ASIC Class Order [CO 10/737]

Administered by Department of the Treasury

Legislation au F2010L02405 Not in force Legislative Instrument

Legislation content

ASIC CLASS ORDER [CO 10/737]

 

EXPLANATORY STATEMENT

 

Prepared by the Australian Securities and Investments Commission

Corporations Act 2001

The Australian Securities and Investments Commission (ASIC) makes ASIC Class Order [CO 10/737] under paragraph 911A(2)(l) of the Corporations Act 2001 (Act).

Paragraph 911A(2)(l) provides that a person is exempt from the requirement to hold an Australian financial services (AFS) 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 Regulatory Guide 176 Licensing: Discretionary powers - wholesale foreign financial services providers (RG 176) which outlines when ASIC will grant exemptions from the requirement to hold an 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 RG 176 to foreign financial services providers (FFSPs) regulated by a number of overseas regulatory authorities (existing RG 176 class orders). The existing RG 176 class orders are listed at the end of this Explanatory Statement.

2. Purpose of the class order

The purpose of [CO 10/737] is to update a number of the existing RG 176 class orders.

Changes to Class Order’s [03/1099], [03/1100], [03/1103] and [04/829] (the class orders)

Since the class orders were issued ASIC has received a number of relief applications seeking relief to allow FFSPs to offer financial services to wholesale investors in respect of interests in registered managed investment schemes (managed investment products). Managed investment products were not included in the class orders when they were first issued, as it was not required by the original applicants. ASIC’s policy, upon receiving applications to include this financial service, has been to provide this relief on a case-by-case basis through individual relief instruments. We are now amending the class orders to include managed investment products in the list of financial services covered by the relief. It is also noted that [CO 03/1101], [CO 03/1102] and [CO 04/1313] (also granted under RG 176) already include "managed investment products" as one of the financial products being made available to FFSPs providing financial services to wholesale clients. The amendment ensures consistency across all RG 176 class orders.

Additional changes to Class Order [CO 03/1100]

All broker-dealers in the United States who are doing business with the public are required to become a member of a national securities association approved by the SEC. In July 2007, the National Association of Securities Dealers (NASD) changed its name to the Financial Industry Regulatory Authority (FINRA) and took on the member firm regulatory functions of the New York Stock Exchange (NYSE).  Also at that time, US regulations were amended so that FINRA became the only association to which broker-dealers who dealt with the public could be a member. To date we have dealt with this by individual relief instruments. Given the other changes, it is now appropriate to update [CO 03/1100] by removing the reference to NYSE and replacing the reference to NASD with FINRA.

On 17 February 2004 [CO 03/1100] was amended by expanding the scope of the term ‘body’ in paragraph (aa) of Schedule A to include a 'partnership formed in the US or a State of the US'. The Information Release issued by ASIC on 17 February 2004 as a practical guide for wholesale FFSPs seeking licensing relief using the amended [CO 03/1100] states that either bodies corporate or partnerships may rely on the relief.  Although [CO 03/1100] was amended to include 'partnerships', the corresponding amendment to the definition of a 'registered investment adviser' was overlooked. The proposed amendment to the definition of a "registered investment adviser" is necessary to reflect the change envisaged in February 2004.

3. Operation of the class order

Under paragraph 4 of [CO 10/737] we add the words ‘managed investment products’ to the list of financial products in paragraph 1 of Schedule B of [CO 03/1099].

Under paragraph 5(a) of [CO 10/737] we amend [CO 03/1100] US SEC regulated financial service providers by removing the reference to NYSE and replacing the reference to NASD with FINRA.

Under paragraph 5(b) of [CO 10/737] we amend [CO 03/1100] by adding ‘managed investment products’ to the list of financial products in paragraph 1 of Schedule B of.

Under paragraph 5(c) of [CO 10/737] we amend the interpretation section of [CO 03/1100] to reflect the above changes, and we add the words ‘partnership formed in the US or a State of the US’ to the definition of a registered investment adviser.

Under paragraph 6 of [CO 10/737] we amend [CO 03/1103] by adding 'managed investment products' to the list of financial products in paragraph 1 of Schedule B.  

Under paragraph 7 of [CO 10/737] we amend [CO 04/829] by adding 'managed investment products' to the list of financial products in paragraph 1 of Schedule B.

4. Consultation

ASIC did not undertake consultation with regard to the changes because they are minor and technical in nature.

5. Existing RG 176 class orders

ASIC has granted class order relief under RG 176 to FFSPs regulated by:

  • the UK Financial Services Authority (Class Order [CO 03/1099] UK FSA regulated financial service providers, as amended);
  • the US Securities and Exchange Commission (Class Order [CO 03/1100] US SEC regulated financial service providers, as amended);
  • the US Federal Reserve and Office of Comptroller of Currency (Class Order [CO 03/1101] US Federal Reserve and OCC regulated financial service providers, as amended);
  • the Monetary Authority of Singapore (Class Order [CO 03/1102] Singapore MAS regulated financial service providers, as amended);
  • the Securities and Futures Commission of Hong Kong (Class Order [CO 03/1103] Hong Kong SFC regulated financial service providers, as amended);
  • the US Commodity Futures Trading Commission (Class Order [CO 04/829] US CFTC regulated financial services providers, as amended); and
  • the Bundesanstalt für Finanzdienstleistungsaufsicht of Germany (BaFin) (Class Order [CO 04/1313] German BaFin regulated financial service providers, as amended).

