ETF issuers can use overseas market makers
Exchange traded funds (ETF) issuers can now use overseas market makers, as the Australian Securities and Investments Commission (ASIC) has updated its class order.
ASIC made ASIC Corporations (Amendment) Instrument 2021/299 (Amending Instrument) to amend Class Order 13/721 [CO 13/721] (Class Order), which removed the requirement in the class order that an authorised participant must be an Australian resident for tax purposes.
The amending instrument removed a regulatory barrier to entry for offshore market-making entities seeking to participate in the Australian ETF market which the corporate regulator said could encourage new entrants to the ETF market-making sector.
ASIC made the amending instrument after it reviewed the local authorised participant requirement and consulting interested stakeholders.
It found the local authorised participant requirement did not support competition or market efficiency in the ETF market making sector and the requirement may lead to suboptimal outcomes for retail investors trading on the secondary market, particularly due to wider buy-sell spreads than could be expected in a more competitive market.
ASIC consulted with a number of ETF issuers and market makers, as well as the Australian Tax Office, as part of the review.
AUTHOR
Chris Dastoor
Recommended for you
T. Rowe Price has launched a multi-strategy credit fund in partnership with US firm Oak Hill Advisors to bring the strategy to Australia for the first time.
Real Asset Management has appointed a head of funds management- real estate to support its growing property team as the firm expands its diversified real estate platform.
The outlook for small-scale retail funds may be “terminal” and has prompted Clime Investment Management to close two of its Australian funds.
Global X has appointed a former CFS director as its new head of marketing to lead the firm’s brand strategy and marketing initiatives.
