ASIC has extended for two years seven class orders giving relief to foreign financial service providers (FFSPs) providing financial services to wholesale clients. These class orders were due to expire (‘sunset’) between 1 October 2016 and 1 April 2017.
At the same time, ASIC has released Consultation Paper 268 Licensing relief for foreign financial services providers with limited connection to Australia (CP 268). CP 268 outlines a proposal to repeal a related class order for foreign entities with a limited connection to Australia providing services to wholesale clients. This class order is due to sunset on 1 April 2017.
Extension of relief for FFSPs
ASIC has extended for two years its relief from the requirement to hold an Australian financial services (AFS) licence when providing financial services to Australian wholesale clients: see ASIC Corporations (Repeal and Transitional) Instrument 2016/396.
We have extended this relief for two years so that we can comprehensively review and consult on the policy settings underlying our relief for FFSPs.
This extension and review comes as a result of market and regulatory developments since the relief was first granted and a number of ongoing international and domestic reviews.
CP 268 outlines further the rationale for this review.
Effect of instrument extending relief
ASIC Corporations (Repeal and Transitional) Instrument 2016/396 continues ASIC's previous relief for FFSPs in the same form with an amended information gathering power. This amendment clarifies that ASIC may request information from an FFSP about the operation of its financial services business.
ASIC will consult publicly before 1 October 2018 on its relief in this area.
ASIC proposes to repeal [CO 03/824] Licensing relief for financial services providers with limited connection to Australia dealing with wholesale clients ([CO 03/824]). ASIC is seeking feedback on whether the relief provided by the class order is no longer necessary in light of other provisions introduced to the Corporations Act 2001 since [CO 03/824] was made. If there is any residual need for licensing relief ASIC would consider these on a case by case basis.
Submissions on CP 268 are due by 2 December 2016.
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Background
Foreign financial service providers class orders
Our FFSP relief was previously provided by:
- [CO 03/1099] UK FSA regulated financial service providers, which is due to sunset on 1 October 2016;
- [CO 03/1100] US SEC regulated financial service providers, which is due to sunset on 1 October 2016;
- [CO 03/1101] US Federal Reserve and OCC regulated financial service providers, which is due to sunset on 1 October 2016;
- [CO 03/1102] Singapore MAS regulated financial service providers, which is due to sunset on 1 October 2016;
- [CO 03/1103] Hong Kong SFC regulated financial service providers, which is due to sunset on 1 April 2017;
- [CO 04/829] US CFTC regulated financial services providers, which is due to sunset on 1 October 2016; and
- [CO 04/1313] German BaFin regulated financial service providers, which is due to sunset on 1 October 2016.
Sunsetting class orders
Under the Legislation Act 2003, all class orders are repealed automatically or 'sunset' after a period of time (mostly 10 years) unless we take action to preserve them. This ensures that legislative instruments like class orders are kept up to date and only remain in force while they are fit for purpose and relevant.
All government organisations are responsible for considering whether the legislative instruments they have made that are due to sunset will be relevant after their sunset date.