18 March 2020

International fund managers finally get clarity regarding their Australian regulatory exposure

This article was written by Will McCosker and Chi Ha.

International fund managers and other financial services providers with Australian customers or counterparties now have clarity regarding their Australian financial services licensing position.  The Australian Securities and Investment Commission (ASIC) last week released Regulatory Guide 176 setting out its long-awaited final position on AFS licensing requirements for foreign financial services providers (FFSPs).  Affected FFSPs include fund managers, banks, brokers, financial product issuers, distributors and advisers with wholesale clients or businesses in Australia. 

The ASIC release gives much-needed certainty to FFSPs, after nearly 2 years of ASIC consultation leading to multiple versions of the proposed framework. There is good news for international managers:

  • an extension to 31 March 2022 for both the current sufficient equivalence (“passporting”) exemption and the current limited connection relief;
  • an expanded list of sufficiently equivalent international regulatory regimes that can entitle an FFSP to apply for a streamlined foreign AFS licence; and
  • improvements to the funds management financial services (FMFS) relief, the successor to the expiring limited connection relief, including to close the “custody gap” identified in its previous iteration.

Given the increasingly important role played by Australian investors internationally, the improved regulatory certainty afforded by last week’s release represents a significant development for a number of international managers.  FFSPs’ next steps will be either to apply for an appropriate AFS licence or to implement the FMFS relief before, 31 March 2022.

For more details on the new Australian FFSPs licensing regime and the FMFS relief, see our KWM Australia alert, which can be found here.

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