Submissions - 2020

Date Title & Summary Topic Area Sent to

Fintech Regtech Committee - Second Issues Paper

AFMA made a submission to the Senate Committee on Fintech and Regtech, highlighting a number of factors that together diminish the relative attractiveness of Australia as a location to conduct mobile financial business, including Fintech business.

Regulation Select Committee on Financial Technology and Regulatory Technology

PMC Consultation Regulator Performance Framework

AFMA made a submission to the PMC consultation on Regulator best practice principles and new arrangements for performance reporting, noting that good governance of regulators is a matter of vital importance to the well-being of societies, given the level of regulatory intervention in many aspects of economic and social activity.

Regulation DPMC

Privacy Act Review

AFMA made a submission to the government’s review of the Privacy Act 1988. AFMA expressed concerns that the proposals seek to remove balance from existing arrangements and cautioned against the wholesale importation of GDPR. For effective economic recovery from the impacts of COVID-19, AFMA suggested it is appropriate for the Government to prioritise measures that support economic growth and jobs and to engage better with the industry for a substantial review of the Act that will have complex flow on implications for other regimes including the Consumer Data Right (CDR).

Regulation Attorney-General’s Department

ASX Clear Capital

ASX conducted a consultation about a new single capital measure (adjusted Liquid Capital – ALC) that non-bank ASX Clear participants will be required to maintain. AFMA made suggestions for streamlining and commitments to efficient turnaround times for the new system to ensure that brokers do not unexpectedly face capital barriers as an obstacle to getting large trades done.

Regulation ASX

Exposure Draft Security Legislation Amendment (Critical Infrastructure) Bill 2020

AFMA made a submission to the consultation on an Exposure Draft of the Security Legislation Amendment (Critical Infrastructure) Bill 2020, which proposes amendments to the Security of Critical Infrastructure Act 2018 (Cth) (SOCI Act). In line with our previous submission, AFMA welcomed the definition and scoping of ‘responsible entities’ in the sector that reflects an appreciation of the sophisticated technological maturities and cyber resilience frameworks implemented by financial institutions. Further, AFMA noted concerns with regulatory harmonisation, ministerial direction, and effective information sharing.

Regulation Home Affairs

Australia's AI Action Plan

AFMA made a submission in response to the Department of Industry, Science, Energy and Resources consultation on the discussion paper laying out the high-level considerations for Australia’s AI Action Plan. AFMA members already employ highly sophisticated technology, including AI and ML in their market practices. Based on their input, AFMA suggested effective approaches to defining AI, regulation of AI and providing an innovation-friendly environment to industry, for the necessary post-pandemic economic recovery of Australia.

Regulation Department of Industry, Science, Energy and Resources

Consultation on Confidentiality of Key ADI Metrics

AFMA’s submission to APRA reiterated that any publication of individual ADI's unaudited business-critical and highly sensitive financial information should be appropriately balanced against the commercial interests of the entities whose data APRA would publish.

Regulation APRA

Foreign Investment Reform (Protecting Australia's National Security) Bill 2020 and Foreign Acquisitions and Takeovers Fees Imposition Amendment Bill 2020 [Provisions]

AFMA made a submission to the Senate Economics Legislation Committee outlining that while supportive of national security related reforms to the foreign investment review framework, contingent interests should not be implicated in changes to the moneylending exemption.

Regulation Senate Standing Committees on Economics

Consultation on the Data Availability and Transparency Bill 2020

AFMA made a submission to the Office of the National Data Commissioner emphasising the need for a more consistent and well-calibrated approach by Government agencies and departments to the sharing and use of data.

Regulation Office of the National Data Commissioner

Consultation on Financial Planners and Advisers Code of Ethics Draft Guide

AFMA’s submission to FASEA highlighted several outstanding issues with the Financial Planners and Advisers Code of Ethics, including Standard 3 and the narrow focus on financial advisors, which is inappropriate for the wide range of roles that make up the retail finance landscape.

Regulation FASEA

Interim Report on Transmission Access Reform: Updated Technical Specifications and Cost-Benefit Analysis

AFMA made a submission to the AEMC reiterating concerns about the proposed model for transmission access reform. AFMA noted that the implementation of dynamic regional pricing may have significant implications for forward contracting in electricity financial markets, which may hinder market efficiency and liquidity.

Regulation AEMC

ESB P2025 Market Design Consultation Paper

AFMA’s submission to the ESB commented on the market design initiatives proposed under the ESB's Post-2025 Market Design project, noting that certain proposals would have a detrimental impact on financial markets if implemented.

Regulation Energy Security Board

Industry consultation on financial products and the Personal Property Securities Act 2009

AFMA made a submission to the Attorney-General's Department consultation examining financial products and the Personal Property Securities Act 2009 (PPSA), requesting that a policy development dialogue process to be put in place to take work forward on the detailed questions posed.