Overview

The Australian Securities and Investments Commission (ASIC) enacted ASIC Class Order [CO 10/737] in 2010 under the Corporations Act 2001 to provide exemptions from the requirement to hold an Australian Financial Services (AFS) licence for certain wholesale foreign financial services providers (FFSPs) regulated by overseas authorities. This class order was introduced to streamline the regulatory framework for FFSPs that operate exclusively with wholesale clients in Australia, ensuring they can provide services without holding an AFS licence while still adhering to strict regulatory standards set by their home countries. The policy objective is to facilitate the provision of financial services by FFSPs in Australia, subject to specific conditions that maintain investor protection and market integrity. ASIC did not undertake formal consultation for these minor and technical changes, given their targeted nature and the existing framework already accommodating such exemptions. The class order updates previous reliefs by incorporating managed investment products into the list of financial services eligible for exemption, reflecting recent requests and ensuring consistency across all RG 176 class orders. Additionally, it updates references to regulatory changes in the United States, such as the transition of the National Association of Securities Dealers (NASD) to the Financial Industry Regulatory Authority (FINRA) and corrects an oversight in the definition of a 'registered investment adviser' to include partnerships. This amendment ensures that the class orders remain current and accurately reflect the regulatory environment and operational practices of overseas financial service providers.

Scope and Application

ASIC Class Order [CO 10/737] applies to foreign financial services providers (FFSPs) regulated by specified overseas regulatory authorities, exempting them from the requirement to hold an Australian financial services (AFS) licence when providing certain financial services to wholesale clients in Australia. The Class Order updates existing exemptions under Regulatory Guide 176, specifically including managed investment products in the services covered by the exemption. This applies to FFSPs regulated by the UK Financial Services Authority, US Securities and Exchange Commission, US Federal Reserve and Office of the Comptroller of the Currency, Monetary Authority of Singapore, Securities and Futures Commission of Hong Kong, US Commodity Futures Trading Commission, and the Bundesanstalt für Finanzdienstleistungsaufsicht of Germany. The Class Order also corrects a reference from NASD to FINRA in the US SEC regulated financial service providers order and includes partnerships formed in the US or a State of the US in the definition of a registered investment adviser. The amendments ensure consistency across all RG 176 class orders and reflect changes in regulatory authorities and financial services covered. The Class Order has a national reach, applying throughout Australia as it is made under the Commonwealth Corporations Act 2001. There are no exclusions, exemptions, or thresholds specified within the Class Order itself; however, it relies on the conditions set out in Regulatory Guide 176 for its application.

Key Provisions

ASIC Class Order [CO 10/737] under the Corporations Act 2001 primarily serves to update existing class orders related to wholesale foreign financial services providers (FFSPs). Section 911A(2)(l) of the Act exempts certain financial services from the requirement to hold an Australian Financial Services (AFS) licence if the service is covered by an exemption specified by ASIC. The primary changes made by this class order involve updating the list of financial services that FFSPs can provide to wholesale clients without needing an AFS licence, ensuring consistency across various class orders. Specifically, "managed investment products" are added to the list of financial products in the relevant schedules of the class orders (paragraphs 4, 5(b), 6, and 7 of [CO 10/737]). The obligations and requirements imposed by this class order include the necessity for FFSPs to ensure they are regulated by an overseas regulatory authority listed in the updated class orders and that they only provide the specified financial services to wholesale clients. FFSPs must also comply with any additional conditions or requirements that may be outlined in the respective class orders. The updated class orders provide a clear list of financial products that can be offered without an AFS licence, which helps FFSPs understand the scope of their permitted activities. Additionally, FFSPs must be aware of changes such as the replacement of references to the National Association of Securities Dealers (NASD) with the Financial Industry Regulatory Authority (FINRA) in the US SEC regulated financial service providers class order. Breaches of the conditions specified in the class orders may result in civil or criminal consequences, although specific penalties are not detailed in the explanatory statement. The potential for penalties underscores the importance of FFSPs adhering strictly to the updated class orders. Non-compliance could lead to enforcement actions by ASIC, which may include fines or other sanctions. The precise nature and extent of these penalties would be determined on a case-by-case basis, taking into account the severity and circumstances of the breach. Ensuring compliance with the updated class orders is therefore crucial for FFSPs to avoid any adverse legal or financial repercussions.

Legal classification tags

Area of Law
Financial Services Regulation
Instrument
Regulation
Concepts
Reporting & Disclosure Obligations
Licensing & Registration
Compliance Obligations

Interactions

Authorises

All Versions

Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.