media release

IR 05-24 ASIC amends policy statement on wholesale foreign financial services providers

Published

The Australian Securities and Investments Commission (ASIC) today released a number of revisions to Policy Statement 176 Licensing: Discretionary powers – wholesale foreign financial services providers [PS 176].

[PS 176] outlines how ASIC will use its powers to provide relief from the financial services licensing regime for wholesale foreign financial service providers (FFSPs), who are regulated by overseas regulatory authorities.

‘This policy statement has been revised to reflect amendments to the law made by the Financial Services Reform Amendment Act 2003 and to clarify how our policy applies. When making these revisions we considered our regulatory experience since the policy was first issued over 18 months ago’, said ASIC’s Director of Regulatory Policy, Mr Mark Adams.

In particular, the revisions of [PS 176]:

  • clarify how we identify the relevant overseas regulatory authority of the FFSP;
  • permit 6-monthly reporting (replacing a continuous requirement) of significant changes to the FFSP’s regulatory regime and enforcement actions against it by overseas regulators;
  • provide additional guidance on notification to ASIC by the FFSP of significant changes to the FFSP’s relevant overseas regulatory regime;
  • extend both the period of time in which an FFSP must notify us of a failure to comply with certain requirements and the period of time in which we must consider such notifications; and
  • alter the legislative basis for the policy statement, from the general licensing exemption power under s911A(2)(l), to the specific exemption power under s911A(2)(h) for FFSPs.

‘The amendments issued today are part of ASIC’s ongoing facilitation of FFSPs’ provision of financial services in Australia. They will help FFSPs who wish to make an application for relief to ASIC under [PS 176]. They will also assist those FFSPs that have already been given relief under the policy to more easily comply with their notification requirements under the terms of our relief’, Mr Mark Adams said.

ASIC has also varied the relief instruments issued under [PS 176] to implement these policy changes.

The changes to [PS 176] and the relief instruments issued under it are summarised in the attachment to this release.

A copy of the updated policy is available from the ASIC website at www.asic.gov.au/ps.

End of release

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Attachment to [IR 05-24]: Summary of amendments to PS 176 Licensing: Discretionary powers – Wholesale foreign financial services providers [PS 176]

[PS 176] outlines how ASIC will use its powers under the Corporations Act 2001 (the Act) to facilitate entry into the Australian market of foreign providers of wholesale financial services (FFSPs) who are regulated by overseas regulatory authorities.

[PS 176] explains how ASIC may provide relief from the financial services licensing regime where an FFSP can satisfy ASIC that:

  • regulation of the FFSP by its overseas regulatory authority is sufficiently equivalent to regulation by ASIC; and
  • there are effective co-operation arrangements between ASIC and that overseas regulatory authority.

Generally, regulation by an overseas regulatory authority is sufficiently equivalent to regulation by ASIC if its overseas regulatory regime:

  • is clear, transparent and certain;
  • is consistent with the IOSCO Objectives and Principles of Securities Regulation;
  • is adequately enforced in its home jurisdiction; and
  • achieves similar outcomes as the Australian regime achieves in relation to the regulation of wholesale financial services.

Effective co-operation arrangements will provide for prompt sharing of information about the overseas regulatory regime and co-operation in relation to supervision, investigation and enforcement between jurisdictions.

Relief under [PS 176] is subject to certain requirements relating to:

  • conduct and status of the FFSP;
  • notification to ASIC by the FFSP of various matters including significant changes in the relevant overseas regulatory regime;
  • disclosure to wholesale clients; and
  • facilitating enforcement actions against the FFSP in Australia.

Release of [PS 176]

[PS 176] was first issued on 12 September 2003.

Since that date ASIC has granted class order relief under the policy to certain FFSPs regulated by:

  • US Securities and Exchange Commission
  • US Federal Reserve and Office of Comptroller of Currency
  • UK Financial Services Authority
  • Hong Kong Securities and Futures Commission
  • Monetary Authority of Singapore
  • US Commodity Futures Trading Commission
  • German Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin)

We have also given individual relief to a number of FFSPs.

Summary of amendments to [PS 176]

The main amendments to [PS 176] released today are:

  • alteration of the legislative basis for the policy statement, from s911A(2)(l) (the general licensing exemption power) to s911A(2)(h) (the specific exemption power for FFSPs). The Financial Services Reform Amendment Act 2003 amended the Act in a way that enabled us to use the specific exemption power in s911A(2)(h) for the purposes of this policy statement [PS 176.1];
  • clarification of how we identify the relevant overseas regulatory authority of the FFSP, including in some cases to allow for more than one regulator, or a host jurisdiction regulator, to be identified as the relevant overseas regulator [PS 176.12]–[PS 176.16];
  • permission for six-monthly reporting, including nil returns, in relation to the class order requirement to notify us of:
    • any significant changes to the relevant overseas regulatory regime applicable to the actual financial services the FFSP is providing, or intends to provide, in Australia under any exemption; and
    • any enforcement or disciplinary action against the FFSP in any foreign jurisdiction by any overseas regulator and the nature of such action [PS 176.54];
  • additional guidance on what we mean by ‘significant changes’ to the FFSP’s overseas regulatory regime [PS 176.55]–[PS 176.57]; and
  • extension of the period of time for notifying us of a failure to comply with certain class order requirements to 15 business days, in recognition that the previous 10 day deadline was not always realistic. ASIC will now have a further 30 business days to notify the FFSP (should we choose to do so) that relief may nonetheless continue [PS 176.48].

In addition, we have made the following minor and/or technical changes to [PS 176]:

  • clarification that whether there are effective co-operation arrangements with an overseas regulatory authority is a matter that must be determined by ASIC. It cannot be addressed by FFSPs in an application for relief [PS 176.33];
  • more detail in the policy regarding the contents of the deed required under the class order [PS 176.62];
  • clarification that a 16 week period will apply for determining most applications for relief (replacing the previous 8 week deadline) to bring the policy into line with our other policies on relief for foreign service providers [PS 176.76];
  • refinement of question 2.1 of Schedule 1 (questions for applicants) to require applicants to explain differences in terminology between their home jurisdiction’s descriptions of the financial services they offer and Australian terminology [PS 176.78]; and
  • emphasising in Schedule 1 that any assertions in response to the questions must be supported by evidence [PS 176.78].

Summary of amendments to current class order relief instruments issued under [PS 176]

As a result of the amendments to the policy there have been consequential amendments to the class orders and related instruments to:

  • permit the six-monthly reporting of required notifications, see also [PS 176.54]; and
  • extend the reporting periods relating to failures to comply with the class order requirements, see [PS 176.48].

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