Following consultation and the passage of the Treasury Laws Amendment (2016 Measures No. 1) Act 2017 and the Corporations Amendment (Client Money) Regulations 2017 earlier this year, ASIC has released the ASIC Client Money Reporting Rules 2017 (Rules). The Rules will impose record-keeping, reconciliation and reporting obligations on Australian financial services licensees (AFS Licensees) that hold ‘derivative retail client money’ within the meaning of the Corporations Act 2001 (Cth), unless the client money relates to a derivative that is traded on a fully licensed domestic market, such as ASX 24.
In summary, AFS Licensees will be required to:
- keep records of reportable client money it has received from, on behalf of, or for the benefit of each client;
- perform daily and monthly reconciliations of the amount of reportable client money held in a client money account; and
- establish and implement policies and procedures designed to ensure compliance with the rules.
ASIC has also published Information Sheet 226 Complying with the ASIC Client Money Reporting Rules 2017 to help AFS licensees comply with their obligations under the client money rules.
The Rules will commence on 4 April 2018, at the same time the other client money reforms take effect. This gives AFS Licensees a six month transition period to ensure they have the necessary systems, policies and procedures for complying with the Rules in place.
See ASIC’s media release dated 10 October 2017 for further information.