EXPLANATORY STATEMENT
Select Legislative Instrument 2011 No. 129
Issued by authority of the Minister for Financial Services and Superannuation
Corporations (Fees) Act 2001
Corporations (Fees) Amendment Regulations 2011 (No. 1)
Section 8 of the Corporations (Fees) Act 2001 (the Act) provides that the Governor‑General may make regulations for the purposes of sections 5, 5A, 6 and 6A of the Act, which deal with the imposition of fees for things done under the Corporations Act 2001 (the Corporations Act).
The Act allows the Corporations (Fees) Regulations 2001 (the Principal Regulations) to specify the fees imposed by the Australian Securities and Investments Commission (ASIC) for performing its market supervision functions under the Corporations Act, including specifying when the fee liability is incurred.
The Regulations amend the Principal Regulations to provide additional capacity to levy fees against the likely entry of Chi-X Australia Pty Ltd, which has been granted a licence to operate a financial market (Chi-X Australia). Chi‑X Australia will compete with the primary Australian exchange (that is, ASX-listed shares will be able to be traded on the ASX and/or Chi‑X Australia). The new levy fees would recover the costs that ASIC would incur as a result of assuming responsibility for supervising this additional domestically licensed financial market.
The Regulations also increase the fees to be paid by current market operators to reflect ASIC’s expected supervisory costs for 2011/2012. This represents the first increase of these fees since they were introduced in Q3 2010 (when ASIC took over market supervisory responsibilities from financial market operators).
Details of the Regulations are included in the Attachment.
Targeted industry consultation was conducted, with particular focus on the market operators who would be directly impacted upon by the Regulations (that is, ASX Limited and Chi-X Australia Pty Ltd). These market operators are liable for the increases in fees, and have had input into the development of an appropriate framework and structure for the charging of market operators for the costs of market supervision.
The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.
The Regulations commence on 1 July 2011.
DETAILS OF THE corporations (Fees) amendment regulations 2011 (No. 1)
Regulation 1 – Name of Regulations
Regulation 1 provides that the name of the Regulations is the Corporations (Fees) Amendment Regulations 2011 (No. 1).
Regulation 2 – Commencement
Regulation 2 provides that the Regulations commence on 1 July 2011.
Regulation 3 – Application
Regulation 3 provides that the amendments that are made by items [9] and [12] of Schedule 1 of the Regulations do not apply retrospectively for the billing period starting on 1 April 2011. This is necessary to avoid any confusion regarding which levy applies for that billing period, since the liability for the April 2011 – June 2011 billing period is incurred on 1 July 2011 (at which time the new levies are in force).
Regulation 4 – Amendment of Corporations (Fees) Regulations 2001
Regulation 4 provides that the Corporations (Fees) Regulations 2001 (Principal Regulations) are amended as set out in Schedule 1 to the Regulations.
Schedule 1 – Amendments
Item [1] – Paragraph 8 (1) (a)
Regulation 8 prescribes the fees payable by market operators in relation to ASIC’s supervision of those financial markets. Subregulations 8(1) to 8(4) prescribe the fees for small financial markets, and paragraph 8(1)(a) outlines what is not considered a small financial market for the purpose of these fees. This item has the effect of adding the financial market operated by Chi-X Australia Pty Ltd (Chi-X Australia) to this list.
This amendment is necessary in light of the likely commencement of operation of this market, and the need to ensure that it is levied to cost recover the supervisory functions of ASIC in a manner consistent with other markets currently operating in Australia.
This item also reflects a change in the name of Sydney Futures Exchange Limited, now known as Australian Securities Exchange Limited.
Items [2], [5], [10] and [13] – Paragraphs 8 (2) (b), 8 (6) (b), 8 (9) (b) and 8 (12) (b)
These items make minor technical changes to ensure that references to the Corporations Act 2001 are consistent throughout the Principal Regulations.
Items [3], [6], [11], and [14] – Subregulation 8 (4), 8 (8), 8 (11), and 8 (14)
These items make minor technical changes to increase clarity of the operation of the Principal Regulations.
Item [4] – Paragraph 8 (5) (a)
Subregulations 8(5) to 8(8) prescribe the fees for wholesale financial markets, and paragraph 8(5)(a) outlines what is not considered a wholesale financial market for the purpose of these fees. This item has the effect of adding the market operated by Chi-X Australia Pty Ltd to this list. This amendment is necessary in light of the likely commencement of operation of this market, and the need to ensure that it is levied to cost recover the supervisory functions of ASIC in a manner consistent with other markets currently operating in Australia.
This item also reflects a change in the name of Sydney Futures Exchange Limited, now known as Australian Securities Exchange Limited.
Item [7] - Subregulation 8 (9), heading
This item amends the heading to reflect a change in the name of the market to which it refers.
Item [8] - Subregulation 8 (9)
This item amends the Principal Regulations to reflect a change in the name of the market operator to which it refers.
Item [9] – Paragraph 8 (9) (a)
This item adjusts the fee to be paid by the Australian Securities Exchange Limited to ASIC for the performance of market supervision functions from $138,750 to $217,000 per quarter. This change is made in accordance with industry consultation and cost recovery principles, taking into account expected increases in volumes traded on the market and increases in the resources required by ASIC to perform its market supervisory functions.
Item [12] – Paragraph 8 (12) (a)
This item adjusts the fee to be paid by ASX Limited to ASIC for the performance of market supervision functions from $786 250 to $860,000 per quarter. This change is made in accordance with industry consultation and cost recovery principles, taking into account expected increases in volumes traded on the market and increases in the resources required by ASIC to perform its market supervisory functions.
Item [15] – After subregulation 8 (14)
This item inserts a new heading ‘Chi-X Australia’, and provides for fees to be levied against Chi-X Australia Pty Ltd if ASIC performs its market supervisory functions under Part 7.2A of the Corporations Act in respect of Chi-X Australia. The fee for Chi-X Australia per billing period is $46,000. This fee reflects an amount settled upon in discussions with industry, taking into account (amongst other relevant things) the expected volume of trading on Chi-X Australia compared with the expected volume of trading on current financial markets, and the additional resources required by ASIC to perform its supervisory functions.
This item also includes additional provisions regarding these fees consistent with those currently applying to other financial markets, namely:
• a pro-rata formula for the initial billing period (since ASIC may not perform the relevant supervisory functions for a full three months in the initial billing period);
• the fee will only be levied once per billing period, even if ASIC performs its functions in relation to another market operated under the same Australian market licence; and
• liability for the fee is incurred on the first day after the billing period in which ASIC performs its functions.
Item [16] – Subregulation 8(15), after definition of first billing period
This item inserts a definition of ‘initial billing period’, to define this term as meaning the billing period during which the relevant market began operating.