BBY Limited

On 18 May 2015, ASX was advised that Receivers & Managers and Administrators were appointed to BBY Limited (BBY), a Clearing Participant of ASX Clear.

As a consequence, ASX Clear has declared an event of default and BBY’s participation in the ASX market, ASX Clear (the central clearing house that clears for the ASX market) and Austraclear (the settlement facility used by BBY for cash settlements) have been suspended.

Following discussion with BBY’s Administrators, ASX Settlement placed further restrictions on BBY’s participation in the ASX Settlement facility (the facility that settles transactions and records holdings in securities, warrants and certain other financial products that trade on the ASX market and certain other licensed markets) on 19 May 2015 prior to market opening. These restrictions meant that BBY could not participate in equity market settlement and can only transfer client holdings to the new Sponsoring Participant for that client or convert client holdings to issuer sponsored holdings.

On 22 June 2015 BBY was placed into liquidation and Stephen Vaughan and Ian Hall of KPMG Australia were appointed as Liquidators.

On 3 July 2015 BBY’s participation in the ASX Settlement Facility was suspended.

Transfer of options that you traded through BBY was possible only if you had arrangements in place with an alternate clearing participant and the clearing participant notified ASX Clear that it was willing to accept the options, within the timeframe notified by ASX Clear to the market here.

ASX Clear was not able to take instructions from individual BBY clients about transfer. It could only deal with clearing participants to obtain the necessary confirmations.

If options that you traded through BBY were closed out, this is because arrangements for transfer to a new clearing participant were not confirmed to ASX Clear in accordance with the procedures described above.

If BBY used your shares to meet its margin obligations to ASX Clear on options that you traded through BBY, then your shares were used as security to ASX Clear. Your shares secured (or were ‘collateral’ for) BBY’s performance of its obligations to ASX Clear in respect of the options.  When BBY entered external administration, ASX Clear had to manage its exposure to BBY, including by trading out of (or ‘closing out’) the options.  ASX Clear was entitled to sell your shares to recover the costs it incurred in closing out the options.  ASX Clear did this only where cash cover lodged by BBY and recorded by ASX Clear in respect of the options was insufficient to meet those costs.

ASX Clear has released from its control collateral lodged as security for BBY’s obligations on its client related derivative accounts that was not used to meet the cost of close out of derivative positions in those accounts.

ASX intends to pay to BBY’s client trust account the remaining cash margin on BBY’s client related derivative accounts as soon as BBY’s Receivers or Liquidators confirm to ASX the client trust account details.  ASX will pay this money to BBY on the basis that it will hold and deal with it in accordance with all applicable laws (including the Corporations Act) on behalf of clients entitled to the moneys.

BBY clients should contact the Receivers & Managers and the Liquidators for further details.

For information on how to transfer your HIN refer to question 6 below.

CHESS is an electronic system that registers legal title (or ownership) of shares and other securities, and facilitates the settlement of trades in those securities. It does this by transferring the legal title to securities while simultaneously facilitating the transfer of money paid for those securities.

As a sponsored holder of securities in CHESS, you are the person who is registered as the legal owner of those securities. You are given a holder identification number or HIN, which is used to identify you as the legal owner of securities in CHESS. A HIN is similar to an account number.

If you hold securities in CHESS then your sponsoring broker controls the transfer of securities to and from your CHESS holdings. However, it may only do so on your instructions and under the terms of the sponsorship agreement you have entered into with them.

Securities that you hold in CHESS are your property, and not the property of your sponsoring broker. However, your sponsoring broker may have contractual or other rights that it may exercise in relation to your property, for instance, to secure any outstanding amounts that you owe. You should refer to your client documentation to confirm this. In addition, if you have an options account and you have pledged securities held on your HIN with the Clearing House as collateral then the Clearing House has rights over these securities.

As indicated above, BBY’s participation in the ASX Settlement facility has been suspended. On Monday 6 July 2015 ASX notified all BBY sponsored holders by mail of the choices they can make about their holdings (ie appointing a new sponsoring broker for their holdings or converting their holdings to issuer sponsored).

