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12-45AD ASIC releases guidance and policy proposals for carbon financial products

Friday 9 March 2012

ASIC today released regulatory guidance to help business comply with its legal requirements leading up to the introduction of Australia’s carbon pricing mechanism later this year.

From July 1 2012, emissions units recognised under the carbon pricing mechanism will be financial products under the Corporations Act 2001 (Corporations Act). ASIC will be responsible for regulating entities and individuals that provide financial services in relation to emissions units.

ASIC’s Regulatory Guide 236 Do I need a licence to participate in carbon markets? (RG 236) is designed to help entities and individuals understand whether they require an Australian financial services (AFS) licence to provide financial product advice and other financial services in relation to carbon markets and emissions units, and, if so, details the next steps and where people can find more information.

RG 236 provides:
ASIC will accept applications for new AFS licences or licence variations relating to emissions units when regulations amending the Corporations Act are finalised. This is likely to occur by May 2012.

ASIC is also consulting on proposals for applying our current AFS licensing policies to licensees providing financial services in relation to emissions units. Consultation Paper 175 Carbon markets: Training and financial requirements (CP 175) invites feedback on our proposals for applying our current polices on training for financial product advisers and financial requirements to these licensees.

ASIC is seeking comments on the proposals by Tuesday 10 April 2012.

ASIC will continue to publish information on our website about the new regulatory framework, including the licensing process, general obligations and the timetable in which requirements will take effect.

Further information

Due to commence on 1 July 2012, the carbon pricing mechanism will require certain entities to incur a charge for their carbon emissions, unless they acquire and surrender the number of emissions units that represents their total annual emissions. The related Carbon Farming Initiative will allow individuals to generate emissions units through domestic emissions offset projects that reduce or sequester carbon emissions.

The Clean Energy Legislative Package includes the Clean Energy Act 2011 (Clean Energy Act), which is the main piece of this legislation establishing the carbon pricing mechanism and the Carbon Credits (Carbon Farming Initiative) Act 2011 (CFI Act), which covers the Carbon Farming Initiative. More information about the Clean Energy Legislative Package is available at www.climatechange.gov.au.