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Tuesday 17 August 2004

IR 04-41 ASIC proposes ongoing licensing relief for securitisation special purpose vehicles

The Australian Securities and Investments Commission (ASIC) today issued proposals to grant limited ongoing class order licensing relief for certain entities in the securitisation business.

The proposed relief will exempt certain special purpose vehicle issuers (SPVs) of debentures or interests in a managed investment scheme from the requirement to obtain an Australian Financial Services (AFS) licence. The proposed relief would apply to those SPVs that carry on business only in relation to a particular securitisation transaction.

ASIC is seeking comment on the proposals as they apply to issuers of securitisation products and managers of securitisation transactions.

‘The proposed relief acknowledges that an unreasonable burden may be imposed by requiring SPVs to hold an AFS licence where the SPV is created for the sole purpose of effecting a single securitisation transaction, and in circumstances where the securitisation process is largely a predetermined one’, ASIC Director of Regulatory Policy, Mr Mark Adams, said.

‘The proposed conditions of relief are intended to ensure that relief will not affect services provided to retail clients, and that an AFS licensee accepts responsibility for financial services provided by the SPV’, Mr Adams said.

Securitisation is a process whereby a portfolio of relatively illiquid assets is packaged by a bankruptcy remote special purpose entity into marketable financial products.

Currently in Australia, financial products backed by securitised assets are mainly sold to wholesale or professional investors. Securitisation asset classes include residential mortgages, credit card receivables, automobile loans and equipment leases.

A securitisation will often involve the establishment of an SPV to purchase assets and issue debt securities or interests in a managed investment scheme (securitisation products) as well as entering into ancillary arrangements such as derivatives transactions to hedge any risk in the transaction. The SPV may be acting as trustee in issuing the financial products. The usual securitisation structure also includes a manager that is under a contractual arrangement with the SPV to manage the securitisation transaction.

On 22 December 2003, ASIC issued Class Order [CO 03/1098] Securitisation special purpose vehicles and securitisation managers to provide interim licensing relief until 30 September 2004 while undertaking final discussions with industry about the form and content of any permanent relief. ASIC has been consulting with the Australian Securitisation Forum and certain other parties in developing proposals for ongoing relief.

The details of ASIC’s proposed ongoing relief are outlined in a brief consultation paper issued at the same time as this information release. The consultation paper is presented in a different format to consultation on policy proposals. It reflects the discrete and technical nature of the policy proposals and recognises that the proposals are more definitive than usual because of the extensive industry consultation that has already taken place.

ASIC invites comments on the consultation paper by Friday, 17 September 2004. Details of the proposed policy are contained in the consultation paper.

To ensure that there is adequate time for compliance with the AFS licensing requirements or conditions of relief that may form part of ASIC’s policy following the consultation process, ASIC has extended the interim relief under [CO 03/1098] from 30 September 2004 until 31 March 2005.

ASIC aims to finalise its policy by late October or early November 2004.

A copy of the consultation paper and [CO 03/1098] is available on ASIC’s website at www.asic.gov.au, or by calling ASIC’s Infoline on 1300 300 630.

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Last updated: 30/03/2021 09:36