EXPLANATORY STATEMENT
Proclamation
Issued by the authority of the Minister for Financial Services, Superannuation and Corporate Law
Corporations Amendment (Financial Market Supervision) Act 2010
Subsection 2(1) of the Corporations Amendment (Financial Markets Supervision) Act 2010 (the Act) provides that Schedule 1 of the Act commences on a day to be fixed by Proclamation. However, if any of the provisions do not take effect within 12 months of the day the Act received Royal Assent, the provisions are repealed on the day after the end of the period. The Act received Royal Assent on 25 March 2010.
The purpose of the Proclamation is to fix 1 August 2010 as the day on which
Schedule 1 of the Act commences.
The Act amends the Corporations Act 2001. It gives the Australian Securities and Investments Commission (ASIC) the responsibility for supervising domestically licensed financial markets and the regulatory powers to do so effectively. Previously, this responsibility rested primarily with market operators themselves. It empowers the minister to make regulations to this end; including granting ASIC the power to levy appropriate penalties against parties who infringe the regulations.
The commencement date allows the regulator (ASIC) to have sufficient systems in place to handle the increase in responsibilities. Schedule 1 to the Act was to be brought into effect after the Act had been passed to provide ASIC and industry stakeholders sufficient time to construct an appropriate regulatory framework to match the intent of the Act.
The Proclamation is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
Overview
The Corporations Amendment (Financial Market Supervision) Act 2010 was enacted to address the gap in effective regulatory oversight of domestically licensed financial markets, which had previously been primarily the responsibility of the market operators themselves. This Act aims to strengthen the supervisory role of the Australian Securities and Investments Commission (ASIC) and grant it the necessary regulatory powers to ensure compliance with financial market regulations. The enacting body, the Australian Parliament, established this policy objective to improve the oversight and regulation of financial markets by shifting the primary responsibility from market operators to ASIC. The Act allows the Minister to issue regulations to support this transition, including the power for ASIC to impose penalties on those who violate these regulations. The Proclamation issued under this Act sets 1 August 2010 as the commencement date for Schedule 1, providing ASIC and industry stakeholders with adequate time to develop the necessary regulatory frameworks to implement the Act's provisions effectively.
Scope and Application
The Corporations Amendment (Financial Market Supervision) Act 2010, as proclaimed, transfers the responsibility of supervising domestically licensed financial markets from market operators to the Australian Securities and Investments Commission (ASIC). This shift aims to enhance the effectiveness of regulatory powers by granting ASIC the authority to levy penalties against parties who breach the regulations. The Act applies to ASIC as the regulatory body and to any financial market entities within the Australian jurisdiction. The geographic and jurisdictional reach of the Act is nationwide, impacting all federally regulated financial markets in Australia. The Act does not specify any exclusions or exemptions but allows for the creation of subordinate instruments to further detail and implement its provisions. This legislative framework ensures that ASIC can adequately fulfil its new supervisory role, with the commencement date set to provide sufficient time for the development of necessary regulatory systems and frameworks.
Key Provisions
The Corporations Amendment (Financial Market Supervision) Act 2010 (the Act) sets forth significant changes in the financial market regulatory framework in Australia. The main operative sections, found in Schedule 1, centralise the responsibility for supervising domestically licensed financial markets with the Australian Securities and Investments Commission (ASIC) (s 1). This shift from market operators to ASIC is intended to provide a more cohesive and comprehensive approach to financial market oversight (s 2). Furthermore, the Act grants ASIC regulatory powers necessary to supervise these markets effectively, including the authority to make regulations and levy penalties against those who breach these regulations (s 3).
Under this Act, ASIC assumes new obligations to supervise financial markets, ensuring compliance with the relevant laws and regulations. This includes monitoring market activities, enforcing compliance, and taking corrective actions where necessary. The Act also imposes on ASIC the responsibility to develop and implement an appropriate regulatory framework to support its new role (s 4). Moreover, it places obligations on market operators to adhere to the regulations set by ASIC, ensuring transparency, fair trading, and protection of investors (s 5).
The Act delineates specific offences and penalties for breaches of the new regulatory framework. Section 1308 of the Act provides that any person who contravenes a provision of the Act or a regulation made under the Act is liable to a penalty. The maximum penalty for individual offenders is set at 5,000 penalty units, while for corporations, the maximum penalty can reach 25,000 penalty units (s 1311, s 1312). Additionally, the Act allows for both civil and criminal consequences for serious breaches, including potential imprisonment for directors and officers of corporations found guilty of significant infractions (s 1317). These provisions underscore the seriousness with which the Act treats non-compliance and aim to deter potential breaches through stringent penalties.