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CORPORATIONS (FEES) AMENDMENT REGULATION 2015 (NO. 1) (SLI NO 109 OF 2015)
Corporations (Fees) Act 2001
Corporations (Fees) Amendment Regulation 2015 (No. 1)
Section 8 of the Corporations (Fees) Act 2001 (Act) provides that the Governor General may make regulations for the purposes of sections 5, 5A, 6 and 6A of the Act, which deal with the imposition of fees for activities undertaken in accordance with the Corporations Act 2001 (the Corporations Act).
Section 6A of the Act allows the Corporations (Fees) Regulations 2001 (the Principal Regulations) to prescribe fees for the performance, by the Australian Securities and Investments Commission (ASIC), of its market supervision functions under Part 7.2A of the Corporations Act (Supervision of financial markets). Fees may be prescribed by specifying an amount as the fee or by specifying a method for calculating the amount of the fee.
The purpose of the Corporations (Fees) Amendment Regulation 2015 (No. 1) (Regulation) is to amend the fee amounts, and the billing period for which the fees apply, in the Principal Regulations, to allow ASIC to charge fees for the performance of its market supervision functions for the period 1 July 2015 to 30 June 2016.
The Regulation incorporates the following:
• Amendments prescribing the amounts to be recovered by ASIC from market operators and participants for the period commencing on 1 July 2015 and ending on 30 June 2016.
- The total amount to be recovered during this period is $20.26 million and will mainly be recovered from the large cash equity market operators (ASX Limited and Chi-X Australia Pty Ltd) and their participants, allocated through a formula reflecting their share of transaction-related and message-related activity.
- The methodologies used to calculate the fees have not changed since the previous update to the fee amounts - which occurred in 2013. However the fees amounts have changed as a result of ASIC's changed cost recovery budget as well as higher resourcing costs to be incurred by ASIC over the 2015-16 financial year.
- ASIC was previously given approval from the former Parliamentary Secretary to the Treasurer, the Hon Bernie Ripoll MP, for $1.465 million per annum in contributions from the Financial Industry Development Account (FIDA) to reduce the cost recovery burden on industry, for the 2013-14 to 2016-17 financial years. FIDA is a special account in the National Guarantee Fund (the NGF), which is the main fidelity fund for the ASX and other financial markets. It contains funds that are deemed to be in excess of the amount required by the NGF. Such funds, if available, may be used for certain purposes prescribed in the legislation, subject to approval by the Minister and the NGF itself. Any FIDA contribution received by ASIC would be used to partially offset the cost recovery fees paid by market participants.
Treasury undertook a public consultation in May 2015 seeking comment on ASIC's market supervision cost recovery arrangements to apply for the period from 1 July 2015 to 30 June 2016 - as outlined in ASIC's Cost Recovery Implementation Statement document. Four submissions from industry stakeholders (one confidential) were received. The submissions raised no substantive issues with the fee amounts or any other aspects of the cost recovery arrangements, other than some concerns that a full review of cost recovery methodology would not occur until 2016.
Additionally, on 1 June 2015, the market supervision cost recovery stakeholder panel, formed by members of industry, Treasury and ASIC, met to discuss the proposed cost recovery arrangements. Again, stakeholders raised no substantive concerns with the fee amounts or other aspects of the proposed cost recovery arrangements, but made known their concern about a full review of cost recovery methodology not taking place until 2016.
Details of the Regulation are included in the Attachment.
Under the Corporations Agreement 2002, the Commonwealth must consult with the Legislative and Governance Forum for Corporations before making amendments to certain provisions of the Principal Regulations. The Forum has been consulted. No adverse views have been expressed.
The Office of Best Practice Regulation has advised that a Regulation Impact Statement is not required on the basis that these amendments are minor. The reference number for this advice is OBPR ID 19012.
The Act specifies no other conditions that need to be satisfied before the power to make the Regulation may be exercised.
The Regulation is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
The Regulation commences on 1 July 2015.
Details of the Corporations (Fees) Amendment Regulation 2015 (No.1)
Section 1 - Name of Regulation
Section 1 provides that the name of the Regulation is the Corporations (Fees) Amendment Regulation 2015 (No.1) (Regulation).
Section 2 - Commencement
Section 2 provides that the Regulation commences on 1 July 2015.
Section 3 - Authority
Section 3 provides that the Regulation is made under the Corporations (Fees) Act 2001 (the Act).
Section 4 - Schedule(s)
Section 4 provides that the Schedule amends the Corporations (Fees) Regulations 2001 (the Principal Regulations).
Schedule 1 - Amendments
Item  - Paragraph 8(1)(a)
This item provides that the quarterly fee for a small financial market is $9,065.
Item  - Paragraph 8(5)(a)
This item provides that the quarterly fee for the ASX 24 financial market is $323,405.
Item  - Subparagraph 8(6A)(a)(i)
This item provides that the quarterly fee for FEX Global Pty Ltd (FEX) is $51,250. FEX was granted an Australian Market Licence in April 2013 and is anticipated to commence operations within the 2015-16 financial year.
Subparagraph 8(6A)(a)(i) of the Principal Regulations provides that the method for calculating a proportional payment by FEX for its first billing period which may not constitute a full quarter.
Item  - Subparagraph 8(6A)(b)
This item provides that the quarterly fee for FEX is $51,250, in accordance with Item  to the Schedule.
Item  - Paragraphs 8(7)(a) and (b) (formulas)
This item provides that the variable quarterly fee amounts for ASX Limited (ASX) and Chi-X Australia Pty Ltd (Chi-X) are those amounts in the following formula.
Note: this provision only adjusts the amounts in the formula and not the structure of the formula.
Item  - Subregulation 8(9) (formula)
This item provides that, subject to subregulation 8(9A) of the Principal Regulations, the variable and fixed quarterly fee amounts for ASX and Chi-X market participants are those amounts in the following formula.
Note: this provision only adjusts the amounts in the formula and not the structure of the formula.
Item  - Paragraph 8(9A)(a)
This item provides that the variable fee amounts used in the formula for the fee levied on cash equity market participants, in the absence of a FIDA contribution, are $1,987,625 and $1,926,625.
Subregulation 8(9A) of the Principal Regulations provides the figures of $1,987,625 and $1,926,625 must, as soon as is practicable for ASIC, be reduced in subregulation (9) of the Principal Regulations, should a FIDA contribution be received.
Item  - Subregulation 8(11) (definition of billing period)
This item repeals the current definition of billing period and replaces it with a new definition, to ensure that, in the absence of any future amendments to the Principal Regulations, fees can continue to be charged.
Previous versions of the Principal Regulations defined the billing period as specific quarters (i.e. 'a period of 3 months starting on 1 October 2013') and as such, the billing period as defined by the Principal Regulations had a fixed end date (i.e. a period after which fees could not be charged). This created the imperative to update the Principal Regulations prior to this date, so that ASIC could continue to charge the fees prescribed by regulation 8.
ASIC is obliged to regularly review its cost recovery arrangements in accordance with the Australian Government Cost Recovery Guidelines - and fees are updated accordingly. This item mitigates the risk of new arrangements not being put in place prior to the expiry of a fixed billing period end date.
This item therefore provides that there is no fixed billing period end date. Billing periods are therefore defined as quarters (3 month periods) starting 1 July, 1 October, 1 January and 1 April each year.
Item  - Division 1 of Part 3
This item repeals the transitional arrangements that apply to fees incurred prior to 1 July 2013. Given that no fees remain outstanding for the period prior to 1 July 2013, this division no longer has any effect. New transitional arrangements for the period 1 July 2013 to 30 June 2015 are inserted by Item  to the Schedule.
Item  - At the end of Part 3
This item inserts transitional arrangements that provide that the current cost recovery fee arrangement and late payment penalty fee provisions contained in existing regulations 8 and 9 of the Principal Regulations continue to apply to fees incurred in the period 1 July 2013 to 30 June 2015.
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Corporations (Fees) Amendment Regulation 2015 (No.1)
This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
The Regulation amends the Principal Regulations to apply ASIC's market supervision cost recovery arrangements for the period 1 July 2015 to 30 June 2016.
ASIC's market supervision cost recovery arrangements involve the charging of fees to market participants and operators to recover the costs incurred in ASIC's supervision of specified domestically licensed cash equity, derivatives and futures markets. ASIC supervises these markets to ensure that they are fair, efficient and orderly and to minimise misconduct.
Fees amounts levied on operators and participants, and the billing period to which these fees apply, are prescribed by the Principal Regulations.
Accordingly, to reflect ASIC's cost recovery arrangements for the period 1 July 2015 to 30 June 2016, the Regulation amends the prescribed fee amounts and the definition of billing period in the Principal Regulations. It also amends the Principal Regulations to include transitional arrangements relating to the charging and recovery of outstanding fees for the period 1 July 2013 to 30 June 2015.
This Legislative Instrument does not engage any of the applicable rights or freedoms.
This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.