Explanatory Statement
ASIC Corporations (Securitisation Special Purpose Vehicles) Instrument 2026/175
This is the Explanatory Statement for ASIC Corporations (Securitisation Special Purpose Vehicles) Instrument 2026/175.
The Explanatory Statement is approved by the Australian Securities and Investments Commission (ASIC).
Summary
- ASIC Corporations (Securitisation Special Purpose Vehicles) Instrument 2026/175 (Instrument 2026/175) provides an exemption from the requirement to hold an Australian Financial Services (AFS) licence for insolvency-remote special purpose entities issuing certain securitisation products in specified circumstances.
- Instrument 2026/175 substantively preserves the exemption previously provided under ASIC Corporations (Securitisation Special Purpose Vehicles) Instrument 2016/272 (Instrument 2016/272) (which itself continued the effect of ASIC Class Orders [CO 04/1526] and [CO 05/1270]).
3. Schedule 1 to Instrument 2026/175 repeals Instrument 2016/272. Instrument 2016/272 would otherwise sunset under section 50 of the Legislation Act 2003 on 1 April 2026.
Purpose of Instrument 2026/175
4. Part 7.6 of the Corporations Act 2001 (the Act) sets out the AFS licensing requirements for providers of financial services. Section 911A generally requires those carrying on a financial services business in Australia to hold an AFS licence. Subsection 766A(1) states that a person provides a 'financial service' if they (amongst other things):
(a) provide financial product advice;
(b) deal in a financial product; or
(c) provide a custodial or depository service.
5. This means that certain conduct engaged in by securitisation special purpose vehicles (SPVs), or the trustee of an SPV that is a trust, would, in the absence of an exemption, amount to the provision of financial services in Australia, attracting the AFS licensing requirements. Such conduct would include the SPV or the trustee of an SPV that is a trust:
(a) issuing securitisation products;
(b) dealing in derivatives transactions;
(c) dealing in foreign exchange contracts;
(d) dealing in the underlying assets of the trust that are financial products; and
(e) providing custodial services.
6. ASIC grants this relief to address concerns that a disproportionate burden would be placed on securitisation entities should they be required to hold an AFS licence. Subsection 926A(2) of the Act provides that ASIC may exempt a person or a financial product or class of persons or financial products from all or specified provisions of Part 7.6 of the Act (other than Divisions 4 and 8).
7. In particular, in considering whether relief from the AFS licensing requirements should be granted, as stated in ASIC Regulatory Guide 167 AFS Licensing: Discretionary Powers, it is an important factor for ASIC to consider whether clients for a financial service are exclusively wholesale clients. It is ASIC’s understanding (including from recent consultation with industry representatives) that the securitisation industry operates almost exclusively in the wholesale market.
Consultation
8. ASIC consulted publicly for 4 weeks on its proposal to remake the relief in Instrument 2016/272. It received three submissions. All submissions supported remaking Instrument 2016/272 on substantially similar terms.
Operation of Instrument 2026/175
Relief from the requirement to hold an AFS licence for issuing a securitisation product
9. Section 6 of Instrument 2026/175 defines “securitisation entity” as a body corporate, that:
(a) issues a securitisation product for the purposes of carrying on a business (the securitisation business) of managing, by way of a securitisation transaction, some or all of the economic risk associated with assets, liabilities or investments (whether the body assumes the risk from another person or creates the risk itself); and
(b) reasonably believes that it, or if it is the trustee of a trust—the trust, is an insolvency-remote special purpose entity according to criteria of an internationally recognised rating agency that are applicable to the entity’s circumstances; and
(c) raises all or substantially all of its funds by issuing securitisation products on terms that the funds raised would be applied in the securitisation business.
10. A “securitisation product” is defined as either a debt instrument or an interest in a managed investment scheme.
11. Subsection 7(1) provides relief to a securitisation entity from the requirements in subsection 911A(1) to hold an AFS licence in respect of the provision of a financial service in the course of the securitisation business, provided that one of the four sets of criteria in subsection 7(2) is satisfied, as well as the additional criteria in section 8.
