ASIC Supervisory Cost Recovery Levy Amendment Act 2018

The ASIC Supervisory Cost Recovery Levy Amendment Act 2018 is a short Commonwealth amending Act. Its stated purpose is to amend the ASIC Supervisory Cost Recovery Levy Act 2017, and for related purposes. The operative change in the available text sits in Schedule 1, which deals with financial benchmarks.

The amendment does not create a standalone new compliance code. Instead, it changes the levy law by expanding the definition of market infrastructure entity in section 7 of the ASIC Supervisory Cost Recovery Levy Act 2017. That is the key practical point. Once a business or person is brought into that defined population, the principal levy framework becomes relevant.

The Schedule inserts two benchmark-related categories. First, it adds a benchmark administrator licensee, using the meaning from the Corporations Act 2001. Second, it adds a person who administers a significant financial benchmark and contravenes subsection 908BA(1) of the Corporations Act 2001, which the Act identifies as the requirement to hold a benchmark administrator licence in relation to that benchmark.

The clearest businesses and persons in scope are those expressly named by the amendment. That includes a benchmark administrator licensee within the meaning of the Corporations Act 2001. It also includes a person who administers a significant financial benchmark and is in contravention of the requirement to hold a benchmark administrator licence for that benchmