ASIC CLASS ORDER (CO 07/753)

EXPLANATORY STATEMENT

Prepared by the Australian Securities and Investments Commission

Corporations Act 2001

Paragraphs 601QA(1)(a), 911A(2)(1), 1020F(1) and 1020F(1)(c) –

Exemptions and Declarations

The Australian Securities and Investments Commission (ASIC) makes Class Order (CO 07/753) Singaporean collective investment schemes (CO 07/753) under s601QA(1)(a), 911A(2)(1), 1020F(1)(a) and 1020F(1)(c) of the Corporations Act 2001 (the Act).

Section 601AQ(1)(a) provides that ASIC may exempt a class of persons from the provisions of Ch 5C of the Act. Section 911A(2)(l) provides that ASIC may exempt a class of persons from the requirement to hold an Australian Financial Services Licence (AFS licence) under Pt 7.6 of the Act. Section 1020F(1)(a) provides that ASIC may exempt a class of persons from the provisions of Pt 7.9 of the Act, and s1020F(1)(c) provides that ASIC may declare that Pt 7.9 of the Act applies in relation to a class of persons as if provisions were omitted, modified or varied as specified in the declaration.

1.         Background

CO 07/753 is issued in accordance with ASIC policy stated in RG 178 Foreign collective investment schemes (RG 178).

Under the policy stated in RG 178, ASIC will generally provide conditional relief from managed investment scheme registration, the Australian Financial Services licensing requirements for certain financial services, and some of the financial product disclosure requirements to foreign collective investment scheme (FCIS) operators where the following pre-conditions are met.

(a)     The regulatory regime in the jurisdiction from which the FCIS operator originates and in which it is regulated (home jurisdiction) is sufficiently equivalent to the Australian regulatory regime for registered managed investment schemes and financial product disclosure;

(b)     ASIC has effective cooperation arrangements with the regulator of the FCIS in the FCIS's home jurisdiction; and

(c)     Adequate rights and remedies are practically available to investors resident in Australia if the FCIS operator breaches the relevant provisions of the regulatory regime in its home jurisdiction.

The Monetary Authority of Singapore (MAS) applied to ASIC for relief under RG 178 for the operation of FCIS authorised by the MAS (Singaporean FCISs).

ASIC is satisfied that the MAS's application meets the requirements under RG 178.

2.         Purpose of the class order

The purpose of CO 07/753 is to regulate the operation in Australia of Singaporean FCISs in a way that will:

(a)     facilitate the availability of Singaporean FCISs in Australia; and

(b)     ensure that Australian investors who access Singaporean FCISs are adequately protected.

This is consistent with principles set out in ASIC's Regulatory Guide 54 Principles for cross border financial services regulation (RG 54).  .

3.         Operation of the class order

Registration relief

CO 07/753 provides an exemption to Singaporean FCIS from the requirement to register a managed investment scheme under Ch 5C of the Act where:

(a)     the Singaporean FCIS is constituted in Singapore as a unit trust; and

(b)     promotion of membership of the Singaporean FCIS has not been principally aimed at persons in Australia and there is no reason to believe that the operator intends that promotion of membership of the Singaporean FCIS will be principally aimed at persons in Australia.

Licensing relief

CO 07/753 provides an exemption to Singaporean FCIS operators from the AFS licensing requirements under Pt 7.6 of the Act where:

(a)     the operator deals in financial products in the ordinary course of business other than issuing financial products;

(b)     the operator deals in derivatives or foreign exchange contracts for the purpose of managing a financial risk to the Singaporean FCIS that arises in the ordinary course of business; and

(c)     the operator provides a custodial or depository service by holding assets of the Singaporean FCIS.

Certain product disclosure relief

CO 07/753 provides an exemption to Singaporean FCIS operators from the product disclosure requirements under Pt 7.9 of the Act with the exception of the requirements of s1017G, 1018A and 1020E of the Act.

Conditions

In accordance with the policy stated in RG 178, the relief in CO 07/753 is subject to standard conditions of relief for registration, licensing and product disclosure. The standard conditions are intended to:

(a)     provide enough information for ASIC to assess whether the Singaporean FCIS operator is complying with the conditions of its authorisation and other aspects of the Singaporean regulatory regime;

(b)     help investors resident in Australia to enforce their legal rights;

(c)     help ASIC enforce the law and the conditions of relief;

(d)     ensure that the Singaporean FCIS operator complies with the Singaporean regulatory regime.

CO 07/753 imposes also an additional condition to ensure that the operator of the Singaporean FCIS and its agents and representatives are under obligations to comply with the requirements of the Singaporean regulatory regime in respect of their conduct in Australia.

4.         Consultation

Since the application for registration, licensing and certain product disclosure relief by the MAS, ASIC has closely consulted with the MAS on the requirements of the Act, the policy stated in RG 178 and the conditions necessary to facilitate the operation of Singaporean FCIS in Australia.

ASIC has also consulted with the Financial Industry Complaints Service (FICS) about Singaporean FCIS operators seeking membership with FICS in order to meet the requirement of the external dispute resolution system under s1017G of the Act.

The Class Order implements RG 178 which was developed following public consultation.