Regulatory favourites March 2023

Ah, Autumn; the season of fruitfulness according to poet John Keats. There has certainly been an abundance of regulatory activity this past month, so we’ve wheelbarrowed in the best of our freshest pickings for you!

Clearing a path for more CS facility services

Treasury has released exposure draft legislation to facilitate competition in clearing and settlement services (CS) for Australia’s financial markets. While the Corporations Act currently permits more than one CS facility to handle the clearing and settlement of transactions executed in the Australian cash equity market, ASX subsidiaries remain monopoly providers.

Proposed rule-making powers will allow ASIC to make rules to manage matters related to competition, such as pricing, access, governance arrangements and interoperability. Some approved overseas-based services already provide clearing facilities for entities trading in OTC derivatives markets. Responses to this consultation can be submitted up until 20 April 2023. Learn more

ASIC DDO enforcement remains on the go

ASIC has made interim stop orders preventing Advance Asset Management Limited from offering or distributing three funds to retail investors because of non-compliant target market determinations (TMDs). The TMDs were considered very broadly drafted and to have failed to define key concepts. ASIC also found the distribution conditions outlined in the TMDs were inadequate.

After an initial grace period ASIC has been strongly enforcing DDO compliance, having issued 27 interim stop orders to date. Nineteen have been lifted following actions taken by the entities to address ASIC’s concerns or where the products were withdrawn, and 8 remain in place. Learn more

AUSTRAC befriends PayPal

AUSTRAC has accepted an Enforceable Undertaking (EU) from PayPal Australia, after the financial crime agency identified concerns with PayPal’s systems, controls and governance in relation to its international funds transfer instructions (IFTI) reporting. The popular money transfer service was acknowledged for its cooperation and the significant work it had already undertaken to strengthen its AML/CTF program and ensure compliance with its AML/CTF requirements.

AUSTRAC’s enforcement team has been particularly active of late, having recently accepted EUs from ING Bank and Cash Converters, and commenced Federal Court proceedings against Star Entertainment Group entities and SkyCity Adelaide. Learn more

On their soapbox

Financial luminaries have had various opportunities to be heard this month. APRA Chair John Lonsdale and ASIC Chair Joe Longo led delegations to several parliamentary committee hearings. Joe Longo also made remarks to the AICD Australian Governance Summit, ASIC Commissioner Danielle Press addressed the AIST Conference of Major Super Funds, and John Lonsdale spoke at the AFR Banking Summit.

Operational resilience and non-financial risk management, cyber security, and climate change impacts were common themes. With parliamentary hearings continuing and the autumn conference season in full swing, expect numerous regulators’ faces to show up at more places.

Like sands through the hourglass

Did you know ASIC is very forthcoming about how it plans to spend its days? The Regulatory developments timetable outlines proposed timeframes for ASIC regulatory work, such as the publication of draft or final guidance, or anticipated making of a legislative instrument. As you scroll along the timeline, the tiles containing further detail change to reflect initiatives in scope at the time.

We also recommend that you check out the Regulatory tracker, where ASIC lists new and updated regulatory guides, information sheets, reports, consultation papers and other documents that it has issued in a given week.