible to retail investors, as part of a broad agenda to foster a deep and liquid corporate bond market, promote Australia as a leading financial services hub and boost Australia’s reputation as one of the most attractive investment destinations in the world. This is expected to provide retail investors with a more visible pricing benchmark for investments they may wish to make in corporate bonds issued by Australian businesses, as well as help further encourage retail investors to consider diversifying their savings through investments in fixed-income products like government and corporate bonds.

2.3 The Australian Government currently issues CGS in the form of:

  • Treasury Bonds, which are medium to long-term debt securities that carry an annual rate of interest fixed over the life of the security, payable six monthly.
  • Treasury Indexed Bonds, which are medium to long-term securities for which the capital value of the security is adjusted for movements in the Consumer Price Index (CPI). Interest is paid quarterly, at a fixed rate, on the adjusted capital value. At maturity, investors receive the adjusted capital value of the security – the value adjusted for movement in the CPI over the life of the bond.
  • Treasury Notes, which are short-term securities issued to assist with the Australian Government’s within-year financing task.

2.4 CGS are issued in accordance with the Commonwealth Inscribed Stock Act 1911 (Cth) (the CIS Act) and associated regulations. The CIS Act and the associated regulations provide for the issuance of CGS and contain detailed rules about, among other things, the holding and transfer of CGS and the maintenance of stock ledgers in relation to CGS. Proposals must be consistent with the requirements of this legislation and regulations. However, for CGS which are to be held in a sub-register maintained by prescribed clearing and settlement facilities, the Australian Government is considering proposing to Parliament amendments to the CIS Act which may be more facilitative of certain Proposals.

2.5 CGS are issued by competitive tender, or on occasion, by syndicated offer. Bids for stock offered for sale at tender may only be submitted by parties that are registered with the AOFM. Successful tender bids and stock sold by syndicated offer are settled in the Austraclear System. No changes to issuance arrangements for CGS are planned as a result of the trading of CGS on financial markets accessible to retail investors.

2.6 All Treasury Bonds and Treasury Indexed Bonds are quoted on the Australian Securities Exchange (ASX). However, neither Treasury Bonds nor Treasury Indexed Bonds are currently traded on the ASX.

2.7 The registry for CGS issued in Australia is currently operated by the Reserve Bank of Australia (RBA). The AOFM has issued a request for tender for registry services for CGS to replace the current service provided by the RBA. The registry service procured through this process is expected to have the functionality to support the electronic trading of CGS and provide on-line services to investors.

2.8 More information about the AOFM and CGS is available at the AOFM’s Internet Web site at http://www.aofm.gov.au.

3 Brief Summary of Requirements

3.1 The requirement is for the delivery of services for the trading of Treasury Bonds and Treasury Indexed Bonds on financial markets in Australia that can be readily and cost-effectively accessed by retail investors.

3.2 It is recognised that the short tenor of Treasury Notes is likely to make it costly to offer the trading of Treasury Notes to retail investors. Proposals therefore do not need to provide for the trading of Treasury Notes.

3.3 Proposals will only be considered from Market Operators that are current holders of a licence to operate a financial market in Australia, approved in accordance with Chapter 7 of the Corporations Act 2001 (Cth). The licence must meet the criteria set out in Clause 34.

3.4 Proposals must include details of planned arrangements for the clearing and settlement of CGS transactions undertaken on the financial market in accordance with the criteria set out in Clause 35.

3.5 Proposals must include details of any amendments to, or waivers of, any applicable listing, clearing, settlement, operating, market or other system rules or procedures which are necessary or desirable to give effect to the Proposal and the mechanism within or outside those rules through which those amendments or waivers will be effected.

3.6 The services are to be performed in accordance with industry best practice standards and rendered by qualified well-trained, skilled, and experienced personnel.

3.7 Successful Market Operators will be required to enter into contractual arrangements satisfactory to the AOFM consistent with the Statement of Contractual Principles at the Addendum to this RFP.

4 Proposal Evaluation

4.1 Following receipt of a proposal, an evaluation process will take place as detailed in Clause 30.

4.2 Any Proposal that does not comply with the requirements listed in Parts II, III and IV will be excluded from further evaluation.

4.3 The AOFM may conditionally accept a Proposal subject to the negotiation and execution of contractual arrangements satisfactory to the AOFM, or any other conditions considered appropriate by the AOFM.

5 Definition of Terms Used in this RFP

5.1 In this RFP, unless the contrary intention appears:
AOFM means the Commonwealth of Australia represented by the Australian Office of Financial Management.

Commonwealth means the Commonwealth of Australia.

Contact Officer means the person identified in Clause 8.

Contract means the contract or agreement (if any) entered into by the AOFM and a Successful Market Operator.

Evaluation Criteria means the criteria set out in Clause 30.

Market Operator means any entity that meets the criteria set out in Clause 34, and submits or considers submitting a Proposal.

Proposal means any Proposal submitted in response to this RFP.

Request for Proposals or RFP means this Request for Proposals, including all Parts, Schedules, Attachments, Annexures and/or Appendices (if any) and any variations and addenda issued.

Services means all or, as the context requires, any part of the services to be provided by a Successful Market Operator under the Contract, as amended from time to time.

Statement of Contractual Principles means the Statement of Contractual Principles at the Addendum to this RFP.

Successful Market Operator means a Market Operator selected by AOFM to provide the service.

PART II – INSTRUCTIONS TO MARKET OPERATORS

6 Preparation of Proposals

6.1 The Market Operator is required to respond to this RFP by completing Proposal Schedules A, B, C, D, E, F and G to this RFP. Failure to complete any of these schedules may result in the Proposal not being evaluated.

6.2 The Market Operator must complete the responses in accordance with this PART II – Instructions to Market Operators, PART III – Conditions of Request for Proposals, and PART IV – Other Requirements. Market Operators who do not comply with all of the requirements set out in Parts II, III and IV will not have their Proposals evaluated.

7 Submission of Proposals

7.1 Proposals must be prepared in accordance with this RFP and may be submitted by mail or email. Proposals submitted by mail must include a copy of the proposal in an electronic format.

7.2 Proposals should be addressed to:

Mr Gerald Dodgson
Australian Office of Financial Management
Treasury Building
Langton Crescent
PARKES ACT 2600

Email: Gerald.Dodgson@aofm.gov.au

8 Contact Officer for RFP Inquiries

8.1 The point of contact for all matters concerning this RFP is:

Contact Officer: Mr Gerald Dodgson

Telephone: +61 2 6263 1141

Email:
Gerald.Dodgson@aofm.gov.au

Request for Proposals – Trading of Commonwealth Government Securities on Financial Markets in Australia

Version 2.0
26 June 2012

PART III – CONDITIONS OF REQUEST FOR PROPOSALS

9 Precedence

9.1 If there is any inconsistency between the documents in this RFP, the documents will be interpreted in the following descending order of precedence:

(a) Part III – Conditions of Request for Proposals;

(b) Part IV – Other Requirements;

(c) Part V – Proposal Schedules;

(d) Part II – Instructions to Market Operators; and

(e) Part I – Introduction.

10 No Contractual Obligation

10.1 Nothing in this RFP will be construed to create any binding contract (express or implied) between AOFM and any Market Operator until a written Contract is entered into with a Successful Market Operator (if any). Any conduct or statement whether prior to or subsequent to the issuance of this RFP is not, and this RFP is not, and must not be deemed to be:

(a) an offer to contract; or

(b) a binding undertaking of any kind by AOFM (including, without limitation, quasi-contractual rights, promissory estoppel, or rights with a similar legal basis).

