Australian Watchdog To Impose New Client Money Reporting Rules

Australian Watchdog To Impose New Client Money Reporting Rules
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The Australian Securities and Investments Commission (ASIC) unveiled that it has released the final version of the ASIC Client Money Reporting Rules 2017.

The new set of client money rules will come into force from 4 April 2018, which means that AFS licensees will have a six month transition period to comply with the client money rules.

‘Derivative retail client money’

The Australian Securities and Investments Commission (ASIC) is focusing on retail brokers. The companies that are holding ‘derivative retail client money’ will have until the 4th of April to comply to the new regulations (record-keeping, reconciliation and reporting obligations).

There is an exception if the client money relates to a derivative that is traded on a fully licensed domestic market, such as ASX 25.

“The client money rules will ensure greater transparency in relation to an AFS licensee’s receipt and use of derivative retail client money. They will apply more formal and consistent standards across the derivatives sector and will ensure any discrepancies in an AFS licensee’s client money account are notified to ASIC in a timely manner and enable ASIC to take appropriate action,” said Cathie Armour, ASIC Commissioner.

The release of the client money rules follows the passage of Treasury Laws Amendment (2016 Measures No. 1) Bill 2016 and the Corporations Amendment (Client Money) Regulations 2017.

CP 291

The final client money rules are a result of industry consultation and feedback on Consultation Paper 291 Reporting rules: Derivative retail client money (CP 291), issued in July 2017.

“ASIC has carefully considered stakeholder feedback arising from CP 291 and has made some changes to address the issues raised. In particular, the changes to the timing of the reconciliation requirements will provide licensees with greater flexibility and make the client money rules easier to comply with,” added Ms Armour.

In addition, ASIC has also published Information Sheet 226 to help AFS licensees comply with their obligations under the client money rules.

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