Licensing relief for low volume financial markets
This is Information Sheet 217 (INFO 217). It answers the following questions:
Under the Corporations (Low Volume Financial Markets) Instrument 2016/888 certain low volume financial markets are exempt from Part 7.2 of the Corporations Act 2001 (Corporations Act) and therefore do not need to hold an Australian market licence. This exemption applies to low volume financial markets named on the register established and kept by ASIC in accordance with the instrument. Operators of low volume financial markets must submit an application to ASIC to be included on this register.
What is a low volume financial market?
A financial market is a low volume financial market if, in the 12-month period before it is included on the register:
- no more than 100 completed transactions are entered into, and
- the value of the transactions entered into does not exceed $1.5 million.
What must you include in your application?
An application by a financial market operator to be named on the register must include:
- the structure, or proposed structure, of the market
- the nature of the activities conducted, or proposed to be conducted, on the market
- the size, or proposed size, of the market
- the nature of the financial products that are dealt with, or proposed to be dealt with, on the market
- evidence of the financial market operator's capacity to conduct the market, including evidence of:
- the experience and qualifications of key staff involved in the operation of the market
- the estimated costs of operating the market
- the financial resources available to operate the market, and
- the arrangements, policies and procedures that the financial market operator has or intends to have in place to operate and supervise the market,
- for each person who, when the financial market operator makes the application, is a participant in an existing market or proposes to be a participant in a proposed market:
- the name of the person
- whether the person, in acquiring or disposing of financial products through the market, is or will be acting as an intermediary or as a principal (to the extent known by the financial market operator), and
- if the person is or will be acting as a principal, whether the person is a retail client or a wholesale client (to the extent known by the financial market operator),
- whether the financial market operator, or any of its associates, operates any other exempt or licensed market and, if so, the details of the market, and
- whether the financial market operator, any of its directors or secretaries or a related body corporate have been:
- the subject of a declaration of contravention of a provision of the Corporations Act
- found guilty of an offence under the Corporations Act
- disqualified from managing corporations, or
- banned or disqualified from providing financial services.
We will not approve an application to be included on the register unless we are satisfied that:
- the market or proposed market is a low volume financial market, and
- the financial market operator is able to comply with the conditions of relief set out in Part 2 of the Corporations (Low Volume Financial Markets) Instrument 2016/888.
When may ASIC remove you from the register?
The circumstances in which we may remove the name and details of a financial market from the register may include, but are not limited to:
- a financial market operator requesting the removal of its name and details from the register
- a financial market operator named on the register becoming insolvent
- ASIC being satisfied that a financial market operator no longer operates the market described in its application for registration, and
- ASIC having reason to believe that it is unlikely that a financial market operator will comply with the conditions set out in Part 2 of the Corporations (Low Volume Financial Markets) Instrument 2016/888.
If ASIC takes such action, the financial market is no longer exempt from the operation of Part 7.2 of the Corporations Act from the day the name and details are removed.
Please note that this information sheet is a summary giving you basic information about a particular topic. It does not cover the whole of the relevant law on that topic, and it is not a substitute for professional advice. You should also note that because this information sheet avoids legal language wherever possible, it might include some generalisations about the application of the law. Some provisions of the law referred to have exceptions or important qualifications. In most cases your particular circumstances must be taken into account when determining how the law applies to you.
Information sheets provide concise guidance on a specific process or compliance issue or an overview of detailed guidance.
This information sheet issued in December 2016.