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ASIC Makes Moves for Online Securities

National financial sector watchdog the Australian Securities Investment Commission (ASIC) has sought to pave the way for a fully electronic system for offering securities, with the release of its latest policy statement on electronic applications on securities.

Policy Statement 150, on 'electronic applications and dealer personalised applications', follows a policy proposal paper on the issue which was released for public discussion last September.

The proposal paper canvassed the regulatory circumstances of allowing issuers of securities to do business electronically. This includes receiving electronic applications for securities.

In its new policy statement, ASIC has allowed granted relief from certain legal restrictions, in the interest of furthering the acceptance of the technology within the securities sector.

Part of this is relief granted from federal Corporations Law. This provision will allow issuers to receive electronic applications for securities without using electronic copies of the paper application forms that are lodged with the paper prospectus.

Key to this relief is that investors gain access to the relevant prospectus and same information when they apply for securities as an investor who uses a paper application form.

Issuers will be given free reign in developing the technological infrastructure behind their electronic application processes. The watchdog said, however, that it will monitor these processes to ensure they comply with its code of conduct.

ASIC has also granted relief to allow licensed dealers to personalise and issue securities application forms that are created either by themselves or by issuers. In addition to these forms, though, dealers must give clients a copy of the relevant prospectus.

This customised form offers dealers continued recognition with clients in the online space, however ASIC will require any personalised form contain all of the information in the issuer's application form that is material to a decision to invest in the securities.