ASIC Makes Moves for Online Securities

National financial sector watchdog
the Australian Securities Investment
(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.

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