ASIC today released a consultation paper proposing relief for retail clients who apply for an interest in a registered simple managed investment scheme through the proposed ASX Managed Funds Service (AMFS).

ASIC Commissioner Greg Tanzer said the proposed relief would make it quicker, easier and potentially cheaper for investors to apply for an interest in a simple managed investment scheme.

‘Society is moving in a direction that requires quick, practical and efficient ways of operating.

‘The proposed relief will provide a more efficient application process, because the requirement for the investor to complete an application form will be replaced with an electronic message that performs the same function’, Mr Tanzer said.

Significantly, the message will also indicate whether the investor has downloaded the current PDS from the AMFS broker’s website or otherwise been given the current PDS before applying.

‘The PDS includes information about the product’s key features, fees, commissions, benefits, risks and the complaints handling procedure. It is absolutely vital that investors are given a PDS before making any investment decision and the proposed relief is designed to support investors to make confident and informed decisions’, Mr Tanzer said.

The ASX is separately working on meeting other regulatory elements described in the consultation paper.

Comments for Consultation Paper 208 ASX Managed Funds Service: Relief from the application form requirement (CP 208) are due by 11 July 2013.

Download:

CP 208

Background

The AMFS is a facility that allows investors to electronically apply for or redeem units in simple managed investment schemes that have been admitted to the service through brokers who are authorised to participate in the service. CP 208 describes in more details the operation of the AMFS.

Currently, under s1016A of the Corporations Act 2001, a retail investor must apply using an application form that accompanies a PDS, or an application form prepared and partly completed by an Australian financial services licensee.

ASX is seeking relief from the requirement of section 1016A as this would prevent the efficient functioning of the AMFS. Also discussed in detail in CP 208 are the other regulatory elements the ASX needs to meet in order to operate the AMFS, being that ASX:

• be granted an exemption by the Minister from the requirement to hold an Australian market licence to operate the AMFS

• amend the ASX Operating Rules and ASX Settlement Rules to accommodate the AMFS

• conclude its engagement with the regulator responsible for the Anti-Money Laundering and Counter-Terrorism Act 2006 (AML/CTF Act), the Australian Transaction Reports and Analysis Centre (AUSTRAC), about whether an existing Anti-Money Laundering and Counter-Terrorism Financing Rule would exempt an entity issuing, via the AMFS, from the AML/CTF Act in relation to the issuing of the products.