Exploring the legal and regulatory issues affecting the worldwide asset management community.
By: Philipp Riedl
Revised guidance from the European Supervisory Authorities (ESAs) contains much-needed information on the extent to which affected firms should be anticipating detailed Regulatory Technical Standards (RTS) that are not expected to be effective until 1 January 2023. The German regulator BaFin issued an accompanying statement on 30 March 2022. The key information is:
Read MoreBy: Anthony R.G. Nolan and Kenneth Holston
Russia’s war against Ukraine has led in record time to the implementation of extensive anti-Russian sanctions by the United States, the European Union, and the United Kingdom, among others. Those initiatives in turn have led to the imposition of extensive capital controls within Russia. The combined effect of Western sanctions and Russian countermeasures threaten the liquidity and creditworthiness of Russian debt obligations. Although the Russian Federation avoided defaulting on a coupon payment on its dollar bonds on March 16, it subsequently announced that it will satisfy its obligations under rubles a dollar bond coming due on April 4 by making payment of principal and interest in rubles.
Read MoreBy: Andrew Massey
On 25 March 2022, the FCA confirmed new requirements for the key information document (KID) required for package retail and insurance-based investment products (PRIIPs) in the UK: policy statement 22/2. Investment funds are generally categorised as PRIIPs, although UK UCITS and UK non-UCITS retail schemes are exempted from the PRIIPs KID requirement until 31 December 2026.
Read MoreBy: Kai Zhang
On 24 March 2022, the FCA issued a notice reminding firms with cryptoassets exposures of its expectations on certain risks. The key themes are:
By: Jim Bulling and Alex Morrison
The Australian Government has now released the terms of reference for the Quality of Advice Review. The review follows recommendations made by the Hayne Royal Commission. The objective of the review is to ensure Australians have access to high quality, affordable and accessible financial advice. The review will consider both regulatory and legislative frameworks, consent arrangements for retail and wholesale clients, actions of ASIC and the role of financial services entities and professional associations.
Read MoreBy: Jim Bulling and Felix Charlesworth
FFSP regime finally announced – good news for offshore managers
On 17 February 2022, the Government introduced the final version of the Foreign Financial Service Provider (FFSP) regulatory regime into Parliament.
The new laws outline three ways in which FFSPs will either be exempt from the requirement to hold an Australian Financial Services Licence (AFSL), or be able to fast track the licencing process. These exemptions will commence on 1 April 2023, to coincide with the expiry of the transitional relief.
Read MoreThe Central Securities Depositaries Regulation (CSDR) originally entered into force in the EU on 17 September 2014, aiming to harmonise timing and standards of conduct in the EEA’s securities settlement industry. It introduced measures for the authorisation and regulation of EEA central securities depositaries (CSDs).
While much of the regulation focuses on prudential, organisational and business standards of CSDs, some of its requirements directly affect trading entities that settle trades on EEA CSDs. These include measures to address and prevent settlement fails and improve settlement discipline, which became effective on 1 February 2022.
Read MoreBy: Jim Bulling
Review of the Quality of Financial Advice
In December 2021, the Australian Treasury published the Draft Terms of Reference to the Review of the Quality of Financial Advice (Review). The Review takes up a number of recommendations of the Hayne Royal Commission and seeks to achieve the goal of providing retail investors access to high quality, affordable, and accessible financial advice. Amongst other areas, the Review will investigate whether regulatory compliance obligations can be streamlined and simplified to reduce cost and remove duplication. Additionally, the Review will consider whether the safe harbour provision for the duty of financial advice providers to act in the best interests of their clients pursuant to section 961B of the Corporations Act 2001 (Cth) is in line with Commissioner Hayne’s recommendation that “unless there is a clear justification for retaining that provision, it should be repealed.”
Read MoreBy: Jim Bulling and Phoebe Naylor
Controversial regulations seeking to govern the provision of proxy advice services were introduced by the Government in late December 2021. The Treasury Laws Amendment (Greater Transparency of Proxy Advice) Regulations 2021 (the Regulations) introduced a definition of “proxy advice” and prescribed it as a financial service. In summary, proxy advice was defined as an offer of voting recommendations to specified entities, in relation to the exercise of their voting rights attached to securities or interests.
Read MoreBy: Jim Bulling
Expanding both the scope of the UCT regime and regulator enforcement powers
On Wednesday 9 February 2022 a bill was introduced to Parliament which seeks to amend the Australian Consumer Law and the Australian Securities and Investments Commission Act (ASIC Act) to extend the Unfair Contract Terms Regime (UCT Regime).
Section 12BF of the ASIC Act currently prohibits unfair terms in standard form consumer and small business contracts as they relate to financial products and financial services.
Under the proposed changes, the UCT regime for small businesses under the ASIC Act will apply where the upfront price of the standard form contract (price threshold) does not exceed AU$5 million and one party to the contract is a business that either employs fewer than 100 people (employee threshold) or has an annual turnover of less than AU$10 million. These changes substantially expand the current law where the price threshold is AU$300,000 (or AU$1 million in a multiyear contract) and the employee threshold is 20 people. As such, the changes are likely to cause the UCT regime to apply to many more financial services business to business contracts.
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