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Client Update - Financial Services Licensing Relief for Luxembourg Fund Managers
ASIC Corporations (CSSF-Regulated Financial Services Providers) Instrument 2016/1109 (CSSF Instrument) commenced on 16 November 2016. The instrument extends relief from the requirement to hold an Australian financial services licence (AFSL) to Luxembourg fund managers that provide financial services to Australian wholesale clients.
Persons or entities that provide financial services in Australia are required to hold an AFSL unless an exemption or relief applies. Currently, relief (“passport relief”) exists for foreign financial services providers (FFSPs) that provide financial services to Australian wholesale clients, where such FFSPs are regulated by certain overseas regulators and subject to satisfaction of the conditions to such relief. See our article " Changes to passport relief for foreign financial services providers" on the current review underway in respect of this relief.
The CSSF Instrument effectively extends this relief to regulated Luxembourg fund managers.
Who can rely on the CSSF Instrument?
The relief provided in the CSSF Instrument is available to Luxembourg fund managers who are regulated by the Commission de Surveillance du Secteur Financier (the Commission for the Supervision of the Financial Sector) of Luxembourg (CSSF) as either a:
(a) management company authorised to manage undertakings for collective investment in transferable securities relating to the undertaking for collective investment of Luxembourg (2010 Law) that comes under Chapter 15 of the 2010 Law; or
(b) investment company established under Part I of the 2010 Law that have designated themselves as “self-managed”.
What financial services and products are covered?
An entity relying on the CSSF Instrument is exempt from the requirement to hold an ASFL in relation to any financial product advice, dealing services, market making services and custodial or depository services provided to Australian wholesale clients in respect of any of the following financial products:
- eligible deposit products;
- foreign exchange contracts;
- debentures, stocks or bonds issued by a government;
- managed investment products; and
- interests in a managed investment scheme that is not required to be registered under Chapter 5C of the Corporations Act 2001 (Cth).
What are the conditions?
The CSSF Instrument is broadly subject to the same conditions as the existing passport relief, being:
(a) delivery to ASIC of certain materials (evidence of regulation, notice of intention to rely on the instrument, consent to disclosure between the CSSF and ASIC, and a deed poll submitting to the jurisdiction of the Australian courts);
(b) disclosure to clients that the FFSP is exempt from the requirement to hold an AFSL and is regulated by the CSSF under foreign laws which differ from Australian laws;
(c) provision of financial services in Australia in a manner which would comply, so far as possible, with the CSSF regulatory requirements;
(d) notification ASIC of the occurrence of certain matters no later than 15 business days after becoming aware of such matters (or when the FFSP should reasonably have become aware of such matters); and
(e) compliance with any written notice given by ASIC requesting information about the financial services provided in Australia.
What will happen next?
The relief applies until 28 September 2018, which coincides with the extension period of the other instruments effecting passport relief in ASIC Corporations (Repeal and Transitional) Instrument 2016/396. ASIC has announced that it will be considering the “policy settings for all FFSPs comprehensively”, which includes the CSSF Instrument and the existing passport relief regime.
As at the date of this article, we understand ASIC will consult publically on any changes proposed to the passport regime (now including the CSSF Instrument) from January 2018.