ASIC unveils regime for foreign financial services providers

The Australian Securities and Investment Commission (ASIC) has released its new regulatory framework for foreign financial services providers (FFSPs) who are providing services to Australian wholesale clients.

It would consist of a new foreign Australian financial services licensing regime for FFSPs and licensing relief for providers of fund management financial services seeking to induce some professional investors.

This was developed through consultation with industry and overseas regulators and there would be two-year transition period to the new regime.

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For new foreign providers, they may be able to obtain a foreign Australian Financial Services (AFS) licence from 1 April, 2020. In order to be eligible they must be authorised under an overseas regulatory regime that ASIC had determined was sufficiently equivalent to the Australian regime.

An FFSP holding a foreign AFS licence would be exempt from certain obligations that apply to AFS licensees, such as financial requirements, as ASIC acknowledged that similar regulatory supervision and outcomes would be achieved by the equivalent overseas requirements.

Foreign providers currently relying on pre-existing relief would have a two-year transition period until 31 March, 2022 to make arrangements to continue their operations in Australia, which may include applying for a foreign AFS licence.

Funds management licensing relief would commence on 1 April, 2022. The relief would be available to foreign providers inducing certain types of Australian professional investors to use the funds management financial services it provides.

Under the relief, a licence would not needed for that inducing conduct. Inducing conduct was defined as attempts to persuade, influence or encourage a particular person to become a client, such as via mass marketing campaigns.

Foreign providers must separately consider if they needed to hold a licence to actually provide financial services.

ASIC Commissioner Cathie Armour, said: “Our new regulatory framework facilitates Australian wholesale access to foreign investment opportunities, preserves market integrity against misconduct in wholesale markets, and strengthens ASIC's ability to take effective regulatory and supervisory action.

“Our ability to effectively supervise all participants in Australian markets is crucial for the confident participation of investors.”




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