11 Conditions on AOFM Provision of Information

11.1 All information written, oral or in any other form which has been and may subsequently be made available to Market Operators is provided on the following conditions:

(a) In making a decision to submit or not to submit a Proposal or in interpreting this RFP, Market Operators must not rely on:

(i) any representation, whether orally or in writing, other than as expressed in this RFP or in any addenda to this RFP; or

(ii) other conduct of AOFM, or any of its officers, employees, advisers or agents.

(b) The contents of this RFP are believed to be accurate as at the date of issue of this RFP. The accuracy of any statements, projections, opinions, forecasts or other information contained in this RFP may change.

(c) Where any such information relates to future matters, no steps have been taken to verify that the information is based on reasonable grounds, and no representation or warranty, whether express or implied, is made by AOFM, or any of its officers, employees, advisers or agents that the statements contained in this RFP are accurate or will be achieved.

(d) Except so far as liability under any statute cannot be excluded and then only to the extent required by statute, neither AOFM, nor its officers, employees, advisers and agents will in any way be liable to any person or body for any loss, damage, cost or expense of any nature arising in any way out of or in connection with the statements, opinions, projections, forecasts or other representations, actual or implied, contained in or omitted from this RFP or by reason of any reliance thereon by any person or body.

(e) Market Operators must seek their own professional advice as appropriate.

12 Responsibility of Market Operators to Inform Themselves

12.1 It is the sole responsibility of Market Operators to obtain all information necessary and relevant to a response to this RFP.

12.2 All Market Operators are deemed, and acknowledge accordingly, to have:

(a) examined this RFP, any documents referred to in this RFP, and any other information made available in writing by AOFM to Market Operators for the purpose of submitting a Proposal;

(b) sought and examined all further information relevant to the risks, contingencies, and any other circumstances which have an effect on the Market Operators’ Proposal and which is obtainable by making enquiries; and

(c) satisfied themselves as to the correctness and sufficiency of their Proposal including the prices associated with the Proposal.

12.3 Should a Market Operator find any discrepancy, inconsistency, error or omission in this RFP, the Market Operator should notify the Contact Officer in writing as soon as reasonably practicable.

13 Reservation of Rights of AOFM

13.1 In addition to and without limiting its other rights in this RFP, at law or otherwise, AOFM may, in its sole and absolute discretion and at any stage of the RFP process, do all or any of the following:

(a) amend this RFP;

(b) suspend, postpone or cancel this RFP process or any part of it at any time, and AOFM will not be liable for any loss, damage or cost caused to, or incurred by, Market Operators by such an event;

(c) seek amended Proposals or call for new Proposals;

(d) negotiate with one or more Market Operators in respect of fees, contract terms or any other matter without prior notice to any other Market Operator;

(e) terminate any negotiations being conducted at any time with any Market Operator for any reason;

(f) request clarification from any Market Operator or anyone else on any aspect of a Proposal;

(g) provide additional instructions, information or clarification;

(h) allow or not allow another entity to take over a Proposal in substitution for the original Market Operator;

(i) consider any information in its evaluation of Proposals; and

(j) if AOFM considers that no Proposal is acceptable or offers value for money, or if it is otherwise in the public interest to do so, terminate the RFP process.

13.2 AOFM will not be liable or in any way responsible for:

(a) any losses, costs, expenses, claims or damages resulting from the exercise of any of AOFM’s rights referred to in Clause 13.1;

(b) any failure to inform a potential Market Operator of a change relating to this RFP arising by AOFM exercising its rights under Clause 13.1; or

(c) any cost, expense, loss, claim or damage arising out of, or in connection with, a Market Operator’s participation in this RFP process including, without limitation, the preparation and submission of a Proposal, participation in a presentation and interview, or the preparation and negotiation of an Contract to provide the Services.

14 Changes to the RFP

14.1 This RFP may be withdrawn or replaced by an amended RFP at any time.

15 Ownership of the RFP & Proposal Documents

15.1 All documents comprising this RFP, including all its parts, appendices, attachments, schedules, annexures, variations and addenda, Specifications & Other Requirements, remain the property of AOFM, but each Market Operator is permitted to use them for the purpose only of compiling its Proposal.

15.2 All copies of a Proposal submitted to AOFM become the property of AOFM. AOFM may replicate the Proposal documents and use them for the purposes of the RFP process including Proposal evaluation, the preparation of any Contract to be entered into by AOFM, audit requirements and complying with governmental and parliamentary reporting requirements including requests for information by Parliament or Parliamentary Committees.

16 Collusive Behaviour & Improper Conduct

16.1 Market Operators and their officers, employees, agents and subcontractors must not engage in any collusive behaviour, anti-competitive conduct or any similar behaviour with any other Market Operator or any other person in relation to the preparation or submission of Proposals.

16.2 AOFM may involve the Australian Competition and Consumer Commission (ACCC) in relation to any competition issues concerning a Market Operator or related to a Proposal.

16.3 Market Operators must not use the improper assistance of any Commonwealth employee, or use information obtained unlawfully or in breach of an obligation of confidentiality to the Commonwealth, in preparing their Proposals.

16.4 The Market Operator warrants that neither the Market Operator nor any of its officers, employees, agents or subcontractors has attempted or will attempt to improperly influence an officer, employee, adviser or agent of AOFM in connection with the evaluation of Proposals, nor approach any Minister or Commonwealth officer concerning the Proposal process other than the Contact Officer.

16.5 In addition to any other remedies available under any law or any contract, AOFM reserves the right, in its sole and absolute discretion, immediately to reject at any time any Proposal submitted by a Market Operator that is engaging or has engaged in any collusive behaviour, anti-competitive conduct or any other similar conduct in relation to the preparation or submission of Proposals or which does not comply with this Clause 16.

16.6 Market Operators must not make false or misleading statements in their Proposals. The AOFM reserves the right, in its sole and absolute discretion, to reject at any time any response where on reasonable grounds it believes that the response contains false or misleading statements, and regardless of whether the false or misleading statements are made intentionally or unintentionally.

17 Conflict of Interest

17.1 Market Operators warrant that, except as notified in Proposal Schedule A – Declaration by the Market Operator, at the time of submitting their Proposals, no conflict of interest exists, or is likely to arise, which would affect the performance of their obligations under any Contract entered with AOFM arising out of this RFP.

17.2 In the event of a conflict of interest being identified AOFM may, in its sole and absolute discretion, exclude the Proposal from further consideration.

18 Privacy

18.1 Market Operators are advised that it is Australian Government policy to ensure that there is no loss of privacy protection when an Australian Government body contracts for the performance of services.

18.2 Successful Market Operators must agree in the Contract to comply with the Privacy Act 1988 (Cth), including the Information Privacy Principles, National Privacy Principles and privacy codes of practice, although there may be no legislative requirement to do so.

18.3 Each Market Operator should obtain, and will be deemed to have obtained, its own advice on the impact of the Privacy Act 1988 (Cth).

19 Australian National Audit Office

19.1 The attention of Market Operators is drawn to the Auditor-General Act 1997 (Cth), which provides the Auditor-General, or a person duly authorised by the Auditor-General, with a right to have at all reasonable times access to information, documents, records and assets.