First set of criteria: Issuing a securitisation product
12. Paragraph 7(2)(a) provides relief where the service consists of issuing a securitisation product, where all of the following apply:
- the securitisation product relates to a securitisation transaction for managing some or all of the economic risk associated with assets held by the securitisation entity, and each other securitisation product issued by the securitisation entity relates to that securitisation transaction or another securitisation transaction for managing some or all of the economic risk associated with assets held by the securitisation entity; and
- the issue is to a person who either:
(i) holds an AFS licence; or
(ii) is exempt from holding an AFS licence under Instrument 2026/175, ASIC Corporations (Foreign Financial Services Providers) Instrument 2025/798 or any exemption under paragraph 911A(2)(h) or (l) or subsection 926A(2) of the Act that includes reference to the exempted person complying with or reasonably believing that they comply with the regulatory requirements of a foreign jurisdiction.
Second set of criteria: Dealing in derivatives and foreign exchange contracts
13. Paragraph 7(2)(b) enables relief where the service consists of dealing in derivatives and foreign exchange contracts (or both) and all of the following apply:
(a) the service does not involve making a market for derivatives or foreign exchange contracts;
(b) the dealing is entered into for the purpose of managing a financial risk that arises in the ordinary course of a securitisation business; and
(c) the counterparty to the dealing is a person as a wholesale client.
Third set of criteria: Providing custodial or depository services for financial products on behalf of securitisation product holders
14. Paragraph 7(2)(c) enables relief for the provision of custodial or depository services in relation to financial products held by the securitisation entity as trustee for the holders of the securitisation products.
Fourth set of criteria: Dealing in financial products as trustee on behalf of securitisation product holders
15. Paragraph 7(2)(d) of Instrument 2026/175 provides relief for a service that is:
- dealing on behalf of the holders of the securitisation products in financial products held by the securitisation entity as trustee for those holders of the securitisation products; and
- is not dealing by issuing or acquiring derivatives or foreign exchange contracts.
Further conditions of the relief
16. Section 8 provides that the exemptions from the requirement to hold an AFS licence in section 7 only apply where the securitisation entity satisfies both sets of criteria, as set out in paragraphs (a) and (b), below (as applicable):
- in the case of a financial service referred to in paragraph 7(2)(a), (b) or (d)—the securitisation entity:
(i) provides the relevant financial service in accordance with financial product advice provided by an AFS licensee authorised to provide such advice in relation to the financial product to which the financial service relates; and
(ii) has entered into a written agreement with the AFS licensee, under which:
(A) the securitisation entity receives the financial product advice described in subparagraph (i); and
(B) the AFS licensee has not by contract or otherwise excluded or limited (or purported to exclude or limit) its liability for any loss or damage resulting from any negligence by that licensee in providing the financial product advice to the securitisation entity;
- in the case of a financial service referred to in paragraphs 7(2)(a), (c) or (d)—the securitisation entity:
(i) has not issued any securitisation products to a person who is a retail client; and
(ii) has taken all reasonable steps to ensure that any securitisation products issued by the securitisation entity are not subsequently acquired by a person who is a retail client.
Repeal of Instrument 2016/272
17. Schedule 1 of Instrument 2026/175 repeals Instrument 2016/272.
Legislative instrument and primary legislation
18. The matters contained in Instrument 2026/175 are designed to ensure the application of primary legislation keeps pace with technological and market developments not contemplated at the time the law was originally made and applies in a way consistent with the intended policy and the enabling provisions in the primary legislation.
19. It will be a matter for the Government and for Parliament to consider whether the Act may need to be amended in the future to include the substance of Instrument 2026/175 in legislation.
Duration of Instrument 2026/175
20. The duration of Instrument 2026/175 is 5 years. This period is appropriate to provide certainty for industry while the Government and Parliament decide whether to amend the primary legislation.
Legislative authority
21. Instrument 2026/175 is made under paragraph 926A(2)(a) of the Act.
22. Paragraph 926A(2)(a) provides that ASIC may exempt a person or class of persons from all or specified provisions of Part 7.6 of the Act (other than Divisions 4 and 8).
23. 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.
24. Instrument 2026/175 is a disallowable legislative instrument.
Statement of Compatibility with Human Rights
25. 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 (Securitisation Special Purpose Vehicles) Instrument 2026/175
Overview
1. ASIC Corporations (Securitisation Special Purpose Vehicles) Instrument 2026/175 (Instrument 2026/175) provides an exemption from the requirement to hold an Australian Financial Services licence, under Part 7.6 of the Corporations Act 2001, for certain securitisation entities issuing certain securitisation products that satisfy specified criteria. Instrument 2026/175 repeals Instrument 2016/272.
Assessment of human rights implications
3. Instrument 2026/175 does not engage any of the applicable rights or freedoms.
Conclusion
4. Instrument 2026/175 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.