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the likely compliance costs;
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the likely effect on competition; and
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other impacts, costs and benefits,
of the proposals.
ASIC and Treasury will then issue a statement in August 2008 once these comments are received, addressing the next steps that will be taken.
The paper comes after Prime Minister Kevin Rudd and US Securities Exchange Commission Chairman Christopher Cox formally announced the possibility of a mutual recognition arrangement for the two nations' securities markets. However, whilst ASIC has specifically noted that this paper is separate to the process for reaching mutual recognition with the US, it is another step closer towards supporting the facilitation of cross border capital flows for the benefit of Australian investors.
Key proposals in the paper include:
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refining Australia's current framework of unilateral recognition (as set out in Regulatory Guides 176 and 178). Suggested changes include:
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providing an opportunity for the public to comment on its proposed extension of relief under these regulatory guides on a class order basis;
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changing the mandatory notification period for significant changes to the authorisation of the foreign financial services provider from "as soon as practicable" to yearly notification;
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clarification of the circumstances when ASIC has effective co-operation arrangements with the overseas regulator; and
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mutual recognition (via the recently introduced Chapter 8 of the Corporations Act). This will enable entities from a foreign jurisdiction to operate in Australia as a host jurisdiction on the basis of compliance with a single regulatory framework in the foreign jurisdiction and will allow Australian entities to operate in the foreign jurisdiction. This will also require ASIC to cede some of its regulatory authority to a foreign regulator.
We will advise our readers once ASIC and Treasury advise the next steps that will be taken after consideration of public commentary.
The consultation paper can be accessed at:
http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/Consultation_paper_98_Cross_Border_Recognition_v1.pdf/$file/Consultation_paper_98_Cross_Border_Recognition_v1.pdf.
For further information on this issue, please contact a member of our Financial Services Reform Team listed on the right hand side of the screen.