Please be aware that if you provided instructions to BBY and/or your new sponsoring broker for the transfer or conversion of your holdings, and this was not effected at the time of BBY’s suspension, those instructions or the processing of those instructions will need to be repeated. Your new sponsoring broker can assist with that process.

A. If you would like to maintain the registration of your shares on the CHESS subregister

If you would like to maintain the registration of your shares on the CHESS subregister you will need to appoint a new sponsoring broker for your CHESS holdings. To do this you should follow the steps below:

STEP 1 If you haven’t already done so, you should contact a broker who can act as your new sponsoring broker for your CHESS holdings. You can use the “Find a broker” function on the ASX website here to help you select a new sponsoring broker.

STEP 2 If you haven’t already done so, you should establish an account with a new sponsoring broker, including entering into a Sponsorship Agreement. Your new account must be set up to exactly match your HINs current registration.

STEP 3 Provide your new sponsoring broker with written instructions to authorise the transfer of your account from BBY to the new sponsoring broker. Your written instructions must be dated and signed by you as the registered account holder(s) (joint account holders must all sign) and must include your HIN, registration name and address details as well as your telephone contact details.

ASX Settlement must receive a valid transfer request from your new sponsoring broker by Friday 16 October 2015 (or such later date determined by ASX Settlement in its absolute discretion). ASX will also need to give notice of the transfer request to the external administrators of BBY.

If ASX Settlement receives a valid transfer request from your new sponsoring broker by that date, we intend to effect the change of your sponsoring broker for those CHESS holdings on the basis that your new sponsoring broker is authorised to request us to do so on your behalf, and that this request constitutes notice from you to ASX Settlement requesting that change.

If you would like to obtain information about the status of your new account set up or your HIN transfer you will need to speak directly with your new sponsoring broker.

B. If you would like to request a conversion to issuer sponsored holdings

If you wish to have your CHESS holdings converted to issuer sponsored holdings, you will need to notify ASX Settlement by using the “Notice Requesting Conversion to Issuer Sponsored Holdings – BBY Sponsored Holdings” available here. Please follow the lodgement instructions contained in that notice.

Should you require further assistance or wish to obtain information about the status of your request to convert your CHESS holdings to issuer sponsored holdings you can contact ASX Customer Service on 131 ASX (131 279).

If ASX Settlement receives a valid notice from you by Friday 16 October 2015 (or such later date determined by ASX Settlement in its absolute discretion), we intend to convert those CHESS holdings to issuer sponsored holdings. Please note before actioning a transfer request ASX will need to give notice to the external administrators of BBY.

As indicated in 6 above if you have provided instructions to BBY and/or your new sponsoring broker for the transfer or conversion of your holdings, and this has not been effected at the time of BBY’s suspension, those instructions or the processing of those instructions will need to be repeated.

A transfer of your CHESS sponsored holdings to your new sponsoring broker can only occur if your account is established with your new sponsoring broker. If you have followed all the steps in 6 above you will need to speak directly with your new sponsoring broker for information regarding the status of your transfer request.

If you wish to obtain information about the status of your request to convert your CHESS holdings to issuer sponsored holdings you can contact ASX Customer Service on 131 ASX (131 279).

The standard settlement cycle is two days following the trade date. ASX does not have visibility into client individual trades, the responsibility for establishing the status of unsettled transactions rests with the external administrators.

Queries in relation to these matters should be directed to the external administrators.

XXXX participation as an ASX market participant has been suspended and, as such, XXXX cannot place any orders for its clients on the ASX market. If you want to place an order on the ASX market, you will need to instruct another CHESS sponsoring broker.

If you don’t already have a relationship with another CHESS sponsoring broker, you will need to enter into a new client agreement with an alternative CHESS sponsoring broker.

Contact details for CHESS sponsoring brokers are listed on the ASX website here.

Holding under XXXX cannot be sold on the ASX Market until they have been transferred to a new CHESS sponsoring broker, see transferring holdings.

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