Regulation Attorney General's Department

Major reforms to the Foreign Investment Review Framework – September 2020

AFMA made a submission to Treasury outlining the operational issues arising from proposed changes to the FIRB framework, with a particular focus on the moneylending exemption changes and the implications for syndicated lending.

Regulation Treasury

IOSCO Principles on Outsourcing

AFMA made a submission recommending IOSCO on the proposed fundamental principles on outsourcing in financial markets. AFMA noted that the updated principles are well-founded in that they are technology-agnostic and support proportionality of assessments based on the degree of materiality and criticality of the outsourced tasks.

Regulation IOSCO

Proposed changes to modernised Economic and Financial Statistics (EFS) reporting standards and guidance

AFMA made a submission to APRA seeking further clarification on changes to EFS reporting standards and guidance.

Regulation APRA

Protecting Critical Infrastructure and Systems of National Significance

AFMA made a submission to the Critical Infrastructure Centre, recommending a consistent whole-of-government approach to cyber-security that does not place additional cost recovery burdens on business.

Regulation Home Affairs

Major Reforms to the Foreign Investment Framework

AFMA made a submission to Treasury on the proposed changes to the foreign investment regime, noting that foreign investment will be key to both Australia’s recovery from the severe economic impact of COVID-19 and international competitiveness going forward.

Regulation Treasury

Engineering Registration Scheme

AFMA made a submission to the NSW Fire Safety & External Wall Cladding Taskforce of the NSW Government to raise concerns that the introduction of a registration scheme for Engineers may negatively impact AFMA members due to its broad scope of application.

Regulation NSW Government

October Budget Submission

AFMA was pleased to lodge an October Budget submission to assist the Government in framing the 2020/21 Federal Budget. In the submission, AFMA highlighted the key contribution of Australia's financial markets and their participants to alleviate the worst economic impacts of the COVID 19 pandemic, calling on the Government to focus on tax and regulatory settings that would both meet the needs of domestic business for high-quality and efficient financial services and also enhance Australia as a financial centre.

Taxation Treasury

VIC DELWP Shocks to VEEC scheme market (follow up)

AFMA sent a follow up letter to the Victorian government raising concerns about the combined impact of COVID-19 and regulatory changes to the Victorian Energy efficiency scheme (VEEC) market.

Regulation VIC DELWP

Chi-X Hybrid Listing

AFMA made a submission to the Chi-X consultation on proposed amendments to the Chi-X Operating Rules and Procedures to accommodate trading on Chi-X in hybrid securities.

Regulation Chi-X

Breach Reporting Draft Amendments

AFMA made a submission in response to Treasury's targeted consultation on the amended draft breach reporting legislation, reiterating that the proposed reporting of investigations lies outside the scope of implementation of the Royal Commission recommendations. AFMA expressed concern that the proposed legislation was incompatible with carefully considered and rigorous policy development.

Regulation Treasury

Exemptions in ASIC Corporations (Derivative Transaction Reporting Exemption) Instrument 2015/844 exp

AFMA responded to a letter outlining ASIC's current intentions regarding the OTC derivative transaction reporting exemptions due to expire on 30 September 2020. While broadly supporting the proposed changes, we requested an extension to the masking relief for foreign privacy restrictions, as not extending the relief will place Reporting Entities in a position of conflict of laws between jurisdictions.

Regulation ASIC

Corporate Bond Review

AFMA was pleased to lodge a submission to the House Standing Committee on Tax and Revenue’s Inquiry into the Development of the Australian Corporate Bond Market. This Inquiry is the latest to consider the factors that may have stymied the development of a deep and liquid corporate bond market in Australia and through the Inquiry’s Terms of Reference, focussed on specific issues such as the tax treatment of corporate bonds for both issuers and investors, impediments within the Corporations Act to developing the bond market and also comparable policy settings in other jurisdictions.

Regulation House Standing Committee on Tax and Revenue

Five Minute Settlement Delay

AFMA's submission to the AEMC noted that the majority of AFMA's energy market members support a delay to the start date of five minute settlement, although views differ regarding the appropriate length of delay. Our members generally expect limited negative impact on financial market liquidity in electricity swaps, and perhaps an improvement in cap liquidity, given that less participants are comfortable with selling 5 minute caps compared to 30 minute caps.

Association AEMC

Consumer Data Right - Issues Paper

AFMA made a submission to the Inquiry into Future Directions for the Consumer Data Right (CDR), suggesting that any expansion in CDR's conceptual scope needs to follow a thorough and independent cost-benefit analysis. We advised a market-based, industry-led approach to supported by a simplified regulatory framework, that gives space for industry coordination, secure innovation and developments in a cost-effective manner.

Regulation Treasury

VIC DELWP - Shocks to VEEC Scheme Market

AFMA sent a letter to Victorian Government Department of Environment, Land, Water and Planning (DELWP), raising concerns about the impact of COVID-19 to the supply of Victorian Energy Efficiency Certificates, and the consequences of implementing changes to the Victorian Energy Upgrades program at this point in time. AFMA accordingly requested the VIC DELWP to consider implementing some liability relief and defer implementation of proposed policy changes to provide a smoother transition period for the market.

