Breaking: ASIC Backpedals on Some of Its Demands to Brokers

The companies are given more time to act as the Australian regulator seeks more details on overseas clients

The Australian Securities and Investments Commission (ASIC) sent out a clarification letter to brokers about its latest batch of demands. The regulator is rolling back on some of its previous, controversial interpretations of Australian laws while it is still seeking more clarity on the matter.

As the Australian industry was set aflame last week, some brokers quickly started organizing a resistance against the demands of the regulator. It appears that there might have been some legal merit behind those intentions as today the ASIC is rolling back on some of its controversial demands to brokers.

The letter, seen by Finance Magnates, outlines that the media release that outraged the industry issued on April 12 is getting a revaluation. The regulator is revising the timetable and the set of actions which brokers need to take to adhere to the ASIC’s request.

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“It is ultimately the responsibility of Licensees to ensure that they are complying with the laws of relevant jurisdictions and with their Australian legal obligations as a holder of an Australian Financial Services License (AFS Licence),” the ASIC’s new position states.

Revised Timetable and Requirements

As per the revised timetable and recommendations to brokers, the companies will still need to provide some information to the regulator. Brokers will need to seek legal advice on the legality of their offering in respective jurisdictions. That includes the ways in which the firms are soliciting their clients.

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The ASIC is informing brokers that if they are providing their services or soliciting clients in a jurisdiction in a manner in which they are not permitted, they need to immediately cease doing so.

The term to “ordinarily wind down” client positions has been extended until June 30. The extension provides a reasonable timeline for Australian brokers to seek legal advice and, in case of identifying any hurdles, to close clients positions.

Brokers are also guided to avoid making deceptive statements as to the scope of their AFS license in foreign jurisdictions.

Imminent Actions

While the extension provides a breathing room for the Australian industry, the companies are still mandated to send to ASIC their plan of action before May 10. As to the recent data requests made by the Australian regulator, firms are required to provide the number of retail and wholesale clients across different jurisdictions by the 8th of July.

The brokers also need to include the total of client money held with the brokerage in each jurisdiction as of July 1, 2019. Notably, the watchdog is extending its request by adding wholesale clients to the list. In conclusion, the ASIC states that it is closely working in authorities in China and across other jurisdictions to ensure broker compliance.

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