19.2 In addition to the Auditor-General’s powers under the Auditor-General Act 1997 (Cth), if a Market Operator is chosen to enter into an Contract, the Market Operator will be required to provide the Auditor-General or their authorised representative access to information, documents, records and AOFM assets, including those on the Market Operator’s premises. This will be required at reasonable times on giving reasonable notice for the purpose of carrying out the Auditor-General’s functions and will be restricted to information and assets which are in the custody or control of the Market Operator, its officers, employees, agents or subcontractors, and which are related to the Contract entered into as a result of this RFP. Such access will apply for the Term of the Contract and for a period of seven (7) years from the date of its expiration or termination.

19.3 Market Operators should obtain, and will be deemed to have obtained, their own advice on the impact of the Auditor-General Act 1997 (Cth) on their Proposal.

20 Market Operator’s Confidential Information

20.1 Subject to this Clause 20, AOFM will treat as confidential any information provided by Market Operators prior to the award of a Contract and, in respect of unsuccessful Market Operators, after a Contract (if any) is awarded.

20.2 Once a Contract has been awarded, AOFM will not keep such information confidential if it was provided by the Successful Market Operator unless:

(a) the specific information is by its nature confidential;

(b) the Market Operator requests that specific information should be kept confidential; and

(c) AOFM agrees to that request by listing the information as Confidential Information in the Contract.

20.3 The obligation of confidentiality in Clause 20.1 does not apply if the information:

(a) is disclosed by AOFM to its advisers or employees solely in order to consider the Proposal responses;

(b) is disclosed by AOFM to the responsible Minister;

(c) is disclosed by AOFM for public accountability reasons or in response to a request by a House or a Committee of the Parliament of the Commonwealth of Australia;

(d) is authorised or required by law to be disclosed; or

(e) is in the public domain otherwise than due to a breach of Clause 20.1 or 20.2.

20.4 To enable AOFM to consider whether it agrees to keep specific information confidential, Market Operators must include in Proposal Schedule A – Declaration by the Market Operator any request that information is to be treated as confidential in the event that a Contract is entered into with it, specifying the reasons why it is necessary to keep the information confidential.

20.5 AOFM will consider any request made under Clause 20.4 and will inform the Market Operator whether or not AOFM, in its sole and absolute discretion, agrees to the request and the terms under which it agrees. AOFM will agree to keep confidential any specific information having regard to the matters covered by the Commonwealth’s Guidance on Confidentiality in Procurement.

20.6 The Market Operator agrees that, notwithstanding the provisions of this Clause 20 the Market Operator allows AOFM to publish details for contracts valued at $100,000 (including GST) or more on its website in accordance with the Senate Order on Departmental and Agency Contracts.

21 AOFM Confidential Information & Security Requirements

21.1 All Market Operators are required to ensure that they and any of their officers, employees, agents or subcontractors involved in any way in preparing their Proposal do not directly or indirectly record, divulge or communicate to any person any Confidential Information concerning the affairs of AOFM acquired or obtained in the course of preparing a Proposal for this RFP.

22 Freedom of Information

22.1 The attention of Market Operators is further drawn to the Freedom of Information Act 1982 (Cth), which grants members of the public rights of access to official documents of the Australian Government and its agencies including AOFM. Market Operators should obtain and will be deemed to have obtained their own advice on the impact of the Freedom of Information Act 1982 (Cth) on their Proposal.

23 Compliance with Laws & Commonwealth Policies

23.1 In the RFP process, all Market Operators undertake to comply with all statutes, regulations, by-laws, codes, ordinances or subordinate legislation in force from time to time, including in particular but not limited to, the Commonwealth Inscribed Stock Act 1911 (Cth); Corporations Act 2001 (Cth); Crimes Act 1914 (Cth); Racial Discrimination Act 1975 (Cth); Sex Discrimination Act 1984 (Cth); Disability Discrimination Act 1992 (Cth); Fair Work Act 2009 (Cth); Equal Opportunity for Women in the Workplace Act 1999 (Cth); Privacy Act 1988 (Cth); Occupational Health and Safety Act 1991 (Cth); Safety, Rehabilitation and Compensation Act 1988 (Cth); Environment Protection and Biodiversity Conservation Act 1999 (Cth); Auditor-General Act 1997 (Cth); Financial Management and Accountability Act 1997 (Cth); and the Public Service Act 1999 (Cth). It will be a term of the Contract with any Successful Market Operator that it complies with all such statutes, regulations, by-laws, codes, ordinances or subordinate legislation.

23.2 In addition to compliance with the statutes, regulations, by-laws, codes, ordinances or subordinate legislation specified above, it will also be a term of the Contract with any Successful Market Operator that it complies with the specific policies identified in this RFP and will all other relevant policies and guidelines of AOFM and the Australian Government.

24 Equal Opportunity for Women in the Workplace

24.1 It is Australian Government policy that the Commonwealth does not acquire goods or services from a supplier who does not comply with the Equal Opportunity for Women in the Workplace Act 1999 (Cth).

24.2 Any Successful Market Operator will be required to comply with the Equal Opportunity for Women in the Workplace Act 1999 (Cth). The Successful Market Operator will also be prevented from entering into a contract in relation to the Services with a non-complying supplier. AOFM may decide not to further consider a Proposal submitted by a Market Operator who is currently named as not complying with the Act.

24.3 Market Operators must state in Proposal Schedule A – Declaration by the Market Operator whether or not they are currently named as not complying with the Equal Opportunity for Women in the Workplace Act 1999 (Cth).

25 Occupational Health & Safety Requirements

25.1 Market Operators will be required to act in such a way as not by action or omission to place the Commonwealth in breach of its obligations under the Occupational Health and Safety Act 1991 (Cth). Market Operators should be aware that they also may have their own obligations under the law in relation to these matters with which strict compliance will be required.

25.2 Market Operators should examine all information necessary to ascertain the risks, contingencies and other circumstances related to the safety of their personnel in undertaking the work. The onus will be upon the Market Operators to establish safe systems of work and to take all reasonable practicable steps to preserve the health and safety of their personnel.

26 Environmental Protection

26.1 AOFM requires that all Market Operators consider environmental preservation and protection as it relates to the Services required under this RFP. This may include the use of environmentally friendly products and plant and equipment, recycling, waste disposal, handling of hazardous/dangerous materials, non-smoking in Commonwealth enclosed premises, syringes and needles used in drug addiction, and other environment-related issues as they relate to or have an impact on the Services required.

27 Workplace Relations

27.1 Market Operators should note that the Australian Government Fair Work Principles apply to this procurement.

27.2 In particular, Market Operators should note that in accordance with the Fair Work Principles Commonwealth agencies will not enter into a contract with a party who:

(a) fails, when required by the Commonwealth, to confirm it understands and complies with all relevant workplace relations law, occupational health and safety law, or worker’s compensation law;

(b) is subject to an order from any Court or Tribunal decisions relating to a breach or workplace relations law, occupational health and safety law, or workers’ compensation law with which the Market Operator has not fully complied or is not fully complying;

(c) has a Fair Work Act 2009 (Cth) agreement that was made on or after 1 January 2010 that does not include genuine dispute resolution procedures; or

(d) fails to provide information when requested by the AOFM relevant to their compliance with the Fair Work Principles.

27.3 Market Operators must address their compliance with the Fair Work Principles in Proposal Schedule A – Declaration by the Market Operator.

28 Use of English Language & Metric Units in Proposals

28.1 All Proposals, including any additional documents in support thereof, must be in the English language and any references therein relating to measurements and dimensions must be expressed in metric units.

29 Prices & Costs

29.1 All prices and costs in relation to a Proposal should be in Australian currency, and must be inclusive of Goods and Services Tax (GST).

