ASIC extends current FFSP relief
ASIC has released an instrument to roll over existing relief for foreign financial service providers (FFSPs) until 31 March 2025. Accordingly, FFSPs may continue to rely on the following licensing exemptions that were set to expire on 31 March 2024 for another year:
- the sufficient equivalence relief for entities who rely on the exemptions for entities regulated by the German BaFin, Hong Kong SFC, UK FCA, Singapore MAS US SEC, Federal Reserve, OCC or CFTC, or Luxembourg CSSF; and
- the limited connection relief for entities which do not carry on any activities in Australia.
Treasury re-releases draft legislation for the future regime for FFSPs
Treasury has finally re-released for consultation draft legislation for licensing exemptions for foreign financial services providers. With a few notable exceptions, the proposed legislation is the same as the legislation the previous Government tabled in Parliament in early 2022 (which lapsed with the calling of the election in May 2022).
The proposed legislation seeks to introduce:
- a comparable regulator exemption;
- a professional investor exemption;
- a market maker exemption;
- an exemption from the fit and proper person assessment to fast-track the licensing process for FFSPs authorised to provide financial services in a comparable regulatory regime.
The following Alerts we released previously discuss the proposed regime in detail and remain relevant:
While the new exposure draft retains the same approach as the lapsed Bill, there are several important changes:
- the new Bill proposes to give the Government the power to stop FFSPs relying on the professional investor exemption in relation to dealings in financial products traded on prescribed markets - there is no indication when or whether this power will be used;
- a new exemption is proposed for making of a market for derivatives that are able to be traded on a prescribed market - again there is no detail about when this exemption will be available;
- an additional condition applies to all the exemptions to require financial services are provided efficiently, honestly and fairly (with certain carveouts); and
- ASIC is conferred an additional power to cancel an exemption on the grounds that the person is not providing financial services efficiently, honestly and fairly.
We welcome the release (again) of legislation to enhance and settle once and for all the regulatory regime that will apply to FFSPs doing business in Australia and look forward to its enactment as soon as possible.
Next steps
Consultation on the exposure draft closes on 8 September 2023. Please do not hesitate to contact us if you have any queries about the draft legislation or require assistance making a submission.
