Starting from next year, brokers in Australia will have to adhere to a new set of client money rules. The main changes to the framework governing the way brokers handle their clients’ funds include a set of record-keeping, reconciliation and reporting obligations.
The Australian regulator in charge of designing the regulatory framework, the Australian Securities and Investments Commission (ASIC), is focusing on retail brokers. The companies that are holding “derivative client money” as defined in Australian Corporations Act will have until the 4th of April to adhere to the new regulations.
The main aspects of the new framework are record-keeping, reconciliation and reporting obligations.
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Commenting on the news, ASIC Commissioner Cathie Armour said: “The client money rules will ensure greater transparency in relation to an AFS licensee’s receipt and use of derivative retail client money.”
“They 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 enable ASIC to take appropriate action,” she elaborated.
The changes exempt obligations on derivatives that are traded on a fully licensed domestic market such as the Australian Stock Exchange ASX.
The news is a long time coming with the Australian government passing the legislative framework at the core of the new law all the way back in 2016 with a modification to Treasury Laws. The Corporations Act in Australia was revised earlier this year to define and include ‘derivative client money’.