29.2 Prices and costs are to be inclusive of all costs of complying with this RFP and associated with doing all things necessary for the due and proper performance of any Contract under this RFP.

30 Evaluation Criteria

30.1 AOFM will evaluate each valid and compliant Proposal using the Evaluation Criteria set out below. The criteria are not listed in order of importance and are as follows:

(a) how readily and cost effectively retail investors can access and utilise the arrangements for the buying and selling of CGS under the Proposal;

(b) the potential of the Proposal to enhance competition in the provision of the required Services and competition between financial markets operating in Australia;

(c) the demonstrated capacity, capability and expertise of the Market Operator to deliver the required Services;

(d) the Market Operator’s prices and fees charged to the Commonwealth, and other costs to the Commonwealth associated with implementing the Proposal (AOFM is obliged to satisfy itself that the prices offered are reasonable. Each Market Operator agrees to provide access to such information as determined by the AOFM as necessary for it to evaluate the reasonableness of the Market Operator’s prices. Subject to this RFP, any such information provided to AOFM will be treated as confidential.); and

(e) the level of compliance with the Statement of Contractual Principles and the assessed level of risk relating to the negotiation of contractual arrangements acceptable to the Commonwealth.

30.2 AOFM may also consider any additional information included in the Market Operators’ responses.

30.3 AOFM may at its absolute discretion conduct presentations, interviews and site visits or reference checks. If a presentation and/or interview or a site visit is undertaken, or referee is contacted, the presentation and/or interview or site visit or referee contact will form part of the evaluation process.

30.4 Following completion of the evaluation process, the AOFM will decide whether or not to accept the Proposal, and the conditions attached to the acceptance.

31 Negotiations

31.1 Acceptance of a Proposal may be subject to negotiations at the sole and absolute discretion of AOFM.

31.2 In any negotiation process, AOFM may require the submission of any written documents or information that may be required for the purposes of the Contract to be entered into under this RFP.

31.3 Without limiting its other rights under this RFP if, in the sole and absolute opinion of AOFM, during final negotiations a Market Operator has retracted, or attempts to retract, contracts under which material business, financial, technical and legal issues were resolved during negotiations, AOFM may reject the Market Operator’s Proposal, discontinue negotiations with that Market Operator, and exercise any other right the AOFM has under this RFP, at law or otherwise.

32 Debriefing of Unsuccessful Market Operators

32.1 Upon the written request of any unsuccessful Market Operator, AOFM will provide a debriefing to the unsuccessful Market Operator.

33 Applicable Law & Court Jurisdiction

33.1 The laws in force in the Australian Capital Territory apply to this RFP.

33.2 All Market Operators agree to submit to the exclusive jurisdiction of the courts of the Australian Capital Territory.

PART IV – OTHER REQUIREMENTS

34 Qualifications of Market Operators

34.1 Proposals will only be considered from Market Operators that are current holders of a licence to operate a financial market in Australia, approved in accordance with Chapter 7 of the Corporations Act 2001 (Cth).

34.2 The market licence must meet the following criteria:
(a) the licence is granted under subsection 795B(1) of the Corporations Act 2001 (Cth); and

(b) the conditions imposed on the licence under section 796A of the Corporations Act 2001 (Cth):
(i) permit the trading of CGS on the market (whether expressly or as part of a broader category of financial products); and

(ii) do not prohibit participants from transacting on the market on behalf of retail clients.

35 Clearing and Settlement Arrangements

35.1 Market Operators must have appropriate clearing and settlement arrangements for CGS transactions effected through their market.

35.2 Clearing and settlement must be undertaken by a clearing and settlement facility licensed to operate in Australia, approved in accordance with Chapter 7 of the Corporations Act 2001 (Cth). The clearing and settlement facility licence must meet the following criteria:
(a) the licence is granted under subsection 824B(1) of the Corporations Act 2001 (Cth); and

(b) the conditions imposed on the licence under section 825A of the Corporations Act 2001 (Cth):
(i) permit the settlement of obligations arising from transactions in CGS products (whether expressly or as part of a broader category of financial products); and

(ii) do not prohibit participants from using the facility’s services on behalf of retail clients.

36 Contractual Arrangements

36.1 Market Operators must state in, and submit as part of their Proposal, Proposal Schedule F – Market Operator’s Compliance with the Statement of Contractual Principles their compliance or otherwise with each specific clause in the Statement of Contractual Principles in the Addendum.

36.2 Where a Market Operator does not comply with a clause in the Statement of Contractual Principles, an alternative clause MUST be proposed by the Market Operator. To avoid any doubt, unless the Market Operator is committed to fully comply with a clause, the onus is on the Market Operator to propose an alternative clause. Where the Market Operator does not fully comply with a clause and fails to propose an alternative clause, the AOFM will treat the response as non-compliant and will NOT enter into discussions or negotiations with the Market Operator.

36.3 Market Operators must be aware that compliance with the Statement of Contractual Principles is an important element of the evaluation of proposals.

PART V – PROPOSAL SCHEDULES

The pages that follow contain all the Proposal Schedules for this RFP. These are:

  • Proposal Schedule A – Declaration by the Market Operator;
  • Proposal Schedule B – Details of Market Operator’s Proposal;
  • Proposal Schedule C – Implementation Plan;
  • Proposal Schedule D – Company Information;
  • Proposal Schedule E – Market Operator’s Prices;
  • Proposal Schedule F – Market Operator’s Compliance with the Statement Contractual of Principles; and
  • Proposal Schedule G – Other Contractual Arrangements and Requirements of Debt Issuers.

Proposal Schedule A – Declaration by the Market Operator

Market Operators must complete all the requirements of this Schedule.

Full Name of Market Operator: ______________________________________

We offer to perform the Services, as specified in the AOFM Request for Proposals (RFP) for the Trading of Commonwealth Government Securities on Financial Markets in Australia, at the prices, fees, rates and charges set out in Proposal Schedule E, and in accordance with this RFP.

We also declare that the RFP response is fully compliant with Part II and Part III and Part IV of the RFP.

We also declare that all the information contained in this Proposal Schedule A and in Proposal Schedules B, C, D, E, F and G that follow are true and correct in every respect.

I/We also warrant that I/We are duly authorised by our contracting entity to make and submit all these Proposal Schedules for and on behalf of our contracting entity.

1. The Proposal remains open for acceptance by AOFM for at least twelve (12) months from the date it was submitted, and until ________________________ (which is beyond that 12-month minimum period).

2. Details of our contracting entity are as follows:

Registered Name ________________________________________________________

Place of Incorporation __________________________________________________

Trading or Business Name ________________________________________________

Registered Full Physical Address: _______________________________________

Postal Address, if any: __________________________________________________

Registered Australian Business Number (ABN or ABRN): ________________

Is your contracting entity registered to participate in the Australian GST System? YES/NO (Please cross out whichever is not applicable)

Full name and contact details of the Authorised Contact Officer of the contracting entity to make and answer any and all enquiries relating to this RFP are:

Full Name ____________________________ Position Title_________________

Telephone Number __________________ Facsimile Number________________

E-mail Address: ____________________________________________________

Full Physical Address: _______________________________________________

3. We warrant that:
(a) there are no false or misleading statements in our response to the RFP;

(b) our response has not been prepared using improper assistance of any Commonwealth employee, or use information obtained unlawfully or in breach of an obligation of confidentiality to the Commonwealth;

(c) our officers, employees, agents and subcontractors have not engaged in any collusive tendering, anti-competitive conduct or any similar behaviour with any other Market Operator or any other person in relation to the preparation or submission of our response;

(d) no conflict of interest exists or is likely to arise which would affect the performance of the obligations of our contracting entity;

(e) all Proposal Schedules have been completed.
5. Is your contracting entity currently named as not complying with the Equal Opportunity for Women in the Workplace Act 1999 (Cth) as determined by the Director of Equal Opportunity for Women in the Workplace Agency? YES/NO (Please cross out whichever is inapplicable) If YES please provide details:

6. Are there any parts of your Proposal you request to be considered as “Confidential Information” within the meaning of the term under this RFP? YES/NO (Please cross out whichever is not applicable).

