ASIC has opened consultation on its proposal to scrap the need for foreign providers of funds management services to professional investors to hold an Australian Financial Services Licence.
The corporate regulator released consultation paper 315, which outlines its proposal to provide funds management relief by ensuring foreign providers of funds management services to professional investors in Australia are exempt from the requirement to hold an AFSL.
However, ASIC's proposal stipulates a cap will be applied, ensuring firms can only undertake a certain amount of activities in Australia.
In its current form, the cap will limit foreign financial services providers (FFSP) from earning any more than 10% of their annual aggregated consolidated gross revenue from the provision of funds management financial services in Australia. If FFSPs eclipse that amount, they will still be required to hold an AFSL.
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ASIC's proposal will also repeal the "limited connection" licensing relief proposed in consultation paper 301, which provided relief to FFSPs with a limited connection Australia who provided services to wholesale clients.
However, limited connection relief is already due to expire on 30 September, so ASIC has proposed extending the relief for six months while it consults with industry on the changes. If limited connection relief is to be repealed, ASIC will then propose a transition period of six months to allow foreign providers to seek an AFSL if required.
ASIC said the proposals reflect industry feedback that "there is a need for Australian professional investors to access funds management financial services providers outside Australia".
"This proposal aims to strike an appropriate balance between facilitating cross-border investment as well as maintaining Australian market integrity and investor protection," ASIC said