Appendix 2: Summary of licence obligations relevant to DLT
Financial service and credit businesses
This appendix should be read with Information Sheet 219 Evaluating distributed ledger technology (INFO 219).
Australian financial services (AFS) licensees are required, among other things, to have adequate technological and human resources, and to have and to maintain the competence, to provide the financial services covered by the licence. If you are an Australian credit licensee, you are required, among other things, to have adequate technological and human resources, and to have and to maintain the competence, to engage in the credit activities covered by your licence.
This means that if you hold an AFS licence or credit licence, you must have technological resources to enable you to:
- comply with all of your obligations under the law
- maintain client records and data integrity
- protect confidential information and other information, and
- meet your current and anticipated future operational needs.
If you hold an AFS licence or credit licence, you must also have adequate human resources to understand the technology and ensure any risks are able to be identified and mitigated. However, the general obligations to have adequate resources do not apply to APRA-regulated bodies. For more information on your obligations and how to comply with them, refer to the relevant laws and Regulatory Guides for AFS licensees and credit licensees: Regulatory Guide 104 Licensing: Meeting the general obligations (RG 104) and Regulatory Guide 105 Licensing: Organisational competence (RG 105).
You must also have, and maintain, the competence to provide the relevant financial service, or engage in the relevant credit activity. This includes having the appropriate personnel with the necessary skills and experience regarding the distributed ledger technology (DLT) to comply with your licence obligations.
A new business wanting to provide financial services or engage in credit activities must generally obtain an AFS or credit licence from ASIC, or act as an authorised representative of an existing licensee. Regulatory Guide 257 Testing fintech products and services without holding an AFS or credit licence (RG 257) provides some information about when an exemption, such as the fintech licensing exemption, may be available.
Market infrastructure licence holders
A business wanting to operate a new financial market infrastructure such as a financial market or clearing and settlement (CS) facility in Australia must be licensed or exempt by the Minister, and a business wanting to operate a new derivative trade repository (DTR) in Australia must be licensed or prescribed by ASIC.
As part of their ongoing obligations, market licensees, CS facility licensees and DTR licensees are required, among other things, to have adequate arrangements and sufficient resources, including technology and human resources, and to have and to maintain the competence, to properly operate their infrastructure.
As part of their obligations under the Corporations Act 2001, CS facility licensees are generally also required to comply with the RBA's Financial Stability Standards (FSS). These standards are principles-based, and therefore technology neutral. As with any CS facility licensee, should an existing or prospective licensee intend to use DLT as part of its operations, the licensee will be expected to demonstrate the appropriateness of its technology and human resources for the service being offered.
Although we work closely with the RBA to supervise CS facilities, assessing a CS facility’s observance of the FSS is the RBA's responsibility. This information sheet is not intended to provide clarification on any information the RBA may require from a current or prospective licensee in conducting such an assessment. For more information on your obligations and how to comply with them, refer to the relevant laws and regulatory guides for market operators, CS facility operators and DTR operators: see Regulatory Guide 172 Financial markets: Domestic and overseas operators (RG 172 ), Regulatory Guide 211 Clearing and settlement facilities: Australian and overseas operators (RG 211) and Regulatory Guide 249 Derivative trade repositories (RG 249).