ASIC considers automatic MIS registration
The Australian Securities and Investments Commission (ASIC) will consider allowing managed investment schemes (MIS) to be automatically registered after they lodge an application, while non-compliant schemes will be halted by stop-orders after registration.
The suggestion by ASIC is part of a report released by the regulator regarding efforts to deregulate the sector, but comes as a Senate Inquiry is about to release its report on the work of ASIC in recent years. Many of the submissions to the inquiry questioned the role and presence of ASIC in the failure of Westpoint, Storm and other MIS arrangements.
ASIC has suggested replacing the 14-day registration period with an automatic registration period and introducing stop orders and direction powers into the relevant legislation to prevent the operation of non-compliant schemes.
In the report ASIC stated these provisions would operate as an alternative to scheme deregistration and would enable the regulator to stop the issuance of interests in an MIS — either on an interim or final basis — and require MIS to make the amendments required to comply with the Corporations Act.
ASIC stated a similar scheme was already in operation with product disclosure statements (PDS). It said the shift would mean MIS are assessed and monitored using a risk-based approach, with only higher-risk schemes being examined more closely.
ASIC said it would also consider shifting the emphasis of disclosure documents away from information that must be disclosed by issuers to tools to help investors better understand the product.
The regulator stated it would begin work on a pilot program with a small number of product issuers. It would be based around the provision of a key fact sheet with minimum prescribed content regarding the MIS, along with an investor self-assessment form to measure whether the product was suitable for the investor.
ASIC said the pilot would measure the efficacy of documents in promoting investor understanding, before wider consultation with product issuers. Issuers who used this approach would not be required to issue a PDS that complies with the shorter PDS regime.
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