AUSTRALIA: Consultation to repeal licencing relief for foreign financial services providers

Wednesday September 28 2016

The Australian Securities and Investments Commission (ASIC) has released consultation paper 268 seeking feedback on proposals to repeal Class Order [CO 03/824] Licensing relief for financial services providers with limited connection to Australia dealing with wholesale clients, which is due to expire on 1 April 2017.

It also provides an update for foreign financial services providers (FFSPs) and other relevant stakeholders on:

• recent temporary extension of our relief for FFSPs from the UK, US, Germany, France, Singapore and Hong Kong that provide a range of financial services to Australian wholesale clients; and
• plans to comprehensively review relief for FFSPs during the extension period.

ASIC provides the basis of the repeal being that its substantive effect is now covered by s911A(2E), and have provided a one-year transitional period to facilitate compliance with the Corporations Act.
[CO 03/824] provides relief for a foreign entity from the need to hold an AFS licence where it is:

• dealing only with wholesale clients; and
• carrying on a financial services business by engaging in conduct that is intended to induce people in this jurisdiction to use the financial services it provides, or is likely to have that effect (see s911D of the Corporations Act).

The original policy rationale for this relief was to ensure that isolated transactions by a foreign entity with Australian wholesale clients would not require that entity to hold an AFS licence. It was granted in part due to concerns that overseas counterparties to derivatives and foreign exchange transactions may be caught engaging in inducing conduct under s911D when issuing financial products to Australian wholesale clients. This would require those overseas counterparties to be licensed for entering into ad-hoc derivatives and foreign exchange contracts with Australian wholesale clients.

Repeal of [CO 03/824]

• 28 Sept. 2016: Consultation paper released;
• 02 Dec. 2016: Comments due on consultation;
• March 2016: Repeal of [CO 03/824]

Relief for FFSPs

• Oct. 2016 – Dec. 2017: Comprehensive review of relief for FFSPs;
• Jan. 2018: Indicative release of consultation paper on proposals to remake relief for FFSPs;
• 01 Oct. 2018: ASIC Corporations (Repeal and Transitional) Instrument 2016/396 is due to expire.

Comments to the consultation should be sent by 02 December 2016 to: Alan Worsley Senior Specialist, Strategic Policy Australian Securities and Investments Commission Level 5, 100 Market Street, Sydney 2000

facsimile: 02 9911 2414 or email: policy.submissions@asic.gov.au

Please click the link at the top of the page for the consultation.