The
Australian Securities and Investments Commission (ASIC) has received
expanded regulatory powers as part of a reform of the country’s financial
market infrastructure (FMI) laws, aimed at bolstering stability and efficiency
in the Australian financial system.

ASIC Gains Enhanced Powers
in Australian Financial Market

The
Treasury Laws Amendment Bill 2024, which received Royal Assent on September 17,
introduces a suite of new measures designed to strengthen oversight of key
entities that facilitate trading in Australia’s capital markets. These entities
include financial market operators, benchmark administrators, clearing and
settlement facilities, and derivative trade repositories.

“The
new laws ensure we have a fit-for-purpose regulatory regime for critical
financial market infrastructure. These enhanced powers help ASIC ensure the
Australian financial system is supported by resilient, efficient, and stable
FMIs,” Simone Constant, the ASIC Commissioner, commented.

Key
provisions of the bill include:

• Introduction
  of a crisis management and resolution regime
• Enhancement
  of licensing, supervisory, and enforcement powers for ASIC and the Reserve Bank
  of Australia (RBA)
• Streamlining
  of roles and responsibilities between the Minister, ASIC, and the RBA

The
legislation also clarifies the scope of the Australian licensing regime for
overseas markets and clearing and settlement facilities, while empowering ASIC
to establish rules promoting fair and effective service provision by licensed
clearing and settlement facilities.

“We
are reviewing our approach to the regulation and supervision of FMIs to ensure
that we make the most effective and efficient use of our expanded powers,”
Constant added. “We will work closely with the RBA and industry to develop
and provide information and guidance on the use of our new powers across this
multi-year program of change.”

The reforms
stem from recommendations made by the Council of Financial Regulators in July
2020, addressing regulatory gaps identified in previous government reports and
international reviews. ASIC has announced plans to update its regulatory
guidance to assist industry compliance with the enhanced framework, signaling a
period of adjustment as the new regime takes effect.

Last month,
ASIC
initiated a pilot program for a new digital portal designed to facilitate
companies’ applications for Australian Financial Services (AFS) licenses.

Impact on FX/CFD Brokers

While the
new FMI laws primarily focus on broader
market structures, they may indirectly affect FX/CFD brokers operating in
Australia. The enhanced regulatory powers granted to ASIC and the RBA could
lead to increased scrutiny across the financial services sector, including
over-the-counter derivatives markets where FX and CFD products are traded.

FX/CFD
brokers should be aware that the strengthened supervisory and enforcement
capabilities of ASIC may result in more rigorous oversight of their operations,
particularly in areas related to market integrity and consumer protection.

While
primarily aimed at critical market infrastructure, the new crisis management
and resolution regime sets a precedent for stronger intervention powers that
could extend to other areas of financial services in the future.

Clarifying
licensing regimes for overseas entities may also affect FX/CFD brokers with
international operations or those considering entering the Australian market.
These firms may need to reassess their compliance with the updated regulatory
framework to ensure they meet any new requirements for providing services to
Australian clients.

Recently, the
Australian regulator expressed
concerns that some derivative issuers of CFDs may be offering “margin
discounts” to retail clients with opposing long and short contracts in
contravention of ASIC laws.