The paper seeks comments on the way ASIC plans to use its powers under the Corporations Act 2001, to facilitate the entry of foreign financial services providers who are regulated by overseas regulatory authorities, into the Australian market.
'New provisions in the Act give some offshore-based financial service providers an opportunity to enter the Australian market place by relying on the regulation that applies to them in their home country', said ASIC's Executive Director Policy and Markets Regulation, Mr Malcolm Rodgers.
'This paper sets out ASIC's approach to recognising other regulatory regimes for this purpose, and seeks industry and consumer comment.
'As Australia is a part of a global market for financial services, we want to facilitate entry by new overseas players, yet at the same time ensure Australian markets and consumers are not put at risk', Mr Rodgers said.
'In this paper, ASIC proposes to limit exemptions from the Australian licensing regime to wholesale providers, and require those who provide services to retail clients to comply with the Australian regime', he said.
The paper is part of ASIC's ongoing development of policy on the regulation of cross border financial services. It follows the release of Principles for cross border financial services regulation on 18 November 2002, and the release of policy proposal papers on Australian market licenses: Overseas operators and Foreign collective investment schemes on 21 November 2002.
Comments on the policy proposal paper are sought by 28 February 2003. ASIC plans to issue a final policy statement on these topics dealt with in the policy proposal paper during the second quarter of 2003.
A summary of the policy proposal paper follows.
Licensing: Discretionary powers ¡V Foreign financial services providers
This policy proposal paper outlines how ASIC intends to use its powers under either s911A(2)(h) or s911A(2)(l) of the Corporations Act 2001 to facilitate the entry into the Australian market of foreign financial services providers who are regulated by overseas regulatory authorities.
Subject to certain conditions, s911A(2)(h) exempts a foreign financial services provider from the requirement to hold an Australian financial services (AFS) licence if they are regulated by an overseas regulatory authority approved by ASIC.
The power under s911A(2)(l) deals with exemptions specified by ASIC. ASIC intends to use s911A(2)(l) to exempt certain foreign financial services providers regulated by certain overseas regulatory authorities from the requirement to hold an AFS licence.
Specifically, the policy proposal paper sets out:
- the criteria for an approval under s911A(2)(h) and an exemption under s911A(2)(l);
- guidance on our interpretation of s911A(2)(h);
- the types of conditions that we may impose on an exemption under s911A(2)(l); and
- how foreign financial services providers can apply for exemption under the proposed policy.
- regulation of the foreign financial services provider by their overseas regulatory authority is sufficiently equivalent to regulation by ASIC; and
- there are effective co-operation arrangements between the foreign financial services provider's overseas regulatory authority and ASIC.
To Download a copy of the paper, click here.
