Two year extension
On 28 September 2016, ASIC extended for two years the relief under seven class orders for certain foreign financial service providers providing financial services to wholesale clients in Australia. The class orders were due to expire between 1 October 2016 and 1 April 2017.
Generally, entities that carry on a financial services business in Australia must hold an Australian financial services licence unless they are otherwise exempted. ASIC provided relief for certain foreign financial services providers under the following class orders:
- [CO 03/1099] UK regulated financial service providers;
- [CO 03/1100] US SEC regulated financial service providers;
- [CO 03/1101] US Federal Reserve and OCC regulated financial service providers;
- [CO 03/1102] Singapore MAS regulated financial service providers;
- [CO 03/1103] Hong Kong SFC regulated financial service providers;
- [CO 04/829] US CFTC regulated financial services providers; and
- [CO 04/1313] German BaFin regulated financial service providers.
What do you need to do to rely on the relief going forward?
These class orders have been repealed but under the ASIC Instrument (known as ASIC Corporations (Repeal and Transitional) Instrument 2016/396) the relief under them will continue for two years commencing on the day the ASIC Instrument commenced, which was 28 September 2016. Applications for relief will continue to be made in the same way. ASIC does not require entities that are currently relying on relief provided under the above class orders to lodge any new notification with ASIC.
ASIC has added an extra condition for entities that are currently relying on the above exemptions that requires them to comply with any written notice given by ASIC directing the person to give to ASIC a written statement containing specified information about the financial service business operated by the person in this jurisdiction within a specific time frame. This obligation is broader than the current requirement, which can see ASIC requesting information about any financial service provided in this jurisdiction. This new condition could see ASIC, for example, requesting information in relation to whether, and the extent to which, a foreign financial services provider is carrying on a business in Australia which would require registration as a foreign company.
During the two year extension of the above relief, ASIC intends to consult with industry on proposals to amend the relief provided for foreign financial service providers. ASIC has indicated that any amendments will aim to strike an appropriate balance between:
- facilitating the cross-border provision of financial services on the basis of substituted compliance; and
- ensuring ASIC can adequately supervise these foreign entities in Australian markets.
ASIC has also released ASIC Consultation Paper 268: Licensing relief for foreign financial services providers with a limited connection to Australia (CP 268). Submissions are due on CP 268 by 2 December 2016.