media release (16-333MR)

ASIC remakes 'sunsetting' class order about managed discretionary accounts


ASIC today released updated regulatory guidance on its relief for Managed Discretionary Accounts (MDAs) in Regulatory Guide 179 Managed Discretionary Accounts (RG 179).

On 29 September 2016, ASIC made a new legislative instrument ASIC Corporations (Managed Discretionary Accounts) Instrument 2016/968 to replace its class order on MDAs that was due to expire ('sunset') on 1 October 2016. This instrument continues the relief from the provisions in the Corporations Act that would apply to the provider of a MDA with some changes. 

The instrument and RG 179:

  • incorporate relief for MDAs operated on a regulated platform and MDAs provided to family members, with some changes from relief under  the previous no-action positions
  • implement new requirements to ensure MDA investors are adequately informed when the MDA provider has a discretion to invest in products where recourse is not limited (for example, contracts for difference)
  • require specific upfront disclosure about:
    • terminating the MDA contract 
    • fees charged within the MDA, and
    • outsourcing arrangements, where the MDA provider outsources significant functions of the MDA, and
  • provide greater certainty on the scope and application of the MDA relief and about ASIC's expectations for managing conflicts of interest.

MDA providers currently offering MDAs under ASIC's regulated platform no-action letter must comply with the new regulatory requirements by 1 October 2018 including the new requirement to obtain an MDA specific dealing by issue licence authorisation. Other existing MDA providers must comply with the revised requirements from 1 October 2017.

In Consultation Paper 200: Managed discretionary accounts–Update to RG 179 (CP 200) ASIC proposed to update the financial resource requirements for MDA providers to ensure that these requirements correspond with the requirements that apply to responsible entities of managed investment schemes and for platform operators. ASIC does not intend to proceed with those proposals at this time.

It is important that MDA providers maintain adequate financial resources to operate their MDAs effectively and compliantly. ASIC will review these requirements over the next two years after we have further information about the kinds of entities affected, taking into account licence authorisation applications made by those who have been relying on the no-action position for regulated platforms.



Under the Legislative Instruments 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.

Read more about sunsetting class orders

An MDA is a facility where client portfolio assets are managed on an individual basis by an MDA provider at the MDA provider's discretion (subject to any agreed limitation).   

There are a wide variety of arrangements that can constitute an MDA. Industry uses different terminology to refer to products that may have the features of an MDA: for example, products commonly known by industry as a Separately Managed Account, Individually Managed Account or a Unified Managed Account. 

ASIC applies a tailored regulatory regime to MDA providers, exempting them from the managed investments provisions in Chapter 5C, and the product disclosure provisions in Chapter 6D and in Part 7.9 of the Corporations Act.  We do this on the basis that MDA providers have more limited functions than responsible entities of a registered scheme. 

ASIC Class Order [CO 04/194] Managed discretionary accounts has been repealed.

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