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17-237MR ASIC consults on proposed financial benchmark regulatory regime
ASIC is seeking feedback on proposed ASIC rules for the administration of licensed financial benchmarks and regulatory guidance on how we would administer the proposed financial benchmark regulatory regime.
The Government is currently consulting on draft legislation to implement financial benchmark regulatory reform. ASIC's consultation is about the licensing regime for administrators of significant benchmarks and ASIC's rule-making powers in the event the amendments to the Corporations Act are passed by Parliament. This early consultation and preparation will help Australia’s financial benchmark regulatory regime to be implemented more expediently.
Together, the draft legislation and ASIC's proposals will help to ensure the robustness and reliability of financial benchmarks in the Australian economy in line with the IOSCO Principles for Financial Benchmarks. The proposals are also designed to facilitate equivalence assessments under overseas regimes including the European Benchmarks Regulation.
ASIC's proposals are outlined in Consultation Paper 292 Implementing the financial benchmark regulatory regime (CP 292).
The consultation paper attaches:
- draft ASIC Financial Benchmark (Administration) Rules 2017 which impose certain key obligations on licensed benchmark administrators and require contributors to licensed benchmarks to cooperate with ASIC;
- draft ASIC Financial Benchmark (Compelled) Rules 2017 which enable ASIC to require, by written notice, the continued administration of a significant benchmark or compelled submissions to a significant benchmark; and
- a proposed regulatory guide setting out how we would administer the licensing regime, our expectations on compliance with the ASIC Financial Benchmark Rules and when we may use our compulsion powers in relation to significant benchmarks.
ASIC is seeking the views of users, contributors and administrators of financial benchmarks and other interested parties.
ASIC Commissioner Cathie Armour said, ‘It is critical to market confidence that financial benchmarks are robust and reliable. This is especially true of benchmarks that are significant in the Australian financial system. These reforms should also facilitate the continued use of significant financial benchmarks, such as the Bank Bill Swap Rate, in the European Union.’
Submissions to CP 292 are due by 21 August 2017.
On 26 June 2017, the Government released draft legislation to establish the overarching framework for the regulatory regime for financial benchmarks. This follows the Government’s announcement on 4 October 2016 that it would implement recommendations by the Council of Financial Regulators in order to strengthen financial regulation to better protect Australians from the possible abuse and manipulation of financial benchmarks.
Financial benchmarks are indices or indicators used to:
- determine the interest payable, or other sums due, under loan agreements or under other financial contracts or instruments;
- determine the price at which a financial instrument may be dealt, or the value of a financial instrument; or
- measure the performance of a financial instrument.