ASIC releases guidance and policy proposals for carbon financial products

The Australian Securities and Investments Commission (ASIC) recently released regulatory guidance to help businesses comply with their financial services legal requirements leading up to the introduction of Australia’s carbon pricing mechanism.

From 1 July 2012, emissions units recognised under the carbon pricing mechanism will be financial products under the Corporations Act 2001. ASIC will be responsible for regulating entities and individuals who provide financial services in relation to emissions units.

ASIC’s Regulatory Guide 236 ‘Do I need a licence to participate in carbon markets?’ (RG 236) is designed to help entities and individuals understand whether they require an Australian financial services (AFS) licence to provide financial product advice and other financial services in relation to carbon markets and emissions units.

RG 236 provides:

• an introduction to ASIC’s role in relation to carbon markets and emissions units;
• details regarding which emissions units are financial products and when you’re likely to require an AFS licence; and
• an outline of the steps required to apply for an AFS licence or vary an existing licence.

ASIC will accept applications for new AFS licences or licence variations relating to emissions units when regulations amending the Corporations Act are finalised. This is likely to occur by May 2012. ASIC will provide further details on their website about when applications can be lodged as soon as possible.

ASIC is also consulting on proposals for applying its current AFS licensing policies to licensees providing financial services in relation to emissions units. Consultation Paper 175 ‘Carbon markets: Training and financial requirements’ (CP 175) invites feedback on proposals for applying current polices on training for financial product advisers and financial requirements to these licensees.

ASIC is seeking comments on these proposals by Tuesday 10 April 2012.