Jurisdiction - Australia
Australia – Regulatory update.

29 July, 2012


Legal News & Analysis – Asia Pacific – Australia – Regulatory & Compliance


Carbon financial markets
From 1 July 2012 Australian carbon credit units issued under the Carbon Farming Initiative, eligible international emissions units issued inaccordance with the Kyoto rules or another relevant international agreement and carbon units issued under the Clean Energy Legislation, will be recognised as “financial products” for the purposes of Australian financial services regulation. Those providing financial services in emission units will need to be registered with the Australian Securities and Investment Commission and licensed to provide services in those financial products, unless a relevant exemption applies.
Report on the Trio Capital collapse
In May 2012, the Parliamentary Joint Committee on Corporations and Financial Services released its report on the inquiry into the collapse of Trio Capital. The Trio collapse has been described as the “largest superannuation fraud in Australian history” with $176m in superannuation funds lost or missing from the fraudulent managed investment schemes.
The report considered a number of issues arising from the fraud and its aftermath including the role of the regulators, auditors, custodians and research houses, as well as the current compensation arrangements for self-managed superannuation fund investors (as opposed to investors in Australian Prudential Regulation Authority (APRA) regulated superannuation
funds). The key recommendations made in the report are:
  • the need for the government to investigate options to improve the oversight and operation of compliance plans and compliance committees in respect of registered schemes;
  • the release of a consultation paper to investigate the best mechanism for a responsible entity of a registered scheme to disclose its scheme assets at the asset level; and 
  • the need for APRA to conduct internal assessments of the adequacy and timeliness of its checks to monitor the ownership of superannuation vehicles.
Financial market infrastructure reform – 
The Council of Financial Regulators released its recommendations on reforms to the oversight of Australia’s financial market infrastructure. The recommendations include:
  • new powers to require certain market infrastructure providers to have key aspects of their operations located in Australia, where deemed appropriate, and be managed and governed by “fit and proper” persons;
  • enhanced “step in” powers for regulators to intervene in the event of infrastructure experiencing substantial difficulties; and
  • strengthened and clarified powers for regulators to give directions to operators of key market infrastructure and impose appropriate sanctions where licensees and their officers fail to comply with directions or licence conditions.
The Government will engage in further consultation on options for implementing the final framework. 

For further information, please contact:

Jonathan Gordon, Partner, Ashurst


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