If YES please identify them here by a brief reference to each subject matter and the Proposal Schedule to which they relate or belong, with an explanation of why it is necessary to keep the information confidential:

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

__________________________________________________________________________________

7. We have read and understood the Fair Work Principles User Guide (January 2010) and understand that the Fair Work Principles apply to this procurement. Furthermore, we declare that:

(a) the contracting entity has had ________[nil or specify number] adverse Court or Tribunal decisions for a breach of workplace relations law, occupational health and safety law, or workers’ compensation law in the two years preceding the date of this RPF; and

(b) the contracting entity has fully complied or is fully complying with all penalties or orders arising from any Court or Tribunal decisions; or

(c) the contracting entity has not fully complied with, or is currently not fully complying with _________ [number] of the penalties or orders arising from any Court or Tribunal decisions and have provided as part of our response information about each of these penalties or orders in the form required as set out in Appendix A to the Fair Work User Guide.
[Strike out (b) or (c) depending upon which is not applicable].
8. Please specify here the full name(s) and position title(s) of your contracting entity’s Authorised Officers (e.g. Company Director and/or Company Secretary) who will sign a Contract under this RFP;

Submitted and Signed on:

Date: . . . . . . . .. . . . ./ . . . ./. . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(Signature of Authorised Officer

of the contracting entity)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(Position Title)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(Printed Name of Authorised Officer)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(Signature of Witness to Signature) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(Printed Name of Witness)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(Signature of Authorised Officer

of the contracting entity)

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(Position Title)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(Printed Name of Authorised Officer)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(Signature of Witness to Signature) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(Printed Name of Witness)

 

Proposal Schedule B – Details of Market Operator’s Proposal

Market Operators should attach full details of their Proposal (excluding pricing) at this Schedule.

Proposal Schedule C – Implementation Plan

Market Operators should attach details of their implementation plan for the Proposal at this Schedule.

Proposal Schedule D – Company Information

Market Operators must complete all the requirements of this Schedule.

  • The Market Operator shall provide details of ownership of the Market Operator’s contracting entity and its ultimate parent company.
  • The Market Operator shall provide details of any services in connection with the Market Operator’s Proposal provided by another entity.
  • The Market Operator shall provide a company structure showing ownership of the entities participating in this RFP response.
  • Please provide details of any areas of the contracting entity’s activities that are outsourced. The Market Operator must specifically disclose any areas relating to the Market Operator’s Proposal that are outsourced, including specific details of each area of outsourcing.

Proposal Schedule E – Market Operator’s Prices

Market Operators should provide details of their prices, fees, rates and charges at this Schedule. Details of all prices, fees, rates and charges involved in effecting the Proposal should be provided, including without limitation:

(a) all prices, fees, rates and charges applying to the AOFM, to retail investors and to any intermediate participant; and

(b) all prices, fees, rates and charges applying in respect of listing, quotation, trading, clearing and settlement. .

All prices, fees, rates and charges should be quoted in Australian Dollars and must be inclusive of the GST and of all things necessary and incidental to the conduct and delivery of the required Services. All one-off and recurring costs must be shown.

Proposal Schedule F – Market Operator’s Compliance with the Statement of Contractual Principles

Successful Market Operators will be required to enter into contractual arrangements with the AOFM consistent with the Statement of Contractual Principles contained in the Addendum to this RFP.

I. Instructions for Completing this Schedule

1 Market Operators are to state their compliance or otherwise with every specific clause in the Statement of Contractual Principles at the Addendum in the format of Table 1 below. Market Operators should address all schedules, any attachments, annexures or appendices.

2 Responses are to be in the order in which the clauses appear and refer to the relevant clause number within each Part.

3 If appropriate, compliance or otherwise may be indicated against groups of clauses (e.g. Clause 2 to 5 inclusive “complies”). Non-committal terms such as ‘Noted’ are not to be used. Such terms will be deemed as “does not comply” by the AOFM.

4 Where a Market Operator does not comply with a clause in the Statement of Contractual Principles, an alternative clause MUST be proposed by the Market Operator. To avoid any doubt, unless the Market Operator is committed to fully comply with a clause, the onus is on the Market Operator to propose an alternative clause. Where the Market Operator does not fully comply with a clause and fails to propose an alternative clause, the AOFM will treat the response as non-compliant and will NOT enter into discussions or negotiations with the Market Operators on the matter.

5 Market Operators must be aware that compliance with the Statement of Contractual Principles is an important element of the evaluation of this RFT process.

6 Responses as to compliance status are to be limited to the following expressions:
(a) “complies” means:
(i) in the case of a clause which imposes a contractual condition, that the condition is agreed to;

(ii) in the case of a clause which specifies a characteristic or performance requirement, that the Market Operator will provide the requirement as specified;

(iii) in the case of a clause which is of an informative nature only, that the clause has been read, understood and is agreed; or

(iv) in the case of a clause where information has been requested that the information has been provided in the required level of detail and in the required format;
(b) “partially complies” means that the contractual condition, characteristic or performance requirement of the clause is not fully met by the Market Operator, however,
(i) in the case of a clause which imposes a contractual condition, that suggested alternative clauses are determined to be more appropriate;

(ii) in the case of a clause which specifies a characteristic or performance requirement, that the Market Operator is unable to provide the requirement as specified but can offer an alternate solution;

(iii) in the case of a clause which is of an informative nature only, that the clause has not been understood or is deemed to be ambiguous; or

(iv) in the case of a clause where information has been requested that the information is not currently available to the required level of detail and/or in the required format.

Full details of the extent of the partial compliance are to be stated. In the case of only partial compliance with a clause, a reason for the partial compliance and a suggested alternative is to be provided;
(c) “does not comply” means that the contractual condition, characteristic or performance requirement of the clause is substantively not met by the Market Operators. Full details of the extent of non-compliance are to be stated. In the case of non-compliance with a clause, a reason for non-compliance and a suggested alternative clause is to be provided; and

(d) “exceeds requirements” means the offer in the Proposal exceeds the specified requirement. Details of the extent of variation and a suggested alternative from the specified requirement are to be provided.

II. Market Operator’s Response

TABLE 1.

Clause Reference No: Compliance Status Market Operator’s Comments (including proposed alternatives where not full compliance)

Proposal Schedule G – Other Contractual Arrangements and Requirements of Debt Issuers

Market Operators should include at this Schedule details of any additional contractual arrangements governing the delivery of the required Services. For example, standard contracts signed by issuers of debt securities traded on the financial market in question.

Any other requirements in relation to provision of the required Services should also be detailed in this Schedule. For example, initial and ongoing requirements of issuers of debt securities traded on the financial market.

For the avoidance of doubt, nothing in these additional contractual arrangements or requirements should be inconsistent with the Statement of Contractual Principles at the Addendum to this RFP.

ADDENDUM – STATEMENT OF CONTRACTUAL PRINCIPLES

The Successful Market Operator will be required to enter into contractual arrangements satisfactory to the AOFM which are consistent with this Statement of Contractual Principles.

