Minister’s powers under the Corporations Act 2001
The Corporations Act 2001 (the Corporations Act) ascribes the responsible Minister powers relating to the regulation of financial markets and financial market infrastructures (FMIs) — clearing and settlement (CS) facilities and trade repositories.
Some of the matters of regulation to which these powers relate are:
- licensing and operating rules of financial markets;
- compensation arrangements for financial markets; and
- licensing and operating rules of CS facilities.
These matters are hereafter collectively referred to as the regulatory matters.
Some of the powers the Minister has in respect of licensing of financial markets and CS facilities are the power to grant, impose or vary conditions on a licence and suspend or cancel a licence. The Minister also has powers to exempt or partially exempt financial markets and CS facilities from market licensing requirements and powers to exempt or partially exempt financial markets and CS facilities from compensation arrangement requirements
The Minister has also the power to disallow changes to operating rules of financial markets and CS facilities.
Under the Corporations Act, the Australian Securities and Investments Commission (ASIC) has a role in the regulatory matters, which includes providing advice to the Minister about applications for a market licence and changes to operating rules and enforcing market licensees’ compliance with their obligations.
With respect to the regulation of CS facilities, ASIC and the Reserve Bank of Australia (RBA) share regulatory responsibility, with ASIC administering license obligations and compliance obligations and the RBA overseeing other compliance obligations. Under the Corporations Act, the RBA is responsible for determining Financial Stability Standards (FSS) and assessing whether licensees have complied with the FSS and taken other necessary steps to reduce systemic risk. ASIC is responsible for ensuring that CS facilities comply with all other obligations, including for the fair and effective provision of services.
List of powers delegated to authorised ASIC officers
In accordance with section 1101J of the Corporations Act, the responsible Minister – at the time of writing, the Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer MP – has delegated some of the regulatory matters to authorised ASIC officers by way of an instrument (the Delegation Instrument).
The authorised ASIC officers (the delegate) are:
- each member of ASIC (within the meaning of section 9 of the Australian Securities and Investments Act 2001 (ASIC Act)); and
- each staff member (within the meaning of subsection 5(1) of the ASIC Act) who is an SES employee (within the meaning of section 34 of the Public Service Act 1999) or who holds an office or position that is at a level equivalent to that of an SES employee.
Under Parts 7.2, 7.2A, 7.3 and 7.5 of the Corporations Act, the Minister has powers relating to the licensing, operating rules and compensation arrangements of financial markets and CS facilities and ASIC supervision of licensed markets. The powers under these parts that have been delegated are outlined in Table 1.
|Power||Financial market||CS facility|
|Issue/revoke exemption from all or specified provisions of Part 7.2 (licensed markets) or Part 7.3 (licensed CS facilities) and vary/revoke an exemption||791C||820C|
|Direct audit of annual report||792F||821E|
|Approve change of country by foreign licensee||792H||821F|
|Require a special report including an audited special report||794B||823B|
|Issue domestic licence||795B(1)||824B(1)|
|Issue overseas licence||795B(2)||824B(2)|
|Gazette the licence||795C||824C|
|Impose/vary/revoke conditions on licence||796A||825A|
|Suspend/cancel licence and vary or revoke suspension||797B
|Issue/revoke exemption from all or specified provisions of Part 7.2A (market supervision) and vary/revoke an exemption||798M|
|Disallow changes to operating rules||793E||822E|
|Consider whether market will be covered by Division 4 of Part 7.5 of the Corporations Act||881D|
|Approve compensation arrangements with grant of license||882A|
|Approve compensation arrangements after license is granted||882B|
|Revoke an approval of compensation arrangements||882C|
|Issue directions to licensee||882D|
|Disallow changes to compensation rules||884B|
|Approve changes to compensation arrangements||884C|
|Assess adequacy of compensation rules and arrangements||885B
|Disallow changes to the operating rules of the Securities Exchanges Guarantee Corporation||890H|
|Request a risk assessment report||892K|
|Issue/revoke exemption from all or specified provisions of Part 7.5 (compensation regimes) and vary/revoke an exemption||893B|
Purpose of the guidelines
These guidelines set out the approach that the delegate is expected to take in exercising the delegated powers and have been issued by the Minister in conjunction with the Delegation Instrument. Therefore, these guidelines describe:
- the matters the delegate should or must consider when exercising the delegated powers, including the appropriate timeframes for exercising the delegated powers;
- the reporting requisite for the delegate to provide a quarterly report on both: upcoming regulatory matters which will require the exercise of the delegated powers over the next quarter, and regulatory matters for which the delegate has exercised the delegated powers over the previous quarter;
- the procedure for allowing the Minister to ‘call up’ (request) regulatory matters for which the Minister deems that it is appropriate that he or she should exercise his or her powers instead of the delegate; and
- other matters regarding the Minister’s rights during the delegation and vary or revoke the delegation.