ASIC Extends Retail Derivatives Issuers’ Financial Requirements for 5 Years
- The rules explain the non-tangible asset requirements.
- Retail OTC derivatives issuers need to comply with these rules.
The Australian Securities and Investments Commission (ASIC) confirmed the remade class order, defining the financial requirements of retail over-the-counter (OTC) derivatives issuers, on Friday.
The order for extending the requirements for five more years came as its previous order was set to expire on 1 October. Additionally, the regulator issued a public consultation paper before issuing the order.
It mandates retail OTC derivatives issuers, holding Australia Financial Services (AFS) license to meet a minimum tangible asset requirement of AU$1 million or 10 percent of their average revenue. Half of the required net-tangible assets held by these companies must be cash and cash equivalents, whereas the other half should be liquid assets.
Further, the derivatives issuers need to prepare quarterly projections of their annual cash flows. And, if the AFS license holders fail to comply with the requirements, they also need to comply with trigger point reporting obligations Obligations In finance, an obligation is a financial responsibility where the terms of a contract must be met. Should an obligation between parties fail then the party who is at default may face legal action. In this scenario, the guilty party will not only have to agree to pay the set amount to fulfill the contractual arrangement but may also be responsible for covering all legal proceedings cost. Routine payments or outstanding debt of any kind are considered financial obligations, so if someone owes you In finance, an obligation is a financial responsibility where the terms of a contract must be met. Should an obligation between parties fail then the party who is at default may face legal action. In this scenario, the guilty party will not only have to agree to pay the set amount to fulfill the contractual arrangement but may also be responsible for covering all legal proceedings cost. Routine payments or outstanding debt of any kind are considered financial obligations, so if someone owes you Read this Term.
“The financial requirements aim to ensure Australian financial services licensees have adequate financial resources to operate their business in compliance Compliance In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a Read this Term with the Corporations Act 2001, and to manage the operational risks inherent in the OTC derivatives market,” the regulator stated.
ASIC’s Other Intervention Orders
Meanwhile, the Australian regulator is bringing restrictions to minimize the risks of retail traders. It recently extended the ban on binary options until 1 October 2031, which originally came into effect in May 2021.
Furthermore, ASIC brought heavy restrictions on leverages offered by regulated brokers to retail clients and on their marketing tactics. Earlier this year, it extended those restrictions for five more years until 23 May 2027.
The Australian Securities and Investments Commission (ASIC) confirmed the remade class order, defining the financial requirements of retail over-the-counter (OTC) derivatives issuers, on Friday.
The order for extending the requirements for five more years came as its previous order was set to expire on 1 October. Additionally, the regulator issued a public consultation paper before issuing the order.
It mandates retail OTC derivatives issuers, holding Australia Financial Services (AFS) license to meet a minimum tangible asset requirement of AU$1 million or 10 percent of their average revenue. Half of the required net-tangible assets held by these companies must be cash and cash equivalents, whereas the other half should be liquid assets.
Further, the derivatives issuers need to prepare quarterly projections of their annual cash flows. And, if the AFS license holders fail to comply with the requirements, they also need to comply with trigger point reporting obligations Obligations In finance, an obligation is a financial responsibility where the terms of a contract must be met. Should an obligation between parties fail then the party who is at default may face legal action. In this scenario, the guilty party will not only have to agree to pay the set amount to fulfill the contractual arrangement but may also be responsible for covering all legal proceedings cost. Routine payments or outstanding debt of any kind are considered financial obligations, so if someone owes you In finance, an obligation is a financial responsibility where the terms of a contract must be met. Should an obligation between parties fail then the party who is at default may face legal action. In this scenario, the guilty party will not only have to agree to pay the set amount to fulfill the contractual arrangement but may also be responsible for covering all legal proceedings cost. Routine payments or outstanding debt of any kind are considered financial obligations, so if someone owes you Read this Term.
“The financial requirements aim to ensure Australian financial services licensees have adequate financial resources to operate their business in compliance Compliance In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a Read this Term with the Corporations Act 2001, and to manage the operational risks inherent in the OTC derivatives market,” the regulator stated.
ASIC’s Other Intervention Orders
Meanwhile, the Australian regulator is bringing restrictions to minimize the risks of retail traders. It recently extended the ban on binary options until 1 October 2031, which originally came into effect in May 2021.
Furthermore, ASIC brought heavy restrictions on leverages offered by regulated brokers to retail clients and on their marketing tactics. Earlier this year, it extended those restrictions for five more years until 23 May 2027.