Part A – Key Additional Definitions

Advisers (a) the financial or legal advisers of a party; and(b) the respective officers and employees of those financial or legal advisers.
Confidential Information information that is by its nature confidential; and(a) is designated by a party as confidential and is described in the Contract; or

(b) a party knows or ought to know is confidential,

but does not include:

(c) information which is or becomes public knowledge other than by breach of the Contract or any other confidentiality obligation.

Contract Material any material created by the Market Operator on or following the commencement date for the Contract, for the purpose of or as a result of performing its obligations under the Contract and includes any modifications that may be required under the Contract.
Contract Period the term of the Contract as determined in accordance with the Contract.
Customer Data all data and information relating to the AOFM, and its operations, facilities, customers, Personnel, subcontractors, delegates, agents, assets and programs (including personal information) in whatever form that information may exist and whether entered into, stored in, generated by or processed through software or equipment by or on behalf of the AOFM.
Customer Material any auxiliary material provided to the Market Operator by the AOFM as more fully described in the Contract.
Fair Work Principles the Australian Government Fair Work Principles released by the Minister for Employment and Workplace Relations on 31 July 2009 http://www.deewr.gov.au/Ministers/Gillard/Media/Releases/Pages/Article_090731_094936.aspx.
Fair Work Principles User Guide the Fair Work Principles User Guide (January 2010) released by the Department of Education, Employment and Workplace Relations (available at www.deewr.gov.au/fairworkprinciples).
Personnel in relation to a party, any natural person who is an employee, officer, agent or professional adviser of that party or, in the case of the Market Operator, of a subcontractor or delegate.
Services the services to be provided by the Market Operator, as specified in, or determined by reference to, the Contract.

Part B – Specific Clauses

The Contract will include specific clauses in the form set out above (with such changes as the AOFM may determine are required in the context of the Contract).

1. Fair Work Principles

(a) The Market Operator must comply, and as far as practicable must ensure its subcontractors comply, with all relevant requirements of the Fair Work Principles and the Fair Work Principles User Guide, including by:
(i) complying with all applicable workplace relations, occupational health and safety, and workers’ compensation laws;

(ii) informing the AOFM of any adverse court or tribunal decision for a breach of workplace relations law, occupational health and safety laws, or workers’ compensation laws made against it during the term of the Contract and any remedial action it has taken, or proposes to take, as a result of the decision;

(iii) providing the AOFM any information the AOFM reasonably requires to confirm that the Market Operator (and any subcontractor) is complying with the Fair Work Principles; and

(iv) participate in all compliance activities associated with its legal obligations, including those arising under the Fair Work Principles. Compliance activities may include responding to requests for information and/or audits undertaken by the Commonwealth, its nominees and/or relevant regulators.
(b) Compliance with the Fair Work Principles shall not relieve the Market Operator from its responsibility to comply with its other obligations under this Contract.

(c) If the Market Operator does not comply with the Fair Work Principles, without prejudice to any rights that would otherwise accrue to the AOFM, the AOFM shall be entitled to publish details of the Market Operator’s failure to comply (including the Market Operator’s name) and to otherwise provide those details to other Commonwealth agencies.

(d) As far as practicable, the Market Operator must:
(i) not use a subcontractor or delegate in relation to this Contract where the subcontractor or delegate would be precluded from contracting directly with the Commonwealth under the requirements of the Fair Work Principles; and

(ii) ensure that all subcontracts and delegations impose obligations on subcontractors and delegates in relation to the requirements of the Fair Work Principles equivalent to the obligations imposed on the Market Operator.

2. Protection of Personal Information

2.1 Application of the clause
This clause applies only where the Market Operator deals with personal information when, and for the purpose of, providing Services under this Contract.
2.2 Obligations
The Market Operator acknowledges that it is a ‘contracted service provider’ within the meaning of section 6 of the Privacy Act 1988 (Cth) (the Privacy Act), and agrees in respect of the provision of Services under this Contract:
(a) to use or disclose personal information obtained during the course of providing Services under this Contract, only for the purposes of this Contract;

(b) not to do any act or engage in any practice that would breach an IPP contained in section 14 of the Privacy Act, which if done or engaged in by an agency, would be a breach of that IPP;

(c) to carry out and discharge the obligations contained in the IPPs as if it were an agency under that Act;

(d) to notify individuals whose personal information the Market Operator holds, that complaints about acts or practices of the Market Operator may be investigated by the Privacy Commissioner who has power to award compensation against the Market Operator in appropriate circumstances;

(e) not to use or disclose personal information or engage in an act or practice that would breach section 16F of the Privacy Act (direct marketing), an NPP (particularly NPPs 7 to 10) or an APC, where that section, NPP or APC is applicable to the Market Operator, unless:
(i) in the case of section 16F – the use or disclosure is necessary, directly or indirectly, to discharge an obligation of this Contract; or

(ii) in the case of an NPP or an APC – where the activity or practice is engaged in for the purpose of discharging, directly or indirectly, an obligation under this Contract, and the activity or practice which is authorised by this Contract is inconsistent with the NPP or APC;
(f) to disclose in writing to any person who asks, the content of the provisions of this Contract (if any) that are inconsistent with an NPP or an APC binding a party to this Contract;

(g) to immediately notify the AOFM if the Market Operator becomes aware of a breach or possible breach of any of the obligations contained in, or referred to in, this clause, whether by the Market Operator or any subcontractor or delegate;

(h) to comply with any directions, guidelines, determinations or recommendations of the Privacy Commissioner, to the extent that they are not inconsistent with the requirements of this clause; and

(i) to ensure that any employee of the Market Operator who is required to deal with personal information for the purposes of this Contract is made aware of the obligations of the Market Operator set out in this clause.

2.3 Subcontracts
The Market Operator must ensure that any subcontract or delegation entered into for the purpose of fulfilling its obligations under this Contract contains provisions to ensure that the subcontractor or delegate has the same awareness and obligations as the Market Operator has under this clause, including the requirement in relation to subcontracts.
2.4 Indemnity
The Market Operator agrees to indemnify the AOFM in respect of any Loss suffered, sustained or incurred by the AOFM which arises directly or indirectly from a breach of any of the obligations of the Market Operator under this clause, or a subcontractor or delegate under the subcontract and delegation provisions referred to in clause 2.3.
2.5 Definitions
In this clause, the terms ‘agency’, ‘approved privacy code’ (APC), ‘Information Privacy Principles’ (IPPs), and ‘National Privacy Principles’ (NPPs) have the same meaning as they have in section 6 of the Privacy Act, and ‘personal information’, which also has the meaning it has in section 6 of the Privacy Act, means:

‘information or an opinion (including information or an opinion forming part of a database), whether true or not and whether recorded in a material form or not, about an individual whose identity is apparent, or can reasonably be ascertained, from the information or opinion’.

3. Audit and Access

3.1 Right to conduct audits
The AOFM or a representative (including without limitation an appointed auditor) may conduct audits relevant to the performance of the Market Operator’s obligations under this Contract. Audits may be conducted of:
(a) the Market Operator’s operational practices and procedures as they relate to this Contract, including security procedures;

(b) the accuracy of the Market Operator’s invoices and reports in relation to the provision of the Services under this Contract;

(c) the Market Operator’s compliance with its confidentiality, privacy and security obligations under this Contract;

(d) material (including books and records) in the possession of the Market Operator relevant to the Services or this Contract; and

(e) any other matters determined by the AOFM to be relevant to the Services or this Contract.

