House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Scott Morrison MP)

General outline and financial impact

Outline

Schedule 1 to this Bill makes amendments to the Corporations Act 2001 (the Corporations Act) ^[1] to:

•

establish a new licensing regime requiring administrators of designated significant financial benchmarks to obtain a new 'benchmark administrator licence' from the Australian Securities and Investments Commission (ASIC). ASIC will have the power to designate significant financial benchmarks, subject to one or more of the specified criteria being met;

•

give ASIC powers to make rules imposing a regulatory framework for licensed benchmark administrators and related matters. This framework will reflect a set of principles released by the International Organization of Securities Commissions (IOSCO); and

•

make manipulation of financial benchmarks a criminal offence and subject to civil penalties, with appropriate penalties attached.

The ASIC Supervisory Cost Recovery Levy Amendment Bill 2017 (ASIC Levy Bill) supports the Bill by adding benchmark administrator licensees which are provided for in that Bill to the list of entities from which the ASIC may recover its regulatory costs (see Chapter 8).

Date of effect: The key parts of this Bill (Parts 1 and 2 of Schedule 1 and Schedule 2) will commence on the day after Royal Assent is given.

Schedule 1 of the ASIC Levy Bill will commence at the same time as Part 1 of Schedule 1 of the Bill, unless that Part does not commence, in which case Schedule 1 to the ASIC Levy Bill will also not commence.

Proposal announced: 4 October 2016.

Financial impact: No financial implications.

Human rights implications: Schedule 1 raises human rights issue. However, the Schedule is compatible with human rights because to the extent that it may limit human rights, the limitations are reasonable, necessary and proportionate. See Statement of Compatibility with Human Rights - Chapter 6.

The ASIC Levy Bill does not raise any human rights issue. See Statement of Compatibility with Human Rights - Chapter 8, paragraphs 8.12-8.15.

Compliance cost impact: $0.1 million per annum.

Summary of regulation impact statement

Regulation impact on business

Impact: Schedule 1 to the Bill is estimated to increase the regulatory burden on industry by around $0.1 million per annum.

Main points:

•

Schedule 1 to the Bill will require the administrators of significant financial benchmarks to obtain a new 'benchmark administrator licence' and comply with a range of requirements in line with international best practice.

•

Schedule 1 to the Bill also clarifies that the manipulation of all financial benchmarks used in Australia, and the manipulation of all financial products used to determine a financial benchmark used in Australia (including bank accepted bills (BABs) and negotiable certificates of deposit (NCDs)), is a specific criminal offence and also can be subject to civil penalties.

•

The regulatory burden associated with this proposal arises as a result of a number of entities having to obtain licenses that they did not previously hold. Advice has been received that the administrators of benchmarks likely to be deemed to be 'significant' already comply with international best practice.

•

There is no additional regulatory burden associated with the introduction of new offences. This is because conduct that manipulates a financial benchmark already offends existing market misconduct provisions and any costs associated with non-compliance with the legislative requirements are not regulatory costs for the purposes of Australia's Regulatory Burden Management Framework.

•

The Treasury has certified that the Council of Financial Regulators' final advice to Government on Reforming Australia's Regulation of Financial Benchmarks satisfies the requirements of a Regulation Impact Statement. See Chapter 7 for the final advice.

Indigenous policy and program evaluation

Schedule 2 to this Bill amends the Productivity Commission Act 1998 to provide for the appointment of an additional Commissioner to oversee the work of the Productivity Commission in relation to the evaluation of policies and programs that have an impact on Indigenous persons.

Date of effect: The day after the Act receives the Royal Assent.

Proposal announced: 14 February 2017.

Financial impact: Costs of $2.9 million over the forward estimates will be offset from the Indigenous Advancement Strategy within the Prime Minister and Cabinet Portfolio.

Human rights implications: This Schedule does not raise any human rights issues. See Statement of Compatibility with Human Rights -paragraphs 9.15 to 9.19.

Compliance cost impact: Nil.