Submissions - 2018

Date Title & Summary Topic Area Sent to

Review of the AUSTRAC Industry Contribution Levy Arrangements - Issues Paper

An AFMA submission re. the AUSTRAC Industry Contribution Levy Arrangements Independent

Regulation Acacia CRE Pty Ltd

BEAR - Provision of draft accountability information by small and medium ADIs

AFMA has requested an extension of the submission deadline for information relating to the BEAR provision of draft accountability information by small and medium ADI's.

Regulation APRA

Open Banking Provisions for further Consultation

AFMA welcomes the second round of consultation by Treasury in relation to the Exposure Draft.

Regulation The Treasury

Consumer Data Right Rules Framework

AFMA supports the introduction of Open Banking as part of the Consumer Data Right as a way to ensure that the information customers already share with their bank can be safely shared with others they trust, and to give customers more control over their information. While AFMA would prefer a market-based and industry-led solution to deliver these outcomes, as we believe this would offer greater flexibility and lower cost, we accept the Government's conclusions about the appropriate framework and have limited our comments to refinements around the proposed approach.

Regulation ACCC

ASIC Derivative Transaction Reporting Relief Extension

An application for continuing exemptions from certain Derivative Transaction Reporting Rules

Other ASIC

Discussion Paper: Proposed Compliance Framework, Liquidity Management

AFMA feedback on the ATO's Discussion Paper for a proposed compliance framework re. liquidity management.

Taxation ATO

Monthly Publication of CPI

AFMA supports the initiative of the Australian Bureau of Statistics to publish Australian inflation data as measured by the Consumer Price Index on a monthly basis rather than a quarterly basis.

Regulation Australian Bureau of Statistics

IBOR Fallbacks for 2006 ISDA Definitions Consultation

An AFMA submission re. the consultation concerning Interbank Offered Rate (IBOR) Fallbacks for 2006 ISDA Definitions Consultation on Certain Aspects of Fallbacks for Derivatives Referencing GBP LIBOR, CHF LIBOR, JPY LIBOR, TIBOR, Euroyen TIBOR and BBSW.

Regulation ISDA

AML-CTF Act Reform Phase 1.5

An AFMA submission on the Anti-Money Laundering and Counter-Terrorism Financing Amendment Bill 2018 Exposure Draft and the Indicative Draft AML/CTF Rules Phase 1.5 in relation to reliance and correspondent banking.

Regulation National Security and Law Enforcement Policy Division

AFMA Response to OTC Transparency in the NEM Consultation Paper

An AFMA submission on an ESB consultation paper on OTC transparency in the NEM. We note that in order for a trade repository solution to be a preferred solution, a case must be made to prove that the benefits of a trade repository outweigh the significant cost outlay and administrative burden. As confidentiality is a key concern amongst our member firms, on balance aggregated reporting is likely to be preferable to members. Individual contract trades on an anonymised basis may not be sufficient to conceal confidential information. In addition, inclusion of specific bespoke transactions could have the potential to distort the data, and not provide any useful information value to market participants, or indeed mislead.

Regulation Energy Security Board

AFMA Response to Market Making Requirements in the NEM

An AFMA submission on an ESB consultation paper on Market Making requirements in the NEM. A number of members have expressed a preference for a market liquidity mechanism that does not involve compulsion, noting a mechanism that provides incentives for market making would be preferred. Hence, a market participant-lead solution to provide liquidity could be considered, with a compulsory liquidity obligation as a fallback process.

Regulation Energy Security Board

Response to discussion paper: "Revisions to the related entities framework for ADIs"

AFMA notes a number of operational concerns with some of the proposals around the related entities framework.

Regulation APRA

Open Banking - Treasury Laws Amendment (Consumer Data Right) Bill 2018

Submission that Open Banking and the Consumer Data Right more generally propose profound changes to the banking and economic environment, and encouraging the Government not to rush consideration of these changes and risk unintended consequences. Given the types of risks associated with banking as well as business and consumer data, the investment of extra time now is the best option and could help minimize the risk of serious problems arising later. Proper consideration of the proposals requires a whole-of-government approach including with APRA, Home Affairs, ASIC, RBA and AUSTRAC combined with deep engagement with industry over an extended period and will require a consideration of prudential matters, financial system stability matters, privacy, market integrity, compatibility with money laundering and counter terrorism programs, and the potential micro- and macro-economic impact.