3.2 Access by the AOFM
(a) The AOFM and its representatives may, at reasonable times and on giving reasonable notice to the Market Operator:
(i) access the premises of the Market Operator to the extent relevant to the performance of this Contract;

(ii) require the provision by the Market Operator, its employees, agents, subcontractors or delegates, of records and information in a data format and storage medium accessible by the AOFM by use of the AOFM’s existing computer hardware and software;

(iii) inspect and copy documentation, books and records, however stored, in the custody or under the control of the Market Operator, its employees, agents, subcontractors or delegates; and

(iv) require assistance in respect of any inquiry into or concerning the Services or this Contract. For these purposes an inquiry includes any administrative or statutory review, audit or inquiry (whether within or external to the Department), any request for information directed to the AOFM, and any inquiry conducted by Parliament or any Parliamentary committee.
(b) The Market Operator must provide access to its computer hardware and software to the extent necessary for the AOFM and its representatives to exercise its rights under this clause, and provide the AOFM and its representatives with any reasonable assistance requested by the AOFM to use that hardware and software.
3.3 Conduct of audit and access
The AOFM must use reasonable endeavours to ensure that:
(a) audits performed pursuant to clause 3.1; and

(b) the exercise of the general rights granted by clause 3.2 by the AOFM,
do not unreasonably delay or disrupt in any material respect the Market Operator’s performance of its obligations under the Contract.
3.4 Costs
(a) Except as set out in clause 3.4(b), each party must bear its own costs of any reviews and/or audits.

(b) If the Market Operator is able to substantiate that it has incurred direct expenses in the AOFM’s exercise of the rights granted under clause 3.1or clause 3.2 which, having regard to the value of this Contract, are substantial, the AOFM and the Market Operator will negotiate an appropriate reimbursement. Any reimbursement must not be greater than the direct expenses incurred and substantiated.
3.5 Auditor-General and Privacy Commissioner
The rights of the AOFM under clause 3.2(a)(i) to 3.2(a)(iii) apply equally to the Auditor-General or a delegate of the Auditor-General, or the Privacy Commissioner or a delegate of the Privacy Commissioner, for the purpose of performing the Auditor-General’s or Privacy Commissioner’s statutory functions or powers.
3.6 Market Operator to comply with Auditor-General’s requirements
The Market Operator must do all things necessary to comply with the Auditor-General’s or his or her delegate’s or the Privacy Commissioner’s or his or her delegate’s requirements, notified under clause 3.2, provided such requirements are legally enforceable and within the power of the Auditor-General, the Privacy Commissioner, or his or her respective delegate.
3.7 No reduction in responsibility
The requirement for, and participation in, audits does not in any way reduce the Market Operator’s responsibility to perform its obligations in accordance with this Contract.
3.8 Subcontract and delegation requirements
The Market Operator must ensure that any subcontract or delegation entered into for the purpose of this Contract contains an equivalent clause granting the rights specified in this clause.
3.9 No restriction
Nothing in this Contract reduces, limits or restricts in any way any function, power, right or entitlement of the Auditor-General or a delegate of the Auditor-General or the Privacy Commissioner or a delegate of the Privacy Commissioner. The rights of the AOFM under this Contract are in addition to any other power, right or entitlement of the Auditor-General or a delegate of the Auditor-General or the Privacy Commissioner or a delegate of the Privacy Commissioner.
3.10 Survival
This clause applies for the Contract Period and for a period of seven years from the termination or expiry of this Contract.

4. Confidentiality and Privacy

4.1 Confidential Information not to be disclosed
(a) Subject to clause 4.3, a party must not, without the prior written consent of the other party, disclose any Confidential Information of the other party to a third party.

(b) In giving written consent to the disclosure of Confidential Information, a party may impose such conditions as it thinks fit, and the other party agrees to comply with these conditions.
4.2 Written undertakings
(a) A party may at any time require the other party to arrange for:
(i) its Advisers; or

(ii) any other third party, other than a AOFM’s employee, to whom information may be disclosed pursuant to clause 4.3(a) or (e),
to give a written undertaking in a form agreed between the Parties.

(b) If the other party receives a request under clause 4.2(a), it must promptly arrange for all such undertakings to be given.

4.3 Exceptions to obligations
The obligations on the parties under this clause 4 will not be taken to have been breached to the extent that Confidential Information:
(a) is disclosed by a party to its Advisers or employees solely in order to comply with obligations, or to exercise rights, under this Contract;

(b) is disclosed to a party’s internal management personnel, solely to enable effective management or auditing of Contract related activities;

(c) is disclosed by the AOFM to the responsible Minister;

(d) is disclosed by the AOFM, in response to a request by a House or a Committee of the Parliament of the Commonwealth;

(e) is shared by the AOFM within the AOFM’s organisation, or with another Agency, where this serves the Commonwealth’s legitimate interests;

(f) is authorised or required by law, including under this Contract, under a licence or otherwise, to be disclosed; or

(g) is in the public domain otherwise than due to a breach of this clause 4.
4.4 Obligations on disclosure
Where a party discloses Confidential Information to another person:
(a) pursuant to clauses 4.3(a), (b)or (e), the disclosing party must:
(i) notify the receiving person that the information is Confidential Information; and

(ii) not provide the information unless the receiving person agrees to keep the information confidential; or
(b) pursuant to clauses 4.3(c) and (d), the disclosing party must notify the receiving party that the information is Confidential Information.

4.5 Additional confidential information
(a) The parties may agree in writing after the date of this Contract that certain additional information is to constitute Confidential Information for the purposes of this Contract.

(b) Where the parties agree in writing after the date of this Contract that certain additional information is to constitute Confidential Information for the purposes of the Contract, this documentation is incorporated into, and becomes part of this Contract, on the date by which both parties have signed this documentation.
4.6 Period of confidentiality
The obligations under this clause 4 continue, notwithstanding the expiry or termination of this Contract in relation to any information which the parties agree in writing after the date of this Contract is to constitute Confidential Information for the purposes of this Contract, for the period agreed by the parties in writing in respect of that information.
4.7 No reduction in privacy obligations
Nothing in this clause 4 derogates from any obligation which either party may have either under the Privacy Act 1988 (Cth) as amended from time to time, or under this Contract, in relation to the protection of personal information.

5. Removal of Customer Data

5.1 Removal of Customer Data
The Market Operator must not, and must ensure that its subcontractors, delegates and Personnel do not:
(a) remove Customer Data or allow Customer Data to be removed from the AOFM’s premises; or

(b) take Customer Data or allow Customer Data to be taken outside of Australia,
without the AOFM’s prior written consent.

6. Termination

6.1 Termination and reduction for convenience
(a) The AOFM may, at any time, by notice, terminate this Contract or reduce the scope of the Services, including for a machinery of government change.

(b) On receipt of a notice of termination or reduction the Market Operator must:
(i) stop work as specified in the notice;

(ii) take all available steps to minimise loss resulting from that termination and to protect Customer Material and Contract Material; and

(iii) continue work on any part of the Services not affected by the notice.
(c) If this Contract is terminated under clause 6.1, the AOFM is liable only for:
(i) payments for Services rendered before the effective date of termination; and

(ii) reasonable costs incurred by the Market Operator and directly attributable to the termination.
(d) If the scope of the Services is reduced, the AOFM’s liability to pay the Service Charges or to provide Customer Material abates in accordance with the reduction in the Services.

