Australian Securities and Investments Commission Amendment Regulations 2004 (No. 1) 2004 No. 102
EXPLANATORY STATEMENT
Statutory Rules 2004 No. 102
Issued by the Parliamentary Secretary to the Treasurer
Australian Securities and Investments Commission Act 2001
Australian Securities and Investments Commission Amendment Regulations 2004 (No. 1)
Subsection 251(1) of the Australian Securities and Investments Commission Act 2001 (the Act) provides that the Governor-General may make regulations prescribing matters required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.
The purpose of the Regulations is to allow Australian Securities and Investments Commission Act (ASIC) to pass appropriate information to "Market Regulation Services Inc.", the supervisor of brokers on the Toronto Stock Exchange.
ASIC is given certain sensitive information in confidence or in connection with the performance of its functions or the exercise of its powers under the corporations legislation. Subsection 127(4B) of the Act authorises the disclosure, by an authorised person, of such information to prescribed bodies corporate (including foreign companies) if the Chairperson of ASIC is satisfied that the information will enable or assist the body corporate to monitor compliance with, enforce, or perform functions or exercise powers under the Corporations Act 2001, the business law of a State not covered by the Act, the business law of a foreign country or the operating rules of the body corporate. Subsection 127(4C) of the Act provides that the regulations may specify a body corporate for the purposes of subsection 127(B) if, and only if, the body corporate conducts, or is involved in the supervision of, a financial market, or is a body corporate that holds an Australian clearing and settlement facility licence.
Regulation 8A of the Australian Securities and Investments Commission Regulations 2001 (the Principal Regulations) provides that the bodies corporate listed in Schedule 3 to the Principal Regulations are specified for the purposes of subsection 127(4C) of the Act.
The Financial Services Reform Amendment Act 2003, which received Royal Assent on 17 December 2003, amended the Act to expand the range of bodies corporate that can be prescribed under subsection 127(4C) of the Act to include bodies corporate that are involved in the supervision of a financial market, in addition to the financial markets themselves.
ASIC was already authorised to provide information to the market operator in Toronto (the Toronto Stock Exchange), by virtue of Regulation 8A of the Principal Regulations. However, this did not extend to the separate supervisor in Toronto ("Market Regulation Services Inc.").
The Regulations prescribe "Market Regulation Services Inc." as a body corporate for the purpose of subsection 127(4C) of the Act, which authorises the disclosure to prescribed bodies corporate of information that is given to ASIC in confidence or in connection with the performance of its functions or the exercise of its powers under the corporations legislation. "Market Regulation Services Inc." is the first supervisory body prescribed under subsection 127(4C) of the Act.
The Regulations commenced on the date of their notification in the Gazette.
Overview
The Australian Securities and Investments Commission Amendment Regulations 2004 (No. 1) were enacted to address a gap in the regulatory framework concerning the disclosure of sensitive information from the Australian Securities and Investments Commission (ASIC) to foreign supervisory bodies. These regulations were introduced by the Parliament of Australia and were designed to align with the policy objective of enhancing international cooperation in financial market regulation. Specifically, the Regulations were made under the authority of the Australian Securities and Investments Commission Act 2001, which allows for the disclosure of confidential information to prescribed bodies corporate that are involved in the supervision of financial markets. The Regulations specify "Market Regulation Services Inc." as such a body corporate, enabling ASIC to share necessary information with this Toronto-based supervisor, thereby facilitating compliance monitoring and enforcement activities across international financial markets.
Scope and Application
The Australian Securities and Investments Commission Amendment Regulations 2004 (No. 1) pertain to the Australian Securities and Investments Commission Act 2001, extending the scope of entities eligible for receiving sensitive information from the Australian Securities and Investments Commission (ASIC). Specifically, the Regulations prescribe "Market Regulation Services Inc." as an entity authorised to receive such information. This designation applies to information that ASIC obtains in confidence or in relation to its functions and powers under the Corporations Act 2001 and related business laws. This provision ensures that ASIC can share information with entities that supervise financial markets, enhancing cross-border cooperation and regulatory efficiency. The Regulations came into effect on the date of their notification in the Gazette, thereby updating the Principal Regulations to include "Market Regulation Services Inc." as a body corporate for these purposes.
Key Provisions
The Australian Securities and Investments Commission Amendment Regulations 2004 (No. 1) primarily address the disclosure of sensitive information by the Australian Securities and Investments Commission (ASIC) to a specified body corporate. Section 127(4B) of the Australian Securities and Investments Commission Act 2001 (the Act) empowers ASIC to disclose information to prescribed bodies corporate, provided certain conditions are met. Specifically, the Chairperson of ASIC must be satisfied that the disclosure will enable or assist the body corporate in monitoring compliance with, enforcing, or performing functions or exercising powers under various legislative frameworks, including the Corporations Act 2001 and other relevant business laws. Furthermore, section 127(4C) allows for the regulation to specify a body corporate for these purposes if it is involved in the supervision of a financial market or holds an Australian clearing and settlement facility licence.
The Regulations impose specific obligations on ASIC to ensure that sensitive information is disclosed only to entities that are directly involved in the supervision of financial markets, thereby enhancing the capacity of these entities to enforce compliance and perform their regulatory functions effectively. By specifying "Market Regulation Services Inc." as a prescribed body corporate under section 127(4C), the Regulations extend the scope of information disclosure to include the supervisor of brokers on the Toronto Stock Exchange, which was not previously covered under the Australian Securities and Investments Commission Regulations 2001.
Breaches of the Regulations could lead to serious legal consequences for ASIC or any authorised person involved in the disclosure of information. While the Regulations themselves do not explicitly outline specific offences, penalties, or consequences for non-compliance, the overarching legislative framework, including the Australian Securities and Investments Commission Act 2001, may impose penalties for unauthorised disclosures of confidential information. Such penalties could include fines and, in severe cases, criminal charges. Additionally, the improper disclosure of sensitive information could also result in civil liabilities under the relevant legislative provisions, including potential damages for any harm caused by the breach. The precise nature and extent of these consequences would depend on the specific circumstances of the breach and the applicable laws.