In April 1987 the six State-based Stock Exchanges merged to form Australian Stock Exchange Limited (ASX).

By 1990, the traditional trading floor system had disappeared and all trading was conducted electronically through SEATS - the Stock Exchange Automated System. When GILLONS receives a buy or sell order from a client, the trade is entered into the national system electronically and the trades are completed on a 'matching' basis (i.e. on the basis of chronology receipt and price limit).

Once the transaction has been completed the results are passed through to CHESS - the Clearing House Electronic Subregister System which enables the electronic transfer of securities eliminating the transfer of paper documents and the old individual share certificates. Such advances in technology have permitted settlement time to be reduced to three business days after the trading day (T+3).

Market Integrity

The role of the ASX is to ensure the integrity of the markets it maintains. One of the principal ways in which it does this is to enforce a regime of continuous disclosure by each listed company issuing any information which might reasonably be thought to influence the share price of that company. The intention is to ensure the market is fully informed.

Insider trading, which is trading by persons in possession of price-sensitive information that has not been publicly disclosed to the market, is a most serious criminal offence. The ASX maintains a sophisticated market surveillance department that constantly monitors for unusual market activity to detect any breaches of the law or its rules. The ASX also regulates if Participating Organisations (i.e. stockbrokers such as GILLONS) who are governed by the ASX's stringent Business Rules in addition to the Corporations Act. The ASX regularly monitors stockbrokers to ensure compliance with the rules.

National Guarantee Fund

Legislation has established the National Guarantee Fund to protect investors against certain contingencies. An investor may have a certain claim on the fund if he or she suffers loss as a result of an unauthorised transfer of securities or certain other delinquencies by a stockbroker. Within certain capped units, The Fund may also protect an investor from the consequences of stockbroker insolvency where a stockbroker fails to meet its obligations to a client who has entrusted property to the broker. In most cases the Fund also guarantees the completion of sales and purchases of "quoted securities" on the ASX's equity and debt markets.

Holdings of Shares and other Securities

With the abolition of share certificates for almost all companies listed on the ASX and the introduction of electronic transfer and settlement, new methods of keeping track of shareholders' holdings have been introduced.

There are two ways in which a client of GILLONS may have their shareholdings registered. You may become Issuer Sponsored by each company's issuer (i.e. sponsored by the issuer by means of its securities registrar) or, as a client of GILLONS, we can arrange for you to be Broker Sponsored on the CHESS system. To do this we must ask you to complete a CHESS sponsorship agreement with E*TRADE.

The advantages of CHESS:

• It is free.
• Instead of having unique Security Holder Reference Numbers (SRN) for each holding, one CHESS Holder Identification Number (HIN) is issued to cover all of your shareholdings registered with CHESS.
• Seller not on CHESS must advise GILLONS of their issuer Sponsored Share Reference number(s) when instructing one of our advisers to sell. The ASX imposes penalties on sellers who are late in providing sold holdings, which are passed on to the selling clients. Sellers on CHESS need do nothing as their holding is already registered with the Stockbroker.
• If you change your address or wish to have your tax file number registered with a company, it is sufficient to advise GILLONS in writing. Through CHESS, GILLONS will notify all companies in which you have a GILLONS sponsored holding and all companies in which you may later buy shares.
• If you have a GILLONS Private Account with ANZ V2+ or E-Trade Australia/ANZ Bank, you can complete sales and purchases with just one phone call to your adviser at GILLONS.

Portfolio analysis

If you are on CHESS, in addition to being notified yourself, as your sponsor, GILLONS is notified electronically of any changes in your shareholding. These may result not just from purchases or sales but also from Rights Issues, Bonus Issues, and participation of Dividend Reinvestment Plans (DRP).

GILLONS operates a unique and world-class portfolio administration service that provides you, your accountant and any other relevant parties with information about your individual investments or Surperannuation activity. This means that your adviser always has an up-to-date record of your portfolio on which to base recommendations.

Execution and Settlement of Orders (Please refer to a GILLONS adviser for the 'Execution and Settlements of Orders' Agreement)

E*TRADE Australia Limited

Gillon Securities Ltd. has in place a referral arrangement with E*TRADE Australia Securities Limited (E*TRADE) under which E*TRADE will execute and settle orders placed with us by you for the purchase or sale of CHESS approved securities quoted for trading on the Stock Exchange Automated Trading System (SEATS) operated by the Australian Stock Exchange Ltd. (ASX). Other arrangements will apply to dealings in other securities.