ASIC Class Order [CO 12/1266]

Administered by Department of the Treasury

Legislation au F2012L01918 Not in force Legislative Instrument

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ASIC CLASS ORDER [CO 12/1266]

 

EXPLANATORY STATEMENT

 

 

Prepared by the Australian Securities and Investments Commission

 

Corporations Act 2001

 

The Australian Securities and Investments Commission (ASIC) makes Class Order [CO 12/1266] under paragraph 911A(2)(l) of the Corporations Act 2001 (the 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 Regulatory Guide 176 Licensing: Discretionary powers – wholesale foreign financial services providers (RG 176) outlines when ASIC will grant conditional relief from the requirement to hold an AFS licence to foreign financial services providers (FFSPs) who:

 

(a)   provide services in Australia only to wholesale clients; and

 

(b)   are regulated by overseas regulatory authorities.

 

ASIC has granted class order relief for the purposes of RG 176 to FFSPs regulated by:

 

  • the UK Financial Services Authority ([CO 03/1099] UK FSA regulated financial service providers);

 

  • the US Securities and Exchange Commission ([CO 03/1100] US SEC regulated financial service providers);

 

  • the US Federal Reserve and Office of Comptroller of Currency ([CO 03/1101] US Federal Reserve and OCC regulated financial service providers);

 

  • the Monetary Authority of Singapore ([CO 03/1102] Singapore MAS regulated financial service providers);

 

  • the Securities and Futures Commission of Hong Kong ([CO 03/1103] Hong Kong SFC regulated financial service providers);

 

  • the US Commodity Futures Trading Commission ([CO 04/829] US CFTC regulated financial service providers); and

 

  • the Bundesanstalt für Finanzdienstleistungsaufsicht of Germany (BaFin) ([CO 04/1313] German BaFin regulated financial service providers).

 

In June 2012 ASIC updated RG 176. ASIC also made Class Order [CO 12/572] to vary existing class orders made for the purposes of RG 176, reflecting key changes to RG 176.

 

One of the refinements to RG 176 and the relevant class orders was an amended notification requirement. Under the requirement exempt FFSPs are required to notify ASIC of significant enforcement or disciplinary actions or investigations as soon as practicable after the exempt FFSP becomes aware of them. Previously FFSPs were only required to notify ASIC of significant enforcement or disciplinary actions (not investigations).

 

 

2. Purpose of the class order

 

The purpose of the class order is to address an unintended consequence that arose as a result of the amendment to the class orders in June 2012. The unintended consequence is that the condition that requires an exempt FFSP to notify ASIC of significant investigations of the body by an overseas regulatory authority may cause the exempt FFSP being investigated to contravene a foreign law by notifying ASIC of such an investigation.           

 

 

3. Operation of the class order

 

The class order has the effect that an exempt FFSP must notify ASIC of significant investigations unless, after having taken reasonable steps to enable notification to be given to ASIC, the exempt FFSP is prohibited by law from giving such notification but only to the extent of the prohibition.

 

Reasonable steps might involve measures such as informing the overseas regulatory authority that the FFSP is subject to the condition of the class order, and requesting the overseas regulatory authority to consent to the notification to ASIC.

 

The extent to which a foreign law may prohibit such notification to ASIC may vary from  jurisdiction to jurisdiction. For example, it may be that a foreign law prohibits the notification to ASIC of details of the investigation but does not prohibit the notification to ASIC of the fact that there is such an investigation.

 

 

4. Statement of Compatibility with Human Rights

 

This statement is prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

 

This class order is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 because it does not engage any of the applicable rights or freedoms.

 

 

 

5.  Consultation

 

Before making the updates to RG 176, a joint ASIC and Department of Treasury consultation paper was released for consultation in June 2008: Consultation Paper 98 Cross-border recognition: Facilitating access to overseas markets and financial services (CP 98).  The update to RG 176 and related material included refinements to content and requirements following feedback received from respondents to CP 98 and ongoing industry consultation. There was targeted consultation with industry associations on the draft updated RG 176.

 

The Office of Best Practice Regulation confirmed that a Regulation Impact Statement was not necessary.

Overview

The Australian Securities and Investments Commission (ASIC) enacted the ASIC Class Order [CO 12/1266] under the Corporations Act 2001 to address an unintended consequence arising from the amendments made to existing class orders in June 2012. The primary issue that the class order aimed to resolve was the potential conflict for foreign financial services providers (FFSPs) who might be prohibited by their home country's laws from notifying ASIC of significant investigations into their activities. By introducing this class order, ASIC sought to balance the need for transparency and compliance with the possible legal constraints faced by these providers when operating in Australia. This class order was designed to refine the notification requirements, ensuring that FFSPs comply with both Australian regulations and their overseas obligations.

Scope and Application

The ASIC Class Order [CO 12/1266] applies to foreign financial services providers (FFSPs) regulated by certain overseas authorities who provide services in Australia exclusively to wholesale clients. This legislation is an exemption from the requirement to hold an Australian Financial Services (AFS) licence, as specified in the Corporations Act 2001. The Act applies to FFSPs regulated by authorities in the UK, US, Singapore, Hong Kong, and Germany, among others, as outlined in previous class orders. The exemption is contingent on the FFSPs providing services only to wholesale clients and being subject to regulation by specified overseas authorities. The class order also addresses the unintended consequences of previous amendments to the notification requirements, ensuring that FFSPs must notify ASIC of significant investigations unless prohibited by foreign law, in which case notification must be limited to the extent of such prohibitions. This legislation does not extend beyond these specific conditions and is compatible with human rights as it does not engage any applicable rights or freedoms.

Key Provisions

The ASIC Class Order [CO 12/1266] under the Corporations Act 2001 (section 911A(2)(l)) grants a conditional exemption from holding an Australian financial services (AFS) licence to foreign financial services providers (FFSPs) who offer services exclusively to wholesale clients in Australia and are regulated by specified overseas authorities (section 1). The order applies to FFSPs regulated by authorities such as the UK Financial Services Authority, US Securities and Exchange Commission, and others. The order aims to address an unintended consequence of an amendment made in June 2012 to the notification requirements under ASIC Regulatory Guide 176 (RG 176). The unintended consequence is that FFSPs might contravene foreign laws if they notify ASIC of significant investigations, as required by the amended RG 176. To comply with the class order, FFSPs must notify ASIC of significant investigations unless they are legally prohibited from doing so. The FFSPs must take reasonable steps to notify ASIC, which might include informing the overseas regulatory authority about the class order's requirements and seeking consent to notify ASIC. The extent to which a foreign law may prohibit such notification can vary between jurisdictions (section 3). Entities governed by the class order have the obligation to notify ASIC of significant investigations conducted by overseas regulatory authorities, unless prohibited by foreign law. They must take reasonable steps to enable such notification, which may involve communicating with the overseas regulatory authority to seek consent for the notification to ASIC. This requirement seeks to balance the need for regulatory oversight in Australia with the obligations FFSPs have under foreign laws. Breaches of the class order may result in regulatory action by ASIC, including enforcement actions or disciplinary measures against the FFSP. While the class order itself does not specify penalties, breaches of the underlying Corporations Act or other financial services laws could incur civil or criminal penalties. The potential consequences depend on the nature and severity of the breach and any applicable laws.

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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.