Fund Product, Company and Regulatory Updates as at 4 July 2017

Product Updates

IOOF to acquire trustee business
Following an agreement with NAB, IOOF has purchased National Australia Trustees Limited. IOOF believed there was a strong strategic fit with their existing trustee business, Australian Executor Trustees (AET).

VanEck to launch ETF
Vectors Australian Floating Rate ETF is to be launched by VanEck onto the Australian Securities Exchange (ASX). This will be the first Australian exchange traded fund (ETF) to offer exposure to a diversified portfolio of Australian floating rate notes (FRNs).

Bennelong launches new emerging companies fund
Bennelong Australian Equity Partners has launched the Bennelong Emerging Companies Fund, which will invest primarily in micro and small capitalisation stocks listed on the ASX.

Company Updates

Media Super enters R&D lending business
Media Super has launched a revolving fund to provide loans to companies and research institutions for projects eligible for research and development (R&D) tax credits. This provides refundable tax offsets on eligible R&D expenditure for businesses with turnover of less than $20 million a year.

QSuper open to the public
Following state legislation changes which came into effect on 1 July 2017, QSuper has expanded its membership from current and former Queensland Government employees and their spouses to the general public. 

Managed funds platform launched by MA Operator
MA Operator has launched uXchange, an independent managed funds platform enabling advisers to access local and international managed funds issued by Fidante Partners, Legg Mason, Dimensional, Magellan, Pengana, Pinnacle, and Vanguard, among others.

ASIC funding model passes Senate
Following recommendations from the 2013 Senate Inquiry into ASIC’s performance and the 2014 Murray Financial System Inquiry, as of 1 July 2017 the financial services sector will now contribute to industry funding of ASIC. The ASIC Supervisory Cost Recovery Levy Bill 2017 passed through the Senate. Only those entities regulated by ASIC and creating a need for regulation will bear its costs, estimated to be $960 per year per adviser.

Sequoia to purchase InterPrac
Sequoia Financial Group is to purchase non-aligned Melbourne based advice group InterPrac for $12.83 million, scheduled to be completed by early September.

CFA Institute launches research exchange
The Chartered Financial Analyst (CFA) Institute has launched its Asia-Pacific research exchange (ARX) after more than a year of beta-testing. More than 30 regional organisations have published over 2,500 articles and research papers on investment practices in Asia Pacific.

Regulatory Updates

Malaysia and Australia sign fintech agreement
The Malaysia Securities Commission and ASIC signed a cooperation agreement providing a framework for information-sharing between the two regulators. This enables ASIC's Innovation Hub and Malaysia's equivalent, aFINity, to assist businesses in understanding the regulatory regimes in each of their jurisdictions.

Westpac pays $127,250 infringement penalty
Westpac has paid a penalty of $127,250 handed down by ASIC for failure to meet reporting derivative transactions obligations, after Westpac failed to report information about 112,556 reportable transactions. The notice identifies 398 alleged contraventions.

Orders to wind up Octaviar Group companies
After seeking to reinstate Octaviar IHH Pty Limited after it had become deregistered, ASIC obtained orders to liquefy all Octaviar Group companies due to concerns that the company lacked a director. The former sole director of the companies, David Anderson, was disqualified from managing a corporation as a result of his New Zealand convictions, which consisted of charges under the Securities Act 1978 (NZ) in 2015. In May 2017 Anderson was disqualified from managing a corporation for 25 years by the Supreme Court of Queensland.

JFSA and ASIC fintech cooperation
The Japan Financial Services Agency (JFSA) and ASIC have announced the completion of the framework to allow sharing of information to support the entry of fintech businesses into each other's markets.

Macquarie pays $505,000 infringement penalty
Macquarie Securities Australia Limited has paid a $505,000 infringement notice handed down by the Markets Disciplinary Panel (MDP) for failing to lodge a Suspicious Activity Report after being alerted to the activity by their own fraud management systems. An investigation was conducted by Macquarie into the activity but was never finished, thus Macquarie did not comply with ASIC's Market Integrity Rules.

ASIC proposed guidance on crowd-sourced funding
ASIC has released two consultation papers on proposed guidance for companies and intermediaries to assist in using the new crowd-sourced funding regime commencing 29 September 2017. Under this regime eligible companies will be able to make offers of shares to a large number of investors via a licensed online platform. The proposals aim to assist companies in understanding and complying with their obligations. ASIC invites submissions on CP 288 and CP 289, which are due by 3 August 2017.

Decision on application of Criminal Code in civil proceedings
The Federal Court has deemed it not necessary for ASIC to prove fault according to Chapter 2 of the Criminal Code in civil proceedings relating to certain breaches of the Corporations Act. Read more here. 

UBS pays $280,000 in infringement penalties 
UBS Securities Australia Limited (UBS) has paid $280,000 to comply with two infringement notices handed down by the MDP. The first infringement notice relates to the operation, use and monitoring of a crossing system known as the UBS Price Improvement Network. The second infringement notice relates to incorrect disclosures in crossing confirmations about execution venue and trading as principal, and the provision of incorrect regulatory data to market operators.

ASIC reports on conduct in funds management
ASIC has reported the findings of its surveillance of responsible entities' compliance with legal obligations, and has made recommendations to improve compliance in line with a model of 'what good looks like' in the funds management sector. Recommendations include:

  • ensuring professional indemnity coverage is adequate for the nature, size and complexity of the responsible entity's business;
  • reviewing and, where necessary, strengthening their conflicts management measures;
  • reviewing custody measures to ensure they meet the requirements;
  • accountability from top management about disputes;
  • reviewing and strengthening existing cyber resilience measures; focusing on the board's role in influencing the culture of the organisation;
  • alignment of remuneration, rewards and incentives with the values of the responsible entity;
  • having in place appropriate whistle-blowing measures; and
  • measures that reflect a consumer-focussed culture.