ASIC places restrictions on OTC derivatives dealers
Significant new restrictions have been placed on Australian financial services (AFS) licensees which deal in over-the-counter (OTC) derivatives, according to the Australian Securities and Investments Commission (ASIC).
The guidance, which coincides with the start of the regulator's client money reporting rules and other client money reforms on 4 April 2018, mean AFS licensees can no longer withdraw derivative retail client money from the client’s account and use it for a wide range of purposes, including as the licensee's own working capital.
The reforms also impose new record-keeping, reconciliation and reporting requirements on AFS licensees that hold derivative retail client money, ASIC said.
ASIC commissioner Cathie Armour said the amendments to the client money regime have strengthened the protection of derivative retail client money and will help to increase investor confidence in the Australian financial system.
“ASIC's client money reporting rules will also ensure greater transparency in relation to an AFS licensee's receipt and use of derivative retail client money and will ensure any discrepancies in an AFS licensee's client money account are notified to ASIC in a timely manner and enable ASIC to take appropriate action,” she said.
“ASIC has engaged with industry and there has been a sufficient transition period to ensure that AFS licensees that hold derivative retail client money are aware of the new regime and understand the obligations it imposes.
“From 4 April 2018, we expect licensees to know and comply with the new client money regime.”
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