13-314MR ASIC releases revised guidance on custody
Thursday 21 November 2013
ASIC has today released revised guidance on the custody of assets and standards to be met by asset holders.
The revised guidance in Regulatory Guide 133, renamed Managed investments and custodial or depository services: Holding assets (RG 133), and class orders, updates existing measures to:
apply minimum standards to asset holders for managed investment schemes and holders of financial products, and affects responsible entities, licensed custodians, platform operators and managed discretionary account operators
ensure agreements with asset holders have certain minimum terms, and
require primary production scheme responsible entities to safeguard the land on which the scheme operates.
We have also updated Regulatory Guide 166 Licensing: Financial requirements (RG 166) to accommodate industry practice of custody of certain assets like derivatives and certain bank accounts and private equity interests when these are held by a responsible entity of a managed investment scheme where existing financial resource requirements would not otherwise allow this.
‘Our updated policy responds to the emerging risks and challenges presented by the major changes affecting the managed investment scheme and custodian industries’, ASIC Commissioner Greg Tanzer said.
‘It will also help ensure that all asset holders meet appropriate standards in an area where assets under custody have reached around $2.16 billion at 30 June 2013.’
The revised requirements apply from 2 January 2014 to asset holders that first hold assets or arrange for them to be held after that date. Otherwise they have until 2 January 2015 to comply with the new requirements and until 1 November 2015 to ensure agreements with asset holders comply with the changes.
Primary production schemes with interests on issue after 2 January 2014 will have to comply from 1 July 2014.
The holding of scheme property and other assets is currently regulated by RG 133 issued in 1998 and associated licence conditions. On 5 July 2012, ASIC released Report 291 Custodial and Depository services in Australia (REP 291) following a review of and consultation with the custodial industry.
ASIC previously issued Consultation Paper 197 Holding scheme property and other assets (CP 197) in December 2012. We received eight non-confidential submissions in response to CP 197. The proposed guidance in CP 197 was refined in the updated RG 133 and RG 166 to take into account feedback.