ASIC consults on new client money reporting rules


By

July 11, 2017

ASIC has today released a consultation paper proposing to make new client money reporting rules (client money rules) for Australian financial services (AFS) licensees that hold ‘derivative retail client money’ within the meaning of the Corporations Act.

The client money rules will impose record keeping, reconciliation and reporting requirements on AFS licensees that hold derivative retail client money. ASIC is proposing that the client money rules should apply to all derivative retail client money received by an AFS licensee, unless the client money relates to a derivative that is traded on a fully licensed domestic market, such as the ASX 24.

Consultation Paper 291 Reporting rules: Derivative retail client money(CP 291) seeks feedback on the proposed client money rules.

The proposals follow the passage of Treasury Laws Amendment (2016 Measures No. 1) Bill 2016 and the Corporations Amendment (Client Money) Regulations 2017. These reforms will prevent AFS licensees from withdrawing client money provided by retail derivative clients, and using it for the wide range of purposes currently permitted under the Corporations Act, including as the AFS licensee’s own working capital.

The reforms also give ASIC the power to make new client money reporting rules to ensure greater transparency in relation to an AFS licensee’s receipt and use of derivative retail client money.

‘The client money rules will apply more formal and consistent standards across the derivatives sector and will ensure any discrepancies in an AFS licensee’s client money account are notified to ASIC in a timely manner and that ASIC is able to take appropriate action’, ASIC Commissioner Cathie Armour said.

The client money rules are proposed to commence on 4 April 2018, which is when the other client money reforms will take effect.

Ms Armour said, ‘We look forward to continued engagement with industry as licensees now work through the application and detail of the rules’.

Submissions on CP 291 are due by Tuesday, 8 August 2017.

SOURCE: ASIC


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