09 November 2016

Treasury revises the proposed industry funding model for ASIC

This article was written by Jim Boynton & Kenneth Tam. 

This week, the Australian Treasury released a proposals paper to introduce an industry funding model for ASIC. The intended timeline for implementation provides that the funding model will commence in the second half of 2017, with the first payable bill issued in early 2019. According to the proposals paper, we can expect to see draft legislation by March 2017.

Our previous alert on this topic is available here.

Levies and user pays fees

Under the proposed model, approximately 88% of ASIC’s regulatory costs will be recovered through levies, with the remainder recovered through fees-for-service. The amount of the levies are calculated each year in accordance with a 2-step process. First, levies are allocated to each subsector based on ASIC’s actual reported regulatory effort for the previous year. These levies are then divided and allocated to each individual entity based on an actual reported business activity metric or for some subsectors, a flat levy.

The total levy payable by an entity will depend on the number of subsector levies that an entity triggers.

This alert highlights some of the potentially significant levies.

Public companies

A proposed annual levy applies to publicly listed disclosing companies, who will pay a base levy of $4,000 plus approximately $33 per $1 million of market capitalisation above $5 million, up to a levy cap of $662,000. This cap is significantly higher than the previous proposed limit of $320,000. There are flat annual levies for other company types.

Investment management, superannuation and related services

The entities that bear the predominant burden for regulatory costs in this category are responsible entities (REs), super trustees, wholesale trustees and investor direct portfolio services (IDPS) operators. The proposed levies for 2017/18 are approximately:

  • Superannuation trustee: $18,000 plus $5 per each $1 million under management greater than $250 million
  • Responsible entity: $7,000 plus $24 per each $1 million under management greater than $10 million
  • IDPS operator: a flat $47,000 for 2017/18, shifting to a graduated levy in 2018/19 based on revenue from IDPS activity with a minimum levy

An entity that acts in all 3 capacities will pay an aggregated levy. Its other activities (eg securities dealing, acting as a wholesale trustee and investment banking) will further add to the entity’s levy.

Are you an investment bank without knowing it?

The “Market infrastructure and intermediaries” subsector includes significant fees for “investment banks”. “Investment bank” is broadly defined. It potentially captures institutional corporate advisers, underwriters of any financial products as well as custodians, fund managers, trustees and others that engage in securities lending and repurchase arrangements. This is because the proposed definition turns on providing the following services:

  • financial product advice to wholesale clients in the course of advising on any of the following:
    • takeover bids or merger proposals;
    • the structure, pricing, acquisition or disposal of assets or enterprises;
    • raising or reducing capital through the issue or acquisition of equity or debt;
    • managing risk through dealing in OTC derivatives; or
  • dealing in a financial product by underwriting the issue, acquisition or sale of financial products; or
  • dealing in financial products in the course of securities lending arrangements or under a securities repurchase agreement for the acquisition of particular securities.

Investment banks will be charged $1,000 plus a graduated levy based on the group’s share of total Australian sourced revenue from investment banking activities above $100,000.

For an example of how the various levies interact for a listed investment bank, please see this example. In that example the bank would pay a 2017/18 levy of over $1.5 million.


The Government is currently inviting submissions by 16 December 2016 as part of its consultation.

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