Regulation Treasury

Treasury Laws Amendment (Black Economy Taskforce Measures No. 2) Bill 2018

A submission on proposed amendments to the Taxation Administration Act 1953 to bring within scope of the third-party reporting requirements payments made by entities that supply an information technology service to another entity wholly or partly for the supply of an information technology service.

Taxation The Treasury

Treasury Laws Amendment (Black Economy Taskforce Measures No. 2) Bill 2018

Submission in relation to the proposed amendments to the Taxation Administration Act 1953 to bring within scope of the third party reporting requirements payments made by entities that supply an information technology service to another entity wholly or partly for the supply of an information technology service, noting the proposed exception for payments made to members of the same consolidated group or MEC group. AFMA suggests that the proposed exception be broadened to capture payments made to members of the same economic group, which could be done in a manner consistent with the Significant Global Entity definition  ie. by including within the exception payments made to entities that are within the same accounting consolidated group.

Regulation Treasury

Design and Distribution Obligations and Product Intervention Power - draft legislation and explanato

Further submission on 2018 Bill reiterating the need to balance compliance cost and regulatory burden and provide greater protections to investors in relation to more complex products. In terms of capital raising it is unclear why the regime distinguishes between ordinary shares and other ordinary securities as these products are used predominantly to provide a basic economic interest in an operating business. Clarity is needed whether distribution by personal advice is carved out of the DDO framework or whether a target market determination (TMD) still has to be produced but can be limited to a statement that distribution to retail investors is via personal advice only. Other issues include concerns about a TMD being misconstrued as disclosure or advice, guidance about the form and content of a TMD, ongoing uncertainty about the reasonable steps test in relation to exchange traded products where there is no relationship between the issuer and the distributor, and a lack of standardisation in relation to record keeping obligations.

Regulation Treasury

ASIC Consultation Paper 302 Proposed changes to capital requirements for market participants

Submission supporting adjustments the capital requirements to reflect underlying risk. Where risks cannot be efficiently calculated on a case by case basis AFMA also supports the use of proxy standard estimates as proposed in a number of cases as an appropriate balance between accuracy and efficiency. There are concerns around the difficulties of calculating cash flows out twelve months in a markets business, and the proper roles of management and boards in relation to managing liquidity risks.

Regulation ASIC

ASIC Consultation Paper 301 Foreign Financial Service Providers

Submission supporting the continuation of the sufficient equivalence and limited connection class order regime, albeit with additional conditions on the relief, and/or a narrowing of the scope of the available relief in order for ASIC to achieve its regulatory objectives, including to strive to maintain, facilitate and improve the performance of the financial system and the entities within that system in the interests of commercial certainty, reducing business costs, and the efficiency and development of the economy. AFMA is strongly of the view that if a foreign AFSL regime is introduced, the licensing process needs to be streamlined and simple for entities that are already licensed in equivalent jurisdictions. An overly onerous application process is likely to be a significant disincentive to offshore entities obtaining a licence and providing services to Australian clients.

Regulation ASIC

Application of CPS226 to physically settled precious metals forwards

Submission requesting APRA to allow an 'APRA covered entity' to exclude physically settled precious metals forwards from the posting and collecting of initial margin under CPS 226, due to the inconsistency between how APRA treats precious metals forwards under CPS226 and margining product capture in other G20 countries, and how this inconsistency affects the business of APRA covered entities and could lead to regulatory arbitrage and an uneven playing field between competitors in different jurisdictions.

Regulation APRA

Joint ISDA / AFMA / GFXD Submission on 2018 Reporting Expiries

Policy submission from ISDA, AFMA and GFXD on the importance of maintaining the exemptions found in ASIC Corporations (Derivative Transaction Reporting Exemption) Instrument 2015/844

Other ASIC

Draft amendments to Chapters 4 and 15 of the AML/CTF Rules relating to corporate customers who are c

Submission behalf of AFMA members who are intermediaries providing services to an investor directed portfolio service (IDPS), managed discretionary account (MDA) or custodian, supporting the proposed changes as the current requirement to 'look through' to the underlying beneficiaries of the custodial or depository service creates unnecessary duplication of effort and administration.

Regulation AUSTRAC

Updates to AUSTRAC Compliance Guide re self-attestation of identity; independent review of AML/CTF p

Submission commenting on proposed changes to the requirements for review of AML/CTF programs, including the independence of the reviewer, the matters to be reviewed, the frequency of reviews and factors that might increase the frequency of review.