Regulation VIC DELWP

ASIC CP 329 - Advice Fee Consents and Independent Disclosure

AFMA made a submission to ASIC on CP 329 noting that while the proposed legislative instruments outlining requirements for consent forms and independence disclosures are well aligned with the policy intent of the Royal Commission's recommendations, there needs to be appropriate calibration of the proposals to promote efficiency and reduce duplication.

Regulation ASIC

AUSTRAC Interim Guidance

AFMA has engaged with AUSTRAC regarding adherence to KYC and other AML requirements due to changes in operational circumstances due to the COVID-19 pandemic. Consequent to this, AUSTRAC published guidance on the use of alternative technologies to verify identities (selfies, video calls, etc) and a rule change regarding self-attestation.

Regulation AUSTRAC

ASIC CP 328 - Initial Public Offers

AFMA made a submission in response to ASIC CP 328 supporting the proposals to grant legislative relief for voluntary escrow arrangements and pre-prospectus communications‚ on 25 March.

Regulation ASIC

Financial Services Royal Commission, Enhancing consumer protections and strengthening regulators

AFMA made a submission to Treasury responding to selected aspects of the draft legislation relating to Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry recommendations issued on 31 January 2020.

Regulation Treasury

Confidentiality of data used in ADI quarterly publications and additional historical data

AFMA provided comment on APRA's proposal to determine data sources for its quarterly publications to be non-confidential.
AFMA submitted that individual entity data currently afforded protection under the APRA Act should continue to be afforded this protection, absent which publication has the potential to be of substantial detriment to the commercial interests of the affected entities.

Regulation APRA

Stamping Fee Exemption

AFMA made a submission in response to Treasury‚Äôs  consultation on the Stamping Fee Exemption as it applies to listed investment entities. AFMA‚Äôs submission provided information to support a properly considered policy decision in respect of these products. However, our main priority is to ensure the exemption continues for other products, including Bank Hybrids, REITs, Infrastructure Issues and Shares.

Regulation Treasury

Conflicts of interest and associated conduct risks during the debt capital raising process

AFMA comments on the consultation paper released by IOSCO on the issue of conflicts of interest in debt capital markets.
AFMA is of the view that the proposed IOSCO guidance to regulators is already generally reflected in formal law, regulatory guidance and market practice in Australia and no additional actions will be required to be in alignment with it.

Regulation IOSCO

Financial Accountability Regime (FAR)

After discussions with Treasury and AFMA members, AFMA submitted a response to the proposed BEAR replacement, the Financial Accountability Regime (FAR). We expressed concern regarding the imposition of civil penalties of up to $1.05 million for accountable persons for licence breaches by their firm. AFMA is concerned with whether the FAR measures will necessarily produce the desired beneficial outcomes in a complex and dynamic environment, rather than lead to excessively risk adverse behaviour which dampens commercial activity.

Regulation Treasury

Compensation Scheme of Last Resort (CSLR)

AFMA responded to the consultation on the proposed AFCA operated Compensation Scheme of Last Resort (CSLR) on 7 February.
Members will face an annual fee that could become significant in the event of a large failure of a firm, potentially in an unrelated area. AFMA has made a submission asking for a more sensible definition of small business and the use of a fairer charging methodology.

Regulation Treasury

Corporate Criminal Responsibility

AFMA provided a response to the ALRC Discussion Paper 87 on Corporate Criminal Responsibility. AFMA is concerned that the reform proposed presents longer term increased risks of criminal and civil action for both firms and officers that would be unreasonable.  
The ALRC has since stated that they will not be proceeding with the scheme as originally proposed due to the new Financial Accountability Regime.

Regulation Australian Law Reform Commission (ALRC)

2020-21 Pre Budget Submission

AFMA was pleased to participate in the Government's 2020/21 Budget process. Apart from a number of regulatory and tax issues that we believe ought be implemented through the budget process, we called on the Government to afford strategic priority to the policy settings that would best foster the development of the financial markets in Australia and enhance the competitiveness of the sector.

Taxation Treasury

Financial Regulator Reform (No.2) Bill

AFMA made comment on the exposure draft of the Financial Regulator Reform (No.2) Bill implementing Royal Commission recommendations concerning the need for APRA and ASIC to cooperate. AFMA has long been a strong advocate for cooperation between ASIC and APRA and this is in the clear interest of regulated entities and compliance efficiency.

Regulation Treasury

Financial Market Infrastructure Regulatory Reforms

AFMA comments on the consultation paper by the Council of Financial Regulators (CFR) on Financial Market Infrastructure Regulatory Reforms (CP).
AFMA said that the final proposals to the Government on regulatory reform in this area should lay out basic policy thinking on FMI at this time, explain why current regulatory arrangements are failing to the extent that justifies change to the law.

Regulation RBA