EXPLANATORY STATEMENT
Select Legislative Instrument 2007 No. 321
Issued by the authority of the Parliamentary Secretary to the Treasurer
Australian Securities and Investments Commission Act 2001
Australian Securities and Investments Commission Amendment Regulations 2007 (No. 2)
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 amendments to the Regulations allow the Australian Securities and Investments Commission (ASIC) to pass confidential information to two further market operators, namely FX Alliance International, LLC (FX Alliance) and The London Metal Exchange Limited (LME). In addition these amendments remove ICAP Europe Limited (IEL) from the list of prescribed bodies corporate to which ASIC can disclose confidential information.
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 amendments to the Regulations to include market operators FX Alliance and LME among the prescribed bodies corporate for the purposes of subsection 127(4B) allows each to more effectively perform the market supervisory functions required of them as financial market operators.
IEL ceased operation of its licensed market and has subsequently had its market licence cancelled. Consequently IEL has been removed from the list of market operators to which ASIC can disclose confidential information.
In addition, to ensure clarity in the law, the amendment replaced references to the ‘Stock Exchange of Newcastle Limited’ with references to the ‘National Stock Exchange of Australia Limited’ in the Principal Regulations.
In 2006 the Stock Exchange of Newcastle Limited changed its name to the National Stock Exchange of Australia Limited. Its Australian market licence was varied to reflect that change.
Under the Corporations Agreement 2002, the Commonwealth must consult with, and receive approval, from the Ministerial Council for Corporations before making amendments to certain provisions of the Principal Regulations. The Council has approved these amendments and agreed to dispense with the period of public exposure given that the amendments are technical in nature.
The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003. The Regulations commenced on the day after they were registered on the Federal Register of Legislative Instruments.
Overview
The Australian Securities and Investments Commission Amendment Regulations 2007 (No. 2) were enacted to amend the Australian Securities and Investments Commission Regulations 2001, under the authority of the Australian Securities and Investments Commission Act 2001. These regulations were introduced to address the need for adjustments in the entities to which the Australian Securities and Investments Commission (ASIC) can disclose confidential information, aligning with the evolving financial market landscape. The Australian Government, through the Parliamentary Secretary to the Treasurer, issued these regulations to facilitate more effective market supervision by including additional market operators while removing entities that are no longer operational or relevant. The policy objective is to ensure that ASIC can efficiently share necessary information with authorised entities that are involved in the supervision of financial markets, thus enhancing compliance and regulatory oversight.
Scope and Application
The Australian Securities and Investments Commission Amendment Regulations 2007 (No. 2) amend the Australian Securities and Investments Commission Regulations 2001, and apply to the Australian Securities and Investments Commission (ASIC) as the regulator of financial markets and entities in Australia. The amendments pertain to the disclosure of confidential information by ASIC to certain market operators, including the addition of FX Alliance International, LLC and The London Metal Exchange Limited to the list of prescribed bodies corporate eligible to receive such information. This inclusion allows these entities to better monitor compliance and perform supervisory functions. Conversely, ICAP Europe Limited has been removed from the list due to the cessation of its operations and the cancellation of its market licence. These changes reflect adjustments to the financial market landscape and aim to ensure that only entities actively involved in market supervision can receive sensitive information from ASIC. The amendments are confined to the Commonwealth level, and their technical nature has allowed for streamlined approval without a public exposure period.
Key Provisions
The Australian Securities and Investments Commission Amendment Regulations 2007 (No. 2) bring forth several key provisions under the Australian Securities and Investments Commission Act 2001 (the Act). Specifically, Regulation 8A of the Australian Securities and Investments Commission Regulations 2001 (the Principal Regulations) has been amended to include two additional market operators, FX Alliance International, LLC (FX Alliance) and The London Metal Exchange Limited (LME), as prescribed bodies corporate. This inclusion, detailed in Schedule 3 of the Principal Regulations, allows the Australian Securities and Investments Commission (ASIC) to disclose confidential information to these entities to enable them to more effectively perform their market supervisory functions. Conversely, ICAP Europe Limited (IEL) has been removed from the list of prescribed bodies corporate due to the cessation of its market operations and subsequent cancellation of its market licence. Additionally, the amendment corrects references within the Principal Regulations from the ‘Stock Exchange of Newcastle Limited’ to the ‘National Stock Exchange of Australia Limited’ to reflect the entity's name change in 2006.
These amendments impose specific obligations on ASIC regarding the disclosure of confidential information. Under subsection 127(4B) of the Act, ASIC is authorised to disclose sensitive information to prescribed bodies corporate, provided the Chairperson of ASIC is satisfied that the disclosure will enable or assist the body corporate in monitoring compliance with, enforcing, or performing functions or exercising powers under specified legislation. Subsection 127(4C) further specifies that a body corporate can only be prescribed if it conducts, or is involved in the supervision of, a financial market, or holds an Australian clearing and settlement facility licence. The inclusion of FX Alliance and LME in the Principal Regulations under these criteria ensures that only eligible entities receive such sensitive information.
Breaches of the provisions contained within the Australian Securities and Investments Commission Act 2001 may result in both civil and criminal consequences. While the Explanatory Statement does not explicitly detail the penalties, the Act and associated regulations typically include provisions for fines and imprisonment for serious breaches. The severity of penalties would depend on the nature and extent of the breach, as well as any precedents set by previous cases under similar circumstances. The legislative framework ensures that entities like ASIC, FX Alliance, and LME adhere to the stringent standards required for handling confidential information, thereby maintaining the integrity and stability of financial markets in Australia.