ASIC revises licensing regime for domestic and overseas market operators

ASIC has modernised and updated its regulatory guidance on the licensing regime for financial markets.

Regulatory Guide 172 Financial markets: Domestic and overseas operators (RG 172) introduces a two-tiered market licence regime, applying a risk-based assessment. The new approach has been facilitated by legislative changes, made by the Government in March 2017 to amend the Corporations Act relating to the market licensing regime.

RG 172 will reduce red tape and create a more tailored regulatory regime to assiASICst the operation of specialised and emerging financial markets. The changes implemented were widely supported during extensive consultation with industry.

‘The reforms made by the Government allow ASIC to administer a market licensing regime that provides flexibility to accommodate a broad range of new and specialised market platforms while ensuring that critical financial markets meet the highest international standard of regulation,’ ASIC Commissioner Cathie Armour said.

As outlined in RG 172, ASIC will now determine if each market venue should be designated as Tier 1 or Tier 2.

Tier 1 market venues are, or are expected to become, significant to the Australian economy or the efficiency and integrity of, and investor confidence in, the financial system. Tier 2 licences will be able to facilitate a range of market venues, including specialised and emerging market venues.

Revisions to the existing RG 172 are also required to reflect the modernisation of important features of the Australian markets regime. These provide more detailed and clearer expectations on technological resourcing and risk management, as well as more closely aligning our approach with other major overseas jurisdictions.

The updated RG 172 incorporates and supersedes two existing Regulatory Guides: Regulatory Guide 177 Australian market licences: Overseas operators and the guidance for market operators in Regulatory Guide 223 Guidance on ASIC market integrity rules for competition in exchange markets (RG 223).

The guidance for market participants previously contained in RG 223 has been consolidated into Regulatory Guide 265 Guidance on ASIC market integrity rules for participants of securities markets (RG 265) and Regulatory Guide 266 Guidance on ASIC market integrity rules for participants of futures markets (RG 266) also issued today, see 18-130MR.