EXPLANATORY STATEMENT
Select Legislative Instrument 2010 No. 214
Issued by the authority of the Minister for Financial Services, Superannuation and Corporate Law
Corporations (Fees) Act 2001
Corporations (Fees) Amendment Regulations 2010 (No. 3)
Section 8 of the Corporations (Fees) Act 2001 (the Act), as amended by the Corporations (Fees) Amendment Act 2010 (the Fees Amendment Act) provides that the Governor-General may make regulations for the purposes of sections 5, 5A, 6 and 6A of the Fees Act, which deal with the imposition of fees for things done under the Corporations Act 2001 (the Corporations Act). Reliance is had on section 4 of the Acts Interpretation Act 1901 for regulations being made under the Act as amended by the Fees Amendment Act, as the Fees Amendment Act has not commenced yet.
On 24 August 2009 the Government announced that it had decided to transfer the responsibility for supervision of Australia’s domestic licensed financial markets from market operators to ASIC. The Corporations Amendment (Financial Market Supervision) Act 2010 (the Amending Act) gave effect to this decision and received the Royal Assent on 25 March 2010.
The Act was amended by the Fees Amendment Act which received the Royal Assent on the Royal Assent on 25 March 2010. The Fees Amendment Act allows the Corporations (Fees) Regulations 2001 (the Principal Regulations) to specify the amount of the fee imposed by ASIC for performing their functions under the Amending Act and when the fee liability incurs.
The Regulations amend the Principal Regulations to provide the details concerning how fees would be imposed on market operators to recover the costs that the Australian Securities and Investments Commission (ASIC) will incur as a result of assuming the responsibility for supervising Australia’s domestically licensed financial markets.
Details of the Regulations are included in the Attachment.
Public consultation on the Regulation was conducted in June 2010. Five submissions were received, including submissions from industry groups and market operators. The following changes were made as a result of comments received from consultation:
• Removal of references to Australian Securities Exchange and Sydney Futures Exchange and instead replacing it with references to “the financial market operated by ASX Limited” and “the financial market operated by Sydney Futures Exchange Limited”.
• Clarification that where there are multiple markets operating off one market licence, only one fee will apply (i.e. ASIC’s fee will be charged per license).
• Other minor and technical changes to the provisions easier to read. These changes did not change the substance of the regulations.
The Act does not specify any conditions that need to be satisfied before the power to make the Regulations may be exercised.
The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.
The Regulations will commence on the commencement of Schedule 1 of the Amending Act.
ATTACHMENT
DETAILS OF THE corporations (Fees) amendment regulations 2010
(No. 3)
Regulation 1 – Name of Regulations
Regulation 1 provides that the name of the Regulations is the Corporations (Fees) Amendment Regulations 2010 (No. 3).
Regulation 2 – Commencement
Regulation 2 provide that the Regulations commence on the date of commencement of Schedule 1 to the Amending Act.
Regulation 3 – Amendment of Corporations (Fees) Regulations 2001
Regulation 3 provide that the Corporations (Fees) Regulations 2001 (Principal Regulations) are amended as set out in Schedule 1 to the Regulations.
Schedule 1 – Amendments
Item [1] – Subregulation 3(1), note
This item amends the note to subregulation 3(1) to reflect the new proposed regulations 8 and 9.
Items [2] – After regulation 7
The item amends the Principal Regulations to insert new regulations 8 and 9.
Subregulations 8(1) to 8(4)
Subregulations 8(1) to 8(4) inserts a prescribed fee for small financial markets. A small financial market is defined as:
• a financial market that is not an exempt market, a wholesale financial market, or a market operated by the Sydney Futures Exchange Limited or the ASX Limited;
• one which is licensed under subsection 795B(1) of the Corporations Act 2001 (the Corporations Act); and
• where the total value of completed transactions on the market is less than $2.5 billion per billing period.
Where ASIC performs functions under Part 7.2A of the Corporations Act in respect of such a market a fee of $9,375 would be incurred per billing period. Subregulation 8(2) intends that where ASIC has not been performing its functions under Part 7.2A of the Corporations Act, for example not monitoring trading and participants, then no fee will be levied. Subregulation 8(3) apportions this amount for the first billing period, where it is unlikely that ASIC will be performing its functions for a full three months. New subregulation 8(4) states that the time the liability for the fee is incurred on the first day of the billing period following the billing period in which ASIC performs its functions.
Subregulations 8(5) to 8(8)
Subregulations 8(5) to 8(8) insert a prescribed fee for wholesale financial markets. A wholesale financial market is defined as:
• a financial market that is not an exempt market, a small financial market, or a market operated by the Sydney Futures Exchange Limited or the ASX Limited;
• one which is licensed under subsection 795B(1) of the Corporations Act;
• where each participant in the market is a wholesale client within the meaning of the Corporations Act; and
• where each participant trades on its own behalf or on behalf of other wholesale clients.
Where ASIC performs functions under Part 7.2A of the Corporations Act in respect of such a market a fee of $9,375 would be incurred per billing period. Subregulation 8(6) intends that where ASIC has not been performing its functions under Part 7.2A of the Corporations Act, for example not monitoring trading and participants, then no fee will be levied. Subregulation 8(7) apportions this amount for the relevant billing period as it is possible that ASIC will not be performing its functions for a full three months. This is because wholesale financial markets have been initially exempted from the transfer of supervisory responsibility to ASIC. New subregulation 8(8) states that the time the liability for the fee is incurred on the first day of the billing period following the billing period in which ASIC performs its functions.
Subregulations 8(9) to 8(14)
Subregulations 8(9) and 8(12) imposes a flat fee on the Sydney Futures Exchange Limited (SFE) and the ASX Limited (ASX). The SFE will be charged $138,750 per billing period and the ASX would be charged $786,250 per billing period. Subregulations 8(10) and 8(13) apportion this amount for the first billing period, where it is unlikely that ASIC will be performing its functions for a full three months. New subregulations 8(11) and 8(14) state that the time the liability for the fee is incurred on the first day of the billing period following the billing period in which ASIC performs its functions.
Subregulation 8(15)
New subregulation 8(15) defines a number of terms used in the proposed regulations including ‘billing period’ and ‘exempt market’.
Regulation 9
New regulation 9 imposes a late payment penalty where the fee prescribed in proposed regulation 8 is not paid as and when it is due. The late payment penalty is worked out by multiplying the amount of the fee by the yield to maturity as quoted by the Reserve Bank of Australia. This liability would be incurred the day the payment was due.