ASIC consults on ‘sunsetting’ class orders about financial requirements

ASIC is seeking feedback on proposals to remake ‘sunsetting’ class orders that impose financial resource requirements on the managed funds industry.

Consultation Paper 367 Remaking ASIC class orders on financial requirements: [CO 13/760], [CO 13/761] and ASIC Instrument 2022/449 (CP 367) sets out ASIC’s proposals on:

Class Order [CO 13/760] Financial requirements for responsible entities and operators of investor-directed portfolio services ([CO 13/760]);
Class Order [CO 13/761] Financial requirements for custodial or depository service providers ([CO 13/761]); and
ASIC Corporations (Financial Requirements for Corporate Directors of Retail Corporate Collective Investment Vehicles) Instrument 2022/449 (Instrument 2022/449).
These class orders set out the financial resource requirements that responsible entities, IDPS operators, custodians, and corporate directors must meet as an Australian financial services (AFS) licensee.

Under the Legislation Act 2003, [CO 13/760] and [CO 13/761] will expire (‘sunset’) on 1 October 2023, and Instrument 2022/449 will sunset on 1 October 2024 if not remade.

ASIC considers that the class orders are operating effectively and efficiently and continue to form a necessary and useful part of the legislative framework. The fundamental policy principles that underpin the class orders have not changed.

ASIC invites submissions from stakeholders on proposals to:

remake, with minor changes to incorporate the corporate director of a retail corporate collective investment vehicle (CCIV), [CO 13/760] and ASIC Instrument 2022/449;
remake, with minor simplifications and no substantive changes [CO 13/761].
Submissions on CP 367 are due on 31 March 2023.

Consultation paper 367 Remaking ASIC class orders on financial requirements: [CO 13/760], [CO 13/761] and ASIC Instrument 2022/449
Attachment 1 to CP 367: Draft ASIC Corporations (Financial Requirements for Responsible Entities, IDPS Operators and Corporate Directors of Retail CCIVs) Instrument 2023/XX
Attachment 2 to CP 367: Draft ASIC Corporations (Financial Requirements for Custodial or Depository Service Providers) Instrument 2023/XX
Under the Legislation Act 2003, all class orders are repealed automatically or ‘sunset’ after a period (usually 10 years) unless ASIC takes action to preserve them. ASIC is undertaking consultation in relation to various “sunsetting” class orders that relate to the managed funds sector.

Under the Corporations Act 2001, AFS licensees are required to hold adequate resources, including adequate financial resources. ASIC’s established regulatory approach on financial resource requirements for AFS licensees is outlined in RG 166 AFS licensing: Financial requirements.

[CO 13/760], [CO 13/761] and Instrument 2022/449 set out tailored financial resource requirements for responsible entities, operators of IDPSs, corporate directors of retail CCIVs and licensed providers of custodial or depository services.

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