OTC derivatives trading in Australia – are you playing by the rules?

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Yesterday we mentioned AFSL obligations in relation to OTC derivatives trading by electricity retailers who operate under an energy retail authorisation.  Today we look at this area in more detail.     By Dr Drew Donnelly, Compliance Quarter. So, what are the rules for OTC derivatives trading? Today’s article is an introduction to the regulatory framework for OTC derivatives in Australia. It is the first of three articles on derivatives trading and compliance. Subsequent articles will look at the rules as they relate to wholesale electricity markets as well as a new law aiming to protect client money provided to retail derivative clients. What are derivatives? Derivatives are a type of financial instrument. They can be distinguished from other financial instruments, such as shares and bonds in that the value…
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Electricity Retail Authorisation from the AER

Electricity Retail Authorisation from the AER

AU Energy Compliance
So you are considering obtaining an electricity retail authorisation from the AER and an electricity retail licence from Victoria, read on to learn about the process.It is an interesting time in the Australian energy market. The energy market is currently characterised by structural change and policy uncertainty. For some, this need for change equals opportunity. Below, we talk about the State of the Energy Market and some of the key steps you would need to take to become an electricity retailer (in the eastern states other than Victoria). If you're asking "How do I obtain an electricity retail licence?" then please feel free to contact us by clicking here and/or read on!  The Energy Market: Uncertainty and ChangeThe energy market in Australia is going through significant structural change (and a…
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AER releases new billing compliance checks for energy retailers

AER releases new billing compliance checks for energy retailers

AU Energy Compliance
We recently looked at changes to compliance reporting guidelines issued by the Australian Energy Regulator (AER), today we examine three new compliance checks published by the AER that energy retailers should review.     By Anne Wardell, Compliance Quarter. The AER has released three new compliance checks setting out the obligations which must be met under the National Energy Retail Rules. The new compliance checks were issued on 28 June 2017 and cover: Bill content, frequency and payment method, (Compliance check #2017-01); Calculating and basis for bills, (Compliance check #2017-02); and Billing complaints and incorrect charges, (Compliance check #2017-03). The new compliance checks are available on the AER website at Retail Markets > Compliance. The information contained in each of the new compliance checks is based on the requirements contained…
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The AUSTRAC risk management tool: Are you meeting your obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006?

The AUSTRAC risk management tool: Are you meeting your obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006?

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  By Dr. Drew Donnelly, Compliance Quarter. Last month in Financial crime doesn’t pay – three ways in which wrongdoers may soon be hit in the pocket we addressed the government’s increasing crackdown on financial crime and wrongdoing and those who would (even unwittingly) facilitate it. We mentioned the recent court case involving Tabcorp where the organisation agreed to pay $45 million for failing to meet its obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (the Act). Today we take a closer look at the requirements of the Act. Specifically, we look at the risk-management obligations for small-to-medium sized enterprises (SMEs) under that Act and its associated regulatory regime. This should be particularly pressing for SMEs, given that the Australian Transaction Reports & Analysis Centre (AUSTRAC) recently identified…
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Three areas where blockchain could revolutionise compliance in Australia

Three areas where blockchain could revolutionise compliance in Australia

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By Dr. Drew Donnelly, Compliance Quarter. In our last article on blockchain, Understanding smart contracts, we talked through an example of how blockchain could be utilised to implement a smart contract for the purchase of a ‘smart’ refrigerator, including the registration of a security interest. This suggests one way in which blockchain could be used to ensure regulatory compliance; the Personal Property Securities Register (PPSR) could be integrated into blockchain adding an extra level of protection to a security interest. In Future possibilities for Australian business with blockchain we talked in general terms about how blockchain might be used to ensure compliance with identity management and corporate governance requirements. In this article, we look at three specific areas of regulatory compliance in Australia where there are already signs that blockchain…
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Understanding smart contracts

