ASIC CLASS ORDER [05/957]
EXPLANATORY STATEMENT
Prepared by the Australian Securities and Investments Commission
Corporations Act 2001
Paragraph 911A(2)(l) – Variation
The Australian Securities and Investments Commission (“ASIC”) makes Class Order [CO 05/957] Singapore MAS-regulated financial services providers – amendment under s911A(2)(l) of the Corporations Act 2001. Section 911A(2)(l) provides that a person is exempt from the requirement to hold an Australian financial services licence for a financial service they provide if the provision of the service is covered by an exemption specified by ASIC in writing and published in the Gazette.
1. Background
ASIC has adopted Policy Statement 176 Licensing: Discretionary powers - wholesale foreign financial services providers [PS 176] which outlines when ASIC will grant exemptions from the requirement to hold an Australian financial services (AFS) licence to financial services providers who:
- provide services in Australia only to wholesale clients; and
- are regulated by an overseas regulatory authority.
ASIC has granted class order relief under [PS 176] to Singaporean bodies regulated by the Monetary Authority of Singapore (“MAS”) who hold a current capital markets services licence under the Securities and Futures Act 2001 of Singapore. The relief is found in Class Order [CO 03/1102] Singapore MAS-regulated financial services providers.
2. Purpose of the class order
The purpose of [CO 05/957] is to permit Singaporean banks and merchant banks to rely on [CO 03/1102].
3. The class order
[CO 05/957] amends [CO 03/1102] by extending the class of bodies who may rely on the class order relief to certain classes of bodies that do not hold capital markets services licence because of specific exemptions under Singaporean law.
Singaporean banks which hold a banking licence under the Banking Act 1970 of Singapore are exempted from the requirement to hold a capital markets services licence as are Singaporean merchant banks which have been approved as a financial institution by MAS under the Monetary Authority of Singapore Act 1970 of Singapore. Singaporean banks and merchant banks are subject to alternative regulation in Singapore.
4. Consultation
In preparing [CO 05/957], ASIC consulted with certain Singaporean banks and merchant banks. ASIC did not undertake further consultation because [CO 05/957] is of a minor and machinery nature and does not substantially alter ASIC’s existing policy in [PS 176].
Overview
The ASIC Class Order [CO 05/957], enacted under the Corporations Act 2001, serves to address a gap in the regulatory framework for certain financial services providers operating in Australia. This class order was introduced by the Australian Securities and Investments Commission (ASIC) to extend the scope of exemption from holding an Australian financial services (AFS) licence to additional categories of Singaporean banks and merchant banks that are regulated by the Monetary Authority of Singapore (MAS). The policy objective is to provide clarity and streamline the regulatory process for these entities, ensuring they comply with Australian financial regulations while leveraging their existing oversight in Singapore. This amendment aims to support the efficient operation of these institutions within the Australian market without imposing unnecessary licensing burdens.
Scope and Application
The ASIC Class Order [CO 05/957] applies to financial services providers, specifically Singaporean banks and merchant banks, that are regulated by the Monetary Authority of Singapore (MAS) and provide services in Australia solely to wholesale clients. This class order operates under section 911A(2)(l) of the Corporations Act 2001, which exempts certain financial services providers from needing an Australian Financial Services (AFS) licence if they are covered by a specific ASIC exemption. The scope of this order extends to Singaporean banks holding a banking licence under the Banking Act 1970 and merchant banks approved as financial institutions by MAS under the Monetary Authority of Singapore Act 1970, which are otherwise exempt from holding a capital markets services licence in Singapore. The jurisdictional reach of this class order is nationwide in Australia, and it amends the previous Class Order [CO 03/1102] to include these additional categories of Singaporean financial entities. There are no stated exclusions or exemptions in this class order, and it does not establish any thresholds; it simply extends the existing relief to certain classes of bodies that were previously excluded.
Key Provisions
The Australian Securities and Investments Commission (ASIC) has introduced Class Order [CO 05/957], which amends Class Order [CO 03/1102] to extend the exemption from holding an Australian financial services (AFS) licence to certain Singaporean banks and merchant banks that are regulated by the Monetary Authority of Singapore (MAS). Under Section 911A(2)(l) of the Corporations Act 2001, this exemption applies to financial services provided to wholesale clients in Australia, provided that the service is covered by an exemption specified by ASIC and published in the Gazette.
The primary operative sections of [CO 05/957] are those that detail the exemption criteria and the conditions under which Singaporean banks and merchant banks can operate in Australia without an AFS licence. This is contingent on these financial institutions being subject to alternative regulatory oversight in Singapore, such as holding a banking licence under the Banking Act 1970 or being approved as a financial institution by MAS under the Monetary Authority of Singapore Act 1970. The class order allows these institutions to rely on the earlier exemption provided by [CO 03/1102], but with an expanded definition of eligible entities.
ASIC imposes several obligations on the financial institutions governed by this class order. They must ensure that they are regulated by MAS and that they meet the criteria outlined in the class order, such as being a Singaporean bank or merchant bank. These entities must also ensure that the financial services they provide in Australia are only to wholesale clients, as defined under the existing policy in Policy Statement 176 (PS 176). Additionally, they must comply with any other regulatory requirements imposed by MAS or any other relevant Singaporean authority.
Failure to comply with the provisions of [CO 05/957] could result in significant consequences. While the explanatory statement does not detail specific offences or penalties, breaches of financial services laws in Australia can typically lead to civil or criminal penalties. The severity of these penalties can vary depending on the nature and extent of the breach, with potential outcomes including fines, legal action, and in severe cases, imprisonment. It is essential for affected financial institutions to adhere strictly to the conditions set forth in the class order to avoid these repercussions.