The Government is consulting on exposure draft legislation to provide Australian financial service licensing exemptions to foreign financial services providers (FFSPs).

The exposure draft Bill amends the Corporations Act to facilitate cross-border financial services while balancing the need to ensure regulatory oversight of foreign financial services provider activity in Australian financial markets by:

• providing an exemption from the requirement to hold an Australian financial services licence for persons that provide financial services from outside Australia to professional investors (the professional investor exemption);
• providing an exemption from the requirement to hold an Australian financial services licence for persons regulated by comparable regulators and that provide financial services to wholesale clients (the comparable regulator exemption);
• providing an exemption from the requirement to hold an Australian financial services licence for persons that provide financial services that involve making a market for derivatives that are able to be traded on a specified licensed market (the market maker exemption); and
• fast-tracking the licensing process for persons seeking to establish more permanent operations in Australia by providing an exemption for persons regulated by comparable regulators from the fit and proper person test when applying for an Australian financial services licence to provide financial services to wholesale clients (the fit and proper person test exemption).

All the exemptions require financial services to be provided efficiently, honestly and fairly.

ASIC may cancel an exemption on the grounds that the person is not providing financial services efficiently, honestly and fairly.

ASIC extends current FFSP relief

ASIC has released the ASIC Corporations (Amendment) Instrument 2023/588 to roll over existing relief that was set to expire on 31 March 2024 for foreign financial service providers (FFSPs) from the requirement to hold an Australian financial services (AFS) licence when providing financial services to Australian wholesale clients until 31 March 2025.

The new relief instrument also delays the commencement of the ASIC Corporations (Foreign Financial Services Providers—Funds Management Financial Services) Instrument 2020/199 until 1 April 2025. Under that instrument ASIC gives licensing relief to some FFSPs that provide funds management financial services to certain categories of Australian professional investors.

During this extended transitional period, ASIC will consider new applications for individual temporary licensing relief, or new standard or foreign AFS licence applications, from entities that cannot rely on the transitional relief.

FFSPs that have been, or are granted a foreign AFS licence, will be able to continue to operate their financial services business in Australia under the licence issued by ASIC.

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Author: David Jacobson
Principal, Bright Corporate Law
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About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.