Managed discretionary accounts

What is a managed discretionary account?

A managed discretionary account (MDA) is a facility, other than a registered managed investment scheme (registered scheme) or an interest in a registered scheme, with the following features:

  • a person (MDA client) makes contributions
  • the client portfolio assets are managed on an individual basis by another person (MDA provider) at the MDA provider’s discretion, subject to any agreed limitation
  • the MDA client and the MDA provider intend that the MDA provider will use the client portfolio assets to generate a financial return or other benefit for the client.

We consider that an MDA generally falls within the definition of both:

  • a managed investment scheme (see section 9 of the Corporations Act)
  • a facility for making a financial investment (see section 763B of the Corporations Act).

We note that there are a wide variety of arrangements, which industry describes using various terminology, that may have the relevant features of an MDA. Regardless of the terminology, these arrangements may therefore constitute an MDA.

Regulation of MDA services

Our policy on the regulation of MDAs is set out in Regulatory Guide 179 Managed discretionary accounts (RG 179). RG 179 sets out how we regulate MDA services provided to retail clients under the Corporations Act.

Relief for MDA providers

We provide relief to MDA providers from the managed investment scheme provisions in Chapter 5C of the Corporations Act. We also provide relief from certain disclosure requirements in the Corporations Act if the MDA provider complies with certain other conditions. For more information on this relief, see RG 179 and ASIC Corporations (Managed Discretionary Account Services) Instrument 2016/968.

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Last updated: 10/09/2021 04:29