Custodial services and asset administration professionals have been implored by the sector’s peak body to take a more hands-on role with its policy work in 2017, as their industry faces continuing regulatory challenges.
The Australian Custodial Services Association (ACSA) has released its 2016 Year in Review, which also identifies challenges it sees on the horizon for the year ahead. The report highlights five expected changes in the regulatory environment, four tax reforms and three shake-ups in investment operations.
ACSA chair David Knights called on members to become more involved in the working group committees to help position the industry for these upcoming changes.
“The success of ACSA highly depends on its volunteers, who work towards raising the industry profile and benefit from networking and professional development opportunities in return,” Knights said.
The implementation of Collective Investment Vehicles (CIV) is at the top of ACSA’s list of changes on which it will focus. It plans to continue to consult with Treasury, with the aim of improving the global competitiveness of the Australian funds management sector by bringing it more in line with a number of other jurisdictions that commonly use CIVs.
The peak body is also engaging in further consultation on Corporate CIV before its scheduled launched on July 1, 2017.
Two other areas of focus are the ongoing derivatives reform, which is expected to enhance over-the-counter clearing processes, and better custodial definitions for the syndicated loan asset class.
“The industry is also collaborating to facilitate the implementation of ASIC Regulatory Guide 97 next year, to improve disclosure on fees and costs for both managed investment schemes and superannuation funds,” Knights said.
On the tax front, the industry is collaborating on the managed investment trust (MIT) reforms, intended to reduce complexity, increase certainty and minimise compliance costs for MITs and their investors.
There will also be increased focus on withholding tax for newly proposed investment structures. Tax of Financial Arrangements rules will also get its share of attention, as consultation continues on how to simplify them.
The fourth area of change comes because of the Tax Laws Amendment. As a result of this, the OECD Common Reporting Standard will now come into effect on July 1, 2017.
Operations (and corporate actions)
In back-office investment operations, the proposed CHESS replacement, improvements in the standardisation of processing of discount securities and upgrades to proxy voting automation are all on the agenda for ACSA, Knights said.
“The year 2017 is shaping up to be another [one] of change and ACSA is well positioned to help the industry meet these new challenges,” he said.
In 2016, ACSA facilitated the implementation of the new Accounting Standard AASB 1056 for Superannuation Entities, and the rollout of ASIC Regulatory Guide 133, for managed investments and custodial services. The year 2016 also marked a movement to T+2 days settlement, from T+3 previously, to improve efficiency of the Australian markets and make it on par with global standards.