(e) The AOFM is not liable to pay compensation under clause 6.1(c)(ii) in an amount which would, in addition to any amounts paid or due, or becoming due, to the Market Operator under this Contract, exceed the total Service Charges payable under this Contract.

(f) The Market Operator is not entitled to compensation for loss of prospective profits.

Part C – Contractual Principles

In addition to the specific clauses set out above, the Contract will include further clauses reflecting the principles set out below (in such form as the AOFM may determine is required in the context of the Contract).

1. Compliance with Commonwealth policies

The Market Operator will be required to covenant that it does and will comply with the specific statutes, regulations, by-laws, codes, ordinances, subordinate legislation and policies identified in this RFP, and will all other applicable statutes, regulations, by-laws, codes, ordinances or subordinate legislation and all relevant policies and guidelines of the AOFM and the Australian Government.

2. Liabilities and Indemnities

The AOFM requires that the Market Operator indemnifies, and keeps indemnified, the AOFM against specified losses, including without limitation any legal liability, claim, expense, loss or damage arising from negligent, fraudulent, reckless, wilfully wrongful or unlawful act or omission by the Market Operator, any breach of representation or warranty and any infringement of Intellectual Property rights by the Market Operator in connection with the performance of the Contract or the use by the AOFM of the Contract Material.

The AOFM may accept a liability cap for certain events, but needs to ensure the value and scope of any liability cap is appropriate having regard to which party is best able to manage the risks. Unlimited liability is recommended for such matters as intellectual property breaches, personal injury and damage to property, confidentiality, security or privacy breaches and unlawful, negligent, reckless or fraudulent acts.

It is not acceptable to the AOFM to be required to give general indemnities to the Market Operator.

3. Compliance with Government Requirements for Subrogation of legal Rights

In the event that the Market Operator is permitted to handle negotiations or conduct litigation on behalf of the AOFM under the contractual arrangements, the Market Operator will be required, among other things, to comply with government policy and obligations, as if the Market Operator were the AOFM, relevant to the conduct of the litigation and any settlement negotiation (including but not limited to the Legal Services Directions 2005) and any direction issued by the Attorney General to the Commonwealth or delegate. The Legal Services Directions 2005 establish the framework within which government legal services must be delivered. The Legal Services Directions 2005 require agencies to use best endeavours to ensure that contracts with third parties that provide for the subrogation of the Commonwealth’s legal rights, for the third party to comply with model litigant directions when undertaking litigation on behalf of the Commonwealth.

4. Austraclear Costs

Currently, the AOFM does not incur issuer fees or certain other fees for CGS held in the Austraclear System. The AOFM will not accept any proposal that would lead to the imposition of issuer fees or any other fees not currently levied on the Commonwealth in relation to CGS held in the Austraclear System. This includes either the direct imposition of fees on the AOFM or any proposal through which such fees are indirectly imposed, for example by imposing those fees on other system participants or end users.

5. Intellectual Property

The AOFM will retain all intellectual property rights in documents, data and information provided to the Market Operator and in the Contract.

6. Representations and Warranties by the Market Operator

The AOFM will require standard basic representations and a commitment to given service levels and standards from the Market Operator in the Contract. In addition, the AOFM will require the Market Operator to give representations and warranties as to further matters such as:
(a) the Market Operator having all of the licences, registrations, authorisations, interests, systems, processes and property specifically required by the RFP or otherwise necessary to lawfully conduct its business as it is now being conducted and to perform the Services in accordance with the Contract and being in compliance with all requirements and conditions in all such licences and other authorisations;

(b) it and its subcontractors, delegates and personnel having the necessary experience, skill, knowledge and competence to perform the Services in accordance with the Contract; and

(c) it having all software, systems and processes necessary to perform the Services in accordance with the Contract.
Although the AOFM may consider giving certain limited representations and warranties, it is not acceptable to the AOFM to provide detailed representations and warranties to the Market Operator.

7. Termination of Contract by the AOFM for Default

Without limiting any other rights or remedies the AOFM may have against the Market Operator arising out of or in connection with this Contract, the AOFM will have specific termination rights (with immediate effect) for certain specified events, including material contractual breaches and fraudulent, negligent, reckless, unlawful or wilfully wrong acts or omissions and certain events relating to the Market Operator (such as insolvency).

8. Termination of Contract by the Market Operator for Default

The Market Operator will have a right to terminate the Contract on expiration of a specified notice period if the AOFM has not paid a correctly rendered invoice, has not notified the Market Operator that it disputes the charges within a specified notice period and certain specified reminders have been given. For the avoidance of doubt, the market Operator shall not be entitled to terminate the Contract as a result of non-payment of an invoice that is the subject of a good faith dispute by the AOFM. The Market Operator shall have no other rights of termination.

9. Non-exclusivity and Flexibility

Contractual arrangements for the delivery of this service will be on a non-exclusive basis. The AOFM will have the right to contract with other Market Operators for delivery of the same or similar services, and the Market Operator will have no right to claim compensation or make any other claims against the AOFM as a result of this.

In addition, the Contract will also include requirements to work together with the AOFM to develop and implement necessary infrastructure to support electronic interfacing with multiple securities exchanges and clearing and settlement systems and linkages between such multiple securities exchanges or clearing and settlement systems.

10. Transition on Termination

In the event the Contract is terminated, the Contract will also include requirements to provide assistance in the transition, including without limitation by working together with the AOFM to enable any currently traded CGS to be transitioned to one or more other securities exchanges and/or clearing and settlement systems.

11. Disclosure Requirements

The Commonwealth should not be subject to listing, operating, clearing, settlement or other market rules (together “Market Rules”) that subject the Commonwealth to disclosure requirements (whether periodic, specific to an event act or issue, on request or continuous) beyond that required by Commonwealth legislation. The Commonwealth should also not be subject to any Market Rules that could have the effect of interfering with the Commonwealth’s control over the timing or form of its disclosures, or which would permit the publication or investigation of any materials, documents or correspondence provided by the Commonwealth without the Commonwealth’s express consent.

12. Other Market Requirements

The Contract cannot be undermined by provisions in Market Rules that enable the Market Operator (or any other entity involved in effecting the Proposal) to change the agreed position without the consent of the AOFM. As such, it will be a term of the Contract that the AOFM’s consent is obtained to any relevant variation. This would include, without limitation, a requirement that all waivers and similar amendments granted to give effect to the Proposal could not be changed without the prior consent of the AOFM.

In addition, the AOFM requires that circumstances in which CGS could be suspended from trading or removed from the Market Operator’s official list are limited to good cause circumstances that are acceptable to the AOFM (such as a persistent non-payment of undisputed fees as contemplated by item 8 above). However, the AOFM requires the flexibility to request trading halts, suspensions or removal from the official list of the Market Operator as and when it determines such action to be necessary.

The AOFM may also require modifications to procedural requirements set out in the Market Rules to the extent that they are inconsistent with the AOFM’s existing processes and procedures.

13. Condition Precedent

The Contract may include a condition precedent to the obligations of the parties coming into effect relating to the implementation of such legislative, regulatory and Market Rule modifications (including to the Commonwealth Inscribed Stock Act 1911 (Cth) and associated regulations) as the AOFM determines are required on or before a given cut-off date, and such modifications being in form and substance satisfactory to the AOFM. In circumstances where this condition precedent is not satisfied or waived by the AOFM, the AOFM may terminate the Contract with immediate effect without compensation to the Market Operator (although certain provisions of the Contract, such as those relating to indemnities and confidentiality, will survive).

Last updated: 6 November 2013