Explanatory Statement
ASIC Corporations (Amendment) Instrument 2026/159
This is the Explanatory Statement for ASIC Corporations (Amendment) Instrument 2026/159.
The Explanatory Statement is approved by the Australian Securities and Investments Commission (ASIC).
Summary
1. ASIC Corporations (Amendment) Instrument 2026/159 (the Amendment Instrument) extends the repeal date of ASIC Corporations (Short Term Trading Market) Instrument 2021/218 (the Principal Instrument) for a further 5 years until 1 April 2031. This extends the exemptive relief to the Australian Energy Market Operator (AEMO) and Trading Participants on their Short Term Trading Market (STTM) for gas from the requirement to hold an Australian financial services (AFS) licence covering the provision of specified financial services related to the operation of the ex ante market of the STTM.
Purpose of the Amendment Instrument
2. On 3 June 2010, the AEMO and Trading Participants on their STTM were granted an exemption from the requirement to hold an AFS licence in relation to the provision of specified financial services related to the operation of the STTM, under ASIC Class Order [CO 10/407].
3. The Principal Instrument was made in 2021 for 5 years until 1 April 2026 with the purpose of continuing to preserve the effect of the ASIC Class Order [CO 10/407].
4. The Amendment Instrument extends the repeal date of the Principal Instrument for a further 5 years until 1 April 2031 to coincide with the scheduled sunset date of the Principal Instrument.
5. ASIC considers that the relief provided by the Principal Instrument remains necessary. The exemption from the requirement to hold an AFS licence is needed as an ‘ex ante market’ forms part of the STTM process. The ex ante market is where gas is traded a day ahead of the day the gas is actually supplied, that is, a day ahead of a ‘gas day’. The ex ante market sets the price for all gas supplied on a gas day. The AEMO must prepare a market schedule for the gas day based on the bids and offers provided by Trading Participants.
6. This schedule will specify the ex ante market price and the quantity of gas that Trading Participants are expected to deliver or withdraw. This scheduling creates what we have termed ‘ex ante rights’. That is, the rights and obligations created when the AEMO schedules Trading Participants in the ex-ante market of the STTM. These rights may satisfy the definition of a derivative under section 761D of the Corporations Act 2001 (the Act) upon consideration of the following features:
(i) Trading Participants who are scheduled in the ex ante market are given the right but not the obligation to deliver or withdraw a specified quantity of gas on the following ‘gas day’;
(ii) Trading Participants undertake these obligations the day following their scheduling in the ex ante market; and
(iii) the amount of consideration is ultimately determined by reference to the volume of gas actually delivered (or withdrawn) on the gas day, multiplied by the ex ante market price, and subject to variations.
7. A derivative is specified as a financial product under paragraph 764A(1)(c) of the Act. As such without relief the AEMO and Trading Participants may be required to hold an AFS licence to deal in ex ante rights.
Consultation
8. ASIC conducted bilateral consultation with the AEMO and the Australian Energy Regulator (AER) as stakeholders that would be affected by ASIC’s decision to extend or revoke the Principal Instrument.
9. The consultation sought feedback from the affected stakeholders in relation to:
(a) whether the Principal Instrument has been operating as intended (including any unforeseen or unintended consequence of the Principal Instruments operation);
(b) whether the relief granted by the Principal Instrument is still required after 1 April 2026 (including the appropriateness of the form in which the relief is granted); and
(c) the impact on the AEMO, the AER and other stakeholders in meeting their regulatory obligations or conducting their business if ASIC did not remake the Principal Instrument.
10. ASIC received feedback from the AEMO that:
(a) the Principal Instrument has been operating as intended and there have not been any unforeseen or unintended consequences;
(b) the relief granted by the Principal Instrument is still required after 1 April 2026 in the current form; and
(c) if the Principal Instrument was not amended then the AEMO and their participants would need to consider their licencing requirements and the AEMO may not be prepared to operate the STTM without a licence.
11. The AER noted that the AEMO as the market operator was best placed to respond to the consultation questions. The AER further noted they had engaged with the AEMO on this matter and are comfortable and supportive of the feedback they provided to ASIC.
Operation of the Amendment Instrument
12. Section 2 of the Amendment Instrument provides that it commences the day after it is registered on the Federal Register of Legislation.
13. Item 1 of Schedule 1 amends the Principal Instrument to provide that it has effect until 1 April 2031.
Legislative instrument and primary legislation
14. The subject matter and policy implemented by the Amendment Instrument is more appropriate for a legislative instrument rather than primary legislation because the Amendment Instrument extends the operation of the Principal Instrument, which is itself a legislative instrument.
15. It will be a matter for the Government and for Parliament as to whether the Act or Regulations may be amended in future to include the relief in the Principal Instrument.
Duration of the Amendment Instrument
16. The effect of the Amendment Instrument is to extend the duration of the Principal Instrument by 5 years.
Legislative authority
17. ASIC makes the Amendment Instrument under paragraph 926A(2)(a) of the Act. Under paragraph 926A(2)(a) of the Act, ASIC may exempt a person or class of persons from Part 7.6 of the Act (other than Divisions 4 and 8).
18. Under subsection 33(3) of the Acts Interpretation Act 1901, where an Act confers a power to make, grant or issue any instrument (including rules, regulations or by-laws), the power shall be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend, or vary any such instrument.
19. The Amendment Instrument is a disallowable legislative instrument.
Statement of Compatibility with Human Rights
20. The Explanatory Statement for a disallowable legislative instrument must contain a Statement of Compatibility with Human Rights under subsection 9(1) of the Human Rights (Parliamentary Scrutiny) Act 2011. A Statement of Compatibility with Human Rights is in the Attachment.
Attachment
Statement of Compatibility with Human Rights
This Statement of Compatibility with Human Rights is prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
ASIC Corporations (Amendment) Instrument 2026/159
Overview
- ASIC Corporations (Amendment) Instrument 2026/159 extends the repeal date of ASIC Corporations (Short Term Trading Market) Instrument 2021/218 for a further 5 years until 1 April 2031. This extends the exemptive relief to the Australian Energy Market Operator and Trading Participants on their Short Term Trading Market (STTM) for gas from the requirement to hold an Australian financial services licence covering the provision of specified financial services related to the operation of the ex ante market of the STTM.
Assessment of human rights implications
2. This instrument does not engage any of the applicable rights or freedoms.
Conclusion
3. This instrument 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.