ASIC ups NTA requirements for custody providers
Custody providers and investor directed portfolio services (IDPS) have been handed new compliance requirements on the first day of the implementation of the Future of Financial Advice reforms, doubling their net tangible assets (NTA) requirements.
The Australian Securities and Investments Commission (ASIC) released the new requirements in Regulatory Guide 166 - Licensing: Financial Services last Friday.
Under the new regulations ASIC will now require all custodial and depository service (custody) providers and IDPS to hold NTA of either $10 million or 10 per cent of average revenue, whichever is greater.
The new regulations will not apply to 'incidental providers' of these services who will instead be required to hold NTA amounting to $150,000 or 10 per cent of average revenue, whichever is greater.
ASIC considers incidental providers to be those who are authorised to provide a custody service that is less than 10 per cent of its financial services business revenue or does not form part of an IDPS.
All custody providers and IDPS will also be subject to new requirements regarding the preparation of cash flow projections and liquidity, with new licensees subject to the new NTA requirements from today onward.
Existing licensees will be given a one-year transition period, with full compliance required from 1 July 2014. ASIC will be implementing the changes through a class order across the sector.
The changes are not unexpected. ASIC released a report on the custody industry in July last year, which was then followed by a consultation period which began in November 2012.
AUTHOR
Staff Writer
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