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ASIC Update - March 2018
Ahead of issuing final industry funding invoices in January 2019, ASIC has published estimates of what regulated sectors will pay, based on ASIC’s budgeted regulatory costs outlined in its draft Cost Recovery Implementation Statement. The indicative levies are an estimate and are likely to change when ASIC’s actual regulatory costs are known in November.
Under the industry funding model (which became law on 1 July 2017- see previous G+T Insight), all organisations that are regulated by ASIC will contribute towards ASIC’s regulatory costs incurred in the previous financial year, and:
- some organisations will pay a flat levy, with the cost of regulating a subsector shared equally among the entities operating in that subsector; and
- others will pay a graduated levy, with the size or level of business activity determining the entity’s shares of costs.
ASIC's estimated levies in the corporate sector include:
- for listed corporations - a minimum levy of $4,000 plus an estimated $0.19 per $10,000 of market capitalisation above $5 million (with an estimated maximum levy of $396,000 for corporations with a market capitalisation greater than $20 billion);
- for unlisted public companies – a flat levy of $321; and
- for large proprietary companies – a flat levy of $868.
ASIC has also published estimates for entities in the deposit taking credit sector, the investment management, superannuation and related services sector, the market infrastructure sector, the market intermediaries sector, the financial advice sector and the insurance sector.
ASIC has indicated that in June, it will write to each regulated organisation’s ASIC contact and provide a unique security key which the organisation must then use to logon to a new online ASIC portal to submit and validate their business activity metrics. ASIC will then use this information to calculate final invoices and generate estimated levy amounts in the future.
See ASIC media release dated 28 March 2018.
ASIC has released Report 569, Market integrity report: July to December 2017 (Report 569) in which it has outlined highlights from the second half of last year, including:
- client money - ASIC points to its client money reporting rules released in October 2017 which impose record-keeping, reconciliation and reporting obligations on Australian financial services licensees that hold derivative retail client money;
- sell-side research -: ASIC points to its new guidance on sell-side research released in December 2017 (see G+T Insight on this issue); and
- cyber resilience - ASIC points to its report on cyber resilience of firms operating in financial markets released in November 2017 which was designed to raise awareness of cyber risks and encourage behavioural change by highlighting good practices and areas for improvement.
Report 569 also highlights ASIC’s key activities in the second half of 2017 in other areas including NSX listing standards, financial benchmarks, continuous disclosure, binary option trading apps and insider trading.
ASIC has indicated that its focus over the next few months will be on:
- technology and cyber resilience - particularly malicious cyber-crime in the context of rapid technological developments.
- conduct - continued focus on conduct that enhances market integrity across all market-based activities; and
- effective capital markets - continued review of market activity in the OTC sector as well as the FX market, considering allocation processes in equities markets and building on its existing market surveillance capabilities.
ASIC has released Report 565 Unfair contract terms and small business loans which sets out the details of the changes made by the big four banks to remove unfair terms from their small business loan contracts of up to $1 million.
- identifies the types of terms in loan contracts that raise concerns under the law;
- provides details about the specific changes that have been made by the banks to ensure compliance with the law; and
- provides general guidance to lenders with small business borrowers to help them assess whether loan contracts meet the requirements under the unfair contract terms law.
REP 565 follows the announcement in August 2017 that the big four banks had committed to improving terms of their small business loans following work with ASIC and the Australian Small Business and Family Enterprise Ombudsman.
See ASIC’s media release dated 15 March 2018.