Regulation AUSTRAC

International Banking Statistics Changes - Resubmissions

A response to APRA's intended adjustments to reporting standards, based on various minor changes made to the International Banking Statistics Reporting Standards.

Regulation APRA

ESB National Energy Guarantee Draft Detailed Design Consultation Paper

Submission agreeing that a key objective of the design of the Guarantee should be to enhance the liquidity, transparency and the level of competition in the retail and wholesale electricity markets. AFMA appreciates the efforts that the ESB has made to engage with stakeholders to ensure that this is the case and urges the ESB to continue to take a flexible approach to achieving the objectives of the Guarantee.

Regulation Energy Security Board

Consultation on proposed Australian Financial Complaints Authority (AFCA) Rules of Complaint Resolut

Submission noting that as access to the scheme is not limited to retail clients, and there is no clear carve out for non-retail clients, AFCA should closely monitor the usage of the scheme by small business to identify whether there are any issues related to access to the scheme that could be addressed through further review. All parties should have reasonable notice and opportunity to respond to systemic issues, potential significant contraventions or breaches, and preliminary assessments in relation to complaints within a timeframe that is appropriate to the complexity and circumstances of each matter. The Rules should clarify how the broad powers over remediation of systemic issues could interact with ASIC's powers in relation to remediation, and how AFCA's remit over privacy-related complaints might operate alongside the Office of the Australian Information Commissioner

Regulation AFCA

Financial Adviser Standards and Ethics Authority - Proposed Guidance on Education Pathways for Exist

Submission urging FASEA to recognise different specialisations and advice activities, including financial markets advisers, that do not require the same skills and competencies as financial planning providers. FASEA should adopt a model that sets a minimum (but still appropriately high) standard of qualifications and competency across the sector, but allows for appropriate streaming and specialisation in addition to the minimum standards that are common to all.

Regulation FASEA

ASIC Consultation Paper 299: Short selling - Reliefs and Orders

Submission in relation to ASIC review of existing relief from the naked short selling prohibition provided to market makers of certain exchange traded products (ETPs); the granting of legislative relief from the naked short selling prohibition in the context of corporate actions and initial public offering (IPO) sell-downs; changing the relevant time short positions are calculated; and remaking a number of class orders on short selling which are due to sunset soon after 10 years. An important aspect of ASIC's review is to consolidate all short selling relief into a single instrument, including relief that is to be remade as a result of sunsetting as well as any new or modified relief raised by the proposals.

Regulation ASIC

AUSTRAC Industry Contribution 2018-19 - Stakeholder Consultation Paper

Submission reiterating previous concerns about industry contribution model and highlighting that only 570 of approximately 14,000 reporting entities pay the entire industry contribution. Although the forward estimates suggest that the amounts to be recovered would decrease each year until 2020-21, that has not occurred this year due to additional funding announced in MYEFO in December 2017 and there is no certainty for industry that the Government will not announce additional funding measures in the coming years.

Regulation AUSTRAC

Proposed Financial Institutions Supervisory Levies for 2018-19

Submission noting that the proposed levies further reduce the maximum and the restricted levy rate applied to the foreign branch ADIs from one third of that for a domestic ADI to one fifth. This follows on from a reduction in the maximum and the restricted levy rate applied to foreign ADIs from one half of that for domestic ADIs to one third in FY 2017-18. The stated purpose of this change in calculation parameters is to better reflect the cost of supervision of these institutions. This approach is consistent with the position advocated by AFMA that the supervisory levies should reflect bank risks and the cost of regulation by APRA.

Regulation Treasury

APRA Information Security Management Discussion Paper

Submission noting that information security is the primary security matter for banks and financial markets participants, and supporting the extension of the prudential standards to information security matters where it is done in a coordinated way that fits well with the other regulatory and legislative initiatives underway. There is a need to ensure there is appropriate coordination with the proposed Government requirements to open up customer data to many more firms under the Open Banking framework which applies to information customers have requested be released to third parties including non-ADI firms, as data will be transferred from entities subject to APRA's information security requirements such as in CPS 234 and CPG 235, to entities that are not.

Regulation APRA

Reserve Bank of New Zealand Consultation Paper: Authorisations for the use of restricted words by ov

Submission supporting the need for a formal public register of authorised overseas banks conducting activities in New Zealand, and the objectives regarding clarity for consumers. However because the non-objection letters currently issued by RBNZ often cover very specific and minor activities, therefore justifying the exemption from registration for a number of entities, we recommend that obligations for and related to authorisation should continue to be managed proportionately according to an entity's level of activity in New Zealand.

