2021 Banner

Submissions - 2021

Date Title & Summary Topic Area Sent to

Third Issues Paper - Senate Committee on Australia as a Technology and Financial Centre

AFMA lodged a submission with the Senate Committee into Australia as a Financial and Technology Centre on replacements to the OBU regime, which followed the Government announcement in March that it would repeal the regime based on concerns expressed by the OECD regarding the regime’s 10% concessional tax rate.  130 OECD nations have since agreed to implement a global minimum tax rate of 15%.  Accordingly, AFMA’s proposed “Global Markets Incentive” (GMI) regime recommends a 15% rate to apply to largely institutional transactions not denominated in AUD.

Taxation Senate Committee on Australia as a Technology and Financial Centre

ARS 220.0 Credit Exposures and Provisions: Supplemental feedback

While APRA is proceeding with a phased implementation of the reporting standard ARS 220 as recommended by AFMA in February, the current lack of a firm timeline for the release of the taxonomy is of concern, given APRA expects ADIs to meet a Q2 2023 commencement. AFMA reiterated the importance of the release of this taxonomy and drew attention to potential overlaps and inconsistencies of the reporting standard with respect to accounting standards and Pillar 3 reporting.

Regulation APRA

APS 111 Capital Adequacy: Measurement of Capital

The draft revision of APS111 provided for the standard to apply to foreign ADIs in circumstances where APRA is not satisfied an entity is subject to capital adequacy standards in its home country that are comparable to those that apply in Australia to a domestic ADI. AFMA's submission sought clarity on whether foreign ADIs would need to demonstrate equivalent capital adequacy standards for the purposes of substituted compliance.

Regulation APRA

Energy Security Board Post-2025 Market Design Options Paper

AFMA made a submission to the ESB Options Paper consulting on market design options prior to final recommendations being made to Ministers in mid-2021. AFMA’s submission centred on contract market implications of the proposed changes to transmission access and advocated for further analysis and industry consultation to be undertaken prior to any options being developed further.

Regulation Energy Security Board

CP340 Guidance on Breach Reporting and Related Obligations

AFMA made a submission to ASIC’s consultation CP340 on breach reporting guidance that seeks to implement the related regulations, focusing comments on the carve out for ASIC Market Integrity Rules and Derivatives Trading Rules from ‘deemed significance’ provisions related to the reporting of core obligations breaches.

Regulation ASIC

Greater Transparency of Proxy Advisers Consultation

AFMA made a submission to Treasury to seek clarity and confirmation that any proposed proxy adviser regulation does not extend to independent sell-side research published by investment banks, given that sell-side research is sufficiently regulated through ASIC RG 264 and 79.

Regulation Treasury

Phase 1.5 Rules

AFMA made a submission to AUSTRAC regarding proposed Rules to support the Phase 1.5 reforms of the AML/CTF regime, which tightened up correspondent banking due diligence requirements and enhanced the reliance provisions and the ability to share information. Our submission sought to ensure the Rules reflect both regulatory expectations and reporting entities’ understanding of the new requirements.

Regulation AUSTRAC

Draft Critical Infrastructure Asset Definition Rules

AFMA made a submission to draft rules under the enhanced regulatory framework for critical infrastructure, supporting further engagement with industry to refine the definition of critical assets, particularly banking and financial markets infrastructure assets. Our submission also highlighted the complex interaction between the critical infrastructure regime and the FIRB framework.

Regulation Home Affairs

VEU Program Stakeholder Engagement

AFMA sent a letter to the Victorian Department of Environment, Land, Water & Planning to outline concerns around fragmentation of market communications for the Victorian Energy Upgrades Program and suggest improvements to stakeholder engagement.

Regulation Department of Environment, Land Water & Planning & Essential Services Commission

Consultations on Modernising Business Registers (Director Identification Number Regime)

AFMA made a submission to a Treasury consultation on legislative instruments related to the introduction of the Director Identification Number regime, outlining issues for directors of registered foreign companies that were not considered in the design of the regime that require clarification or modification.

Regulation Treasury

Draft Amendments to Breach Reporting Regulations

AFMA made a submission in regard to draft breach reporting regulations that implement the new breach reporting rules in Schedule 11 of the Financial Sector Reform Act 2020. The submission focussed on proposed changes that would result in market integrity rules being incorporated as ‘core obligations’.

Regulation Treasury

Revisions to the capital framework for Authorised Deposit-taking Institutions

AFMA made a submission in relation to APRA’s proposed revisions to the ADI Capital Framework, seeking concessions on the credit conversion factor (CCF) applicable to retail margin lending activities.

Regulation APRA

CHESS Replacement: Proposed changes to netting and settlement workflow

AFMA responded to the ASX consultation paper on proposed changes to the CHESS replacement project functionality. AFMA raised concerns that the reduced functionality increased risks and costs for clearing brokers. Our submission noted that the industry was interested to understand alternatives to the proposed approach and suggested that an external risk analysis of the impact of the proposed changes on both the exchange and broker systems should be undertaken before consideration could be given to proceeding with the proposed changes.

Regulation ASX

ASIC Report 668 Allocations in debt capital market transactions

AFMA sent a letter to ASIC on March 17 outlining member observations on particular aspects of Report 668 which outlines ASIC expectations around best practices for allocations in debt capital markets. Main observations related to matters concerning the role of compliance, joint lead manager (JLM) orders and inflated bids.

Regulation ASIC

CP334 Joint AFMA-ISDA-GFMA submission to ASIC Review of Derivative Transaction Rules (Reporting) 2013

ASIC is conducting a review of the ASIC Derivative Transaction Rules (Reporting) 2013 through a two-stage consultation in 2021. The first round of consultation through CP 334 set out initial proposals to harmonise the rules to international standards and remove outdated provisions to ensure the rules are fit for purpose. AFMA joined a submission with ISDA and GFMA, outlining areas where further clarity is required on the proposals and specifying where additional guidance should be incorporated.

Regulation ASIC

BBSW Fallbacks in RBA-Eligible Securities

AFMA sent a submission to the RBA in response to a consultation on the plan to publish new eligibility criteria in the first half of 2021, which will require fallbacks for new BBSW-linked securities issued on or after 1 July 2022. AFMA made a submission after reviewing the draft criteria proposed for fallback provisions, noting that member feedback indicated general support for the Bank’s planned course.

Regulation RBA

Proposed amendments to Chapters 3, 6, 7 and 10 of the AML/CTF Rules (the Phase 1.5 Reforms)

AFMA made a detailed submission on the proposed Rules to support the “Phase 1.5” amendments to the AML/CTF Act.  Our submission focussed on areas to align the proposed Australian requirements with other jurisdictions to mitigate regulatory fragmentation, ensuring sufficient lead times to allow for members to update systems and processes and reducing proscription around certain matters, instead allowing reporting entities to adopt a risk-based approach. 

Regulation AUSTRAC

CPS 226 Joint AFMA-ISDA submission on LIBOR transition discrepancies in timeliness of reconciliations

On behalf of the IBOR Transformation Australian Working Group, AFMA joined with ISDA in sending a submission to APRA regarding the issue of timeliness in resolving portfolio reconciliation discrepancies under CPS 226 when dealing with legacy swaps for the purposes of transitioning from LIBOR, subsequent the CFTC granting a no-action relief from this requirement for amendments to legacy swaps to accommodate fallbacks to alternative benchmarks.

Regulation APRA

CP 338 Remaking ASIC Class Order on Parent Entity Financial Statements

AFMA made a brief submission to ASIC welcoming the remake of Class Order [CO 10/654] Inclusion of parent entity financial statements in financial reports, which was due to expire on 1 April 2021.

Regulation ASIC

Extension of Margin Lending Instalment Warrants Relief

AFMA sent a submission to ASIC on 5 March to seek an extension to the relief provided in the ASIC Class Order Margin lending relief for ASX-traded instalment warrants (CO 10/1034) due to sunset on 1 April. The relief was extended by the release of ASIC Corporations (Margin Lending Relief for Exchange-Traded Instalment Warrants) Instrument 2021/194 on 24 March.

Regulation ASIC

Market Data in The Secondary Equity Markets

AFMA sent a submission to IOSCO in response to its Market Data in the Secondary Equity Markets Consultation Report, endorsing the principles set out in the joint response to the consultation by ICSA and GFMA. The ICSA/GFMA submission provides analysis that illustrates both the causes of high market data costs and the consequences for market efficiency.

Regulation IOSCO

APRA Remuneration Standard 511

AFMA made a submission to the APRA consultation on a revised draft of a remuneration standard, which significantly improved on the previous draft released. Members had flagged concerns around the threshold for inclusion and the burden for smaller foreign ADIs.

Regulation APRA

ASX Clear Consultation Trust Segregated Accounts

AFMA responded to an ASX consultation paper on proposed amendments to the ASX Clear Operating Rules and Guidance Note 12 to provide an improved framework and guidance to assist participants to comply with client money obligations.

Regulation ASX

ASIC CP 333 Reference Checking and Information Sharing Protocol

AFMA provided a submission to the ASIC consultation on implementing the Hayne Royal Commission’s recommendations that firms expand the existing industry standard approach to reference checking for financial advisors.

Regulation ASIC

Treasury Payments System Review

AFMA responded to the Treasury consultation reviewing the regulatory architecture of the Australian payments system to ensure it remains fit-for-purpose and is capable of supporting continued innovation for the benefit of consumers, businesses and the broader economy.

Regulation Treasury

ASIC CP322 Affordable Advice

AFMA provided a submission to an ASIC consultation CP 332 which seeks input from industry participants and relevant stakeholders to help ASIC understand the issues and impediments relating to the supply of good quality affordable personal advice; and the practical steps that can be taken by ASIC and industry to improve consumer access to good quality affordable advice.

Regulation ASIC