Understanding smart contracts

Consumer, Uncategorized
    By Dr Drew Donnelly, Compliance Quarter. Continuing in our series of posts on blockchain and related financial technology, today we look at how blockchain might facilitate a new legal instrument; smart contracts. We define smart contracts, provide an explanatory example and look at some of the inherent limitations of the instrument. A smart contract is… To understand smart contracts, it is useful to think about blockchain again and how it facilitates the transfer of digital currency (sometimes called ‘cryptocurrency’). Blockchain is a distributed ledger or network with an inbuilt process for validating transactions and permanently recording them. Through its inbuilt verification process, the blockchain can validate the transfer of a currency such as bitcoin or ethereum from one person to another. Consider, however, that the transfer of money…
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Exempt Sellers: the Requirement to hold an Electricity Retail Authorisation or exemption

Exempt Sellers: the Requirement to hold an Electricity Retail Authorisation or exemption

AU Energy Compliance
By Anne Wardell and Connor James, Compliance Quarter. A variety of businesses are involved in the sale of energy. These businesses include caravan parks, building managers, shopping centres, office buildings, airports, industrial parks and solar power providers. Below we look at when an electricity retail authorisation is required and when a person or business can operate under an exemption. Energy sellers in the Eastern States of Australia must either operate under licence or an exemption. The sale of energy, under the Retail Law, includes the sale of energy at cost, i.e. without profit. Our previous articles look at some of the changes proposed in this area. National Energy Consumer Framework The Eastern States (except Victoria) are governed by the National Energy Retail Rules (‘Retail Rules’) and National Energy Retail Law…
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From fintech to regtech: a new area for innovation focus

From fintech to regtech: a new area for innovation focus

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By Dr Drew Donnelly, Compliance Quarter. Today, continuing in our series of articles concerning developments in the fintech regulatory space (including blockchain), we discuss regulatory technology or ‘regtech’. Specifically, we look at a recent report from the Australian Securities & Investments Commission (ASIC) on its fostering of the sector. What is regtech? In many industries, both in Australia and internationally, regulatory compliance is becoming increasing complex – and costly. At the same time the risk of non-compliance for a business is growing, both through increased enforcement and the potential for reputational damage. By way of example, in Budget 2017 and financial services: an opening for the minnows and a warning for the sharks, we discussed the Government’s implementation of a new banking executive accountability regime, as well as increased funding…
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Future possibilities for Australian business with blockchain

Future possibilities for Australian business with blockchain

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    By Dr Drew Donnelly, Compliance Quarter. Last year, the Federal Government announced its commitment to Australia being a world-leader in Financial Technology (fintech). One aspect of this is fostering the use of digital currency (such as ‘bitcoin’) in Australia. In Three ways that financial technology changes can grow your business, we discussed the Government’s recent support for the use of digital currency through removing the ‘double GST’ which often applies to digital currency transactions. In its fintech priorities (read here at http://fintech.treasury.gov.au/australias-fintech-priorities), the Government also confirms its support for fostering ‘blockchain’ technology in Australia. So, what is blockchain? And how might it revolutionise Australian industry and government administration? What is Blockchain? Blockchain is a distributed ledger system, originally created to support the use of digital currencies such as…
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The Australia-Hong Kong Fintech Agreement: Q & A

The Australia-Hong Kong Fintech Agreement: Q & A

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  By Dr Drew Donnelly, Compliance Quarter. On 13 June, The Hong Kong Securities and Futures Commission (SFC) and Australian Securities & Investments Commission (ASIC) signed a Cooperation Agreement on financial technology (fintech or FinTech). This agreement aims to facilitate the sharing of information about fintech developments and to assist fintech firms looking to operate in one another's jurisdictions. Last month, we discussed the expansion of the ‘regulatory sandbox’ for fintech in Australia through ASIC’s Innovation Hub. Hong Kong has a similar regulatory sandbox and this agreement will mean that the respective hubs will be able to refer businesses from their own jurisdiction to the other for advice and support. In today’s article, we suggest three questions you might have about the agreement and provide our answers based on the…
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