Regulation RBNZ

Financial Adviser Standards and Ethics Authority Code of Ethics for Financial Advisers - Exposure Dr

AFMA strongly supports the implementation of the professional standards for financial advisers regime and the role of FASEA in implementing the regime, but urges FASEA to adopt more specific standards that stipulate appropriate practices and rules of behaviour, in order to avoid inconsistent interpretation by code monitoring bodies and additional costs in implementation.

Regulation FASEA

Cost Recovery Implementation Statement: Fees for service under the ASIC industry funding model (2018

Submission noting there is no legislative basis to charge a fee for a market integrity rule waiver as it has been omitted from the Regulations.

Regulation ASIC

ASX Market Management - Consultation Paper

The industry recognises the generally very high level of ASX infrastructure "up time". When there are outages the industry is keen to ensure that any risk of damage to the reputation of Australia's markets and the confidence of users of the markets is minimised. In this regard it is critical that the session states are managed in a clear and optimised way for the market as a whole, in order to create the best outcome for the national interest.

Regulation ASX

New APRA data collection solution

Submission supporting solutions that result in minimal cost and disruption to ADIs while still allowing the evolution and improvement of the system. The solution should allow or support smart submission with automatic form completion where appropriate and logical checking of data, and notification of potential errors, should be flexible and extensible, and have user-friendly features to support easy tracking and notification around submission status.

Regulation APRA

Corporations (Fees) Amendment (ASIC Fees) Bill 2018 and amendments to Corporations (Fees) Regulation

Submission reiterating concerns about fees for changes to SEGC operating rules when SEGC is essentially a compensation fund, and inconsistencies between fees for market licensee and CS facility reports.

Regulation Treasury

Further submission on Regulatory Guide 264 - Sell-side research

Submission recommending further adjustments to the guidance in relation to research analyst input to committees due to concerns about the ability of committees to have the benefit of (but not to influence) an independent research analyst's expert and personal assessment of the issuing company, before the IER is widely distributed. AFMA members also believe the restriction is out of kilter with global practices and would result in Australia being the only developed market globally which restricts committees having access to all relevant material, which includes analysts expert views.

Regulation ASIC

Banking Executive Accountability Regime (Size of an Authorised Deposit-taking Institution) Determina

Submission recommending that the Government should adjust the thresholds for small and medium ADIs to ensure that small and medium ADIs continue to be well placed to attract and retain talent, compete, and offer a range of services and products.

Regulation Treasury

Implementing the OECD Hybrid Mismatch Rules - Updated Exposure Draft and Draft Explanatory Memorandu

Submission supporting refinement of the proposed amendments to Part IIIB to implement the branch hybrid mismatch rules in a manner that neutralises a clear hybrid mismatch, but that the deduction would not otherwise be denied to the foreign bank branch. This could potentially be done with reference to the books and records of the branch or where the quantum of the deduction available to the branch does not exceed the amount available assuming Part IIIB did not have any application (i.e. the arm's length amount determined under Subdivision 815-C).

Taxation Treasury

Competition in the Australian financial system

AFMA submission to the Productivity Commission inquiry draft report consultation.

Regulation Productivity Commission

Open Banking

Submission in response to the final report into the review of open banking in Australia.

Other The Treasury

National Energy Guarantee

Submission on draft NEG design consultation paper.

Regulation Energy Security Board

Diverted Profits Tax

Joint industry submission in relation to the Diverted Profits Tax draft law companion ruling and draft practical compliance guideline.

Regulation ATO

Design & Distribution Obligations and Product Intervention Power Draft Legislation and Explanatory M

Submission in relation to draft legislation.

Regulation The Treasury

Foreign Influence Transparency Scheme Bill 2017

Supplementary submission on the FITS Bill in response to Committee questions.

Regulation Parliamentary Joint Committee on Intelligence and Security

ASIC draft guidance on ASIC Market Integrity Rules for participants of securities markets

Submission on draft guidance in relation to securities market participants‚ management plans.

Regulation ASIC

2018-19 Pre-Budget Submission

Submission on matters for consideration in the formulation of the FY2018-19 Budget strategy.

Taxation The Treasury

Foreign Influence Transparency Scheme Bill 2017

Submission on the likely adverse impacts on industry bodies such as AFMA of compliance with the Bill as drafted.

Regulation Parliamentary Joint Committee on Intelligence & Security