Explanatory Memorandum(Circulated by authority of the Treasurer, the Hon Scott Morrison MP)
Chapter 8 ASIC Supervisory Cost Recovery Levy Amendment Bill 2017
Outline of chapter
8.1 The amendments in the ASIC Supervisory Cost Recovery Levy Amendment Bill 2017 (ASIC Levy Bill) add benchmark administrator licensees to the list of entities from which the Australian Securities and Investments Commission (ASIC) may recover its regulatory costs.
Context of amendments
8.2 The ASIC Supervisory Cost Recovery Levy Act 2017 (the Cost Recovery Act) imposes a levy on persons regulated by ASIC to recover its regulatory costs.
8.3 Under the Cost Recovery Act, similar types of entity regulated by ASIC are grouped together in different sub-sectors and different levy amounts may be payable for entities within each of these sub-sectors. The Cost Recovery Act also makes persons that are required to hold various licences, but do not hold those licences, a regulated entity. This is achieved by imposing a levy on persons that contravene certain licensing provisions.
8.4 The amounts payable each year will be set through a legislative instrument with the ASIC Supervisory Cost Recovery Levy Regulations 2017 setting out the methods and/or formulas that will be used to apportion ASIC's regulatory costs. The annual legislative instrument, which will be drafted and made by ASIC, will set out certain information that will be input into the methods or formulas, for example, the number of entities that are part of an industry sub-sector for each financial year.
8.5 The Government will recover ASIC's regulatory costs from its regulated population from 2017-18, which commenced on 1 July 2017. Due to the ex-post nature of the industry funding model, these amounts will not be collected until the first quarter of 2019.
8.6 Under Schedule 1 to Treasury Laws Amendment (2017 Measures No. 5) Bill 2017 (this Bill), administrators of designated significant financial benchmarks will be required to obtain a 'benchmark administrator licence' from ASIC. Administrators of other financial benchmarks may opt-in to the new licensing regime on a voluntary basis. As benchmark administrator licensees will be regulated by ASIC, it is appropriate that a levy should be imposed on them as part of the recovery of ASIC's regulatory costs.
Summary of new law
8.7 Benchmark administrator licensees, as well as entities that are required to hold a benchmark administrator licence because they operate a significant financial benchmark but fail to obtain such a licence, are included in the definition of a 'market infrastructure entity' in the Cost Recovery Act.
Comparison of key features of new law and current law
|New law||Current law|
|Benchmark administrator licensees will be included in the Cost Recovery Act and will be liable to pay a levy as part of ASIC's cost recovery arrangements.||No current law.|
Detailed explanation of new law
Schedule 1 - Financial benchmarks
ASIC Supervisory Cost Recovery Levy Act 2017
8.8 Benchmark administrator licensees are included in the definition of a 'market infrastructure entity' in section 7 of the Cost Recovery Act. Other entities in this category include market licensees, participants in a licensed market, clearing and settlement facility licensees, and derivative trade repository licensees. [Schedule 1, item 1, section 7 paragraph (ga) after paragraph (g) of the definition of 'market infrastructure entity']
8.9 A person who is required to obtain a benchmark administrator licence because they administer a significant financial benchmark, but fails to do so, making them in breach of the licensing requirement in subsection 908BA(1) of Schedule 1 to this Bill, is also included in the definition of a 'market infrastructure entity'. [Schedule 1, item 2, section 7 paragraph (ja) after paragraph (j) of the definition of 'market infrastructure entity']
8.10 Schedule 1 to the ASIC Levy Bill will commence at the same time as Part 1 of Schedule 1 to this Bill, unless that Part does not commence, in which case Schedule 1 to the ASIC Levy Bill will also not commence. Part 1 of Schedule 1 to this Bill, which contains the main amendments made in that Schedule 1 of that Bill, will commence on the day after the Treasury Laws Amendment (2017 Measures No. 5) Act 2017 receives the Royal Assent.
Application and transitional provisions
8.11 There are no application or transitional provisions for the ASIC Levy Bill.
Statement of compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
ASIC Supervisory Cost Recovery Levy Amendment Bill 2017
8.12 The ASIC Levy Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
8.13 The ASIC Levy Bill adds benchmark administrator licensees to the list of entities from which the ASIC may recover its regulatory costs
Human rights implications
8.14 The ASIC Levy Bill does not engage any of the applicable rights or freedoms.
8.15 The ASIC Levy Bill is compatible with human rights as it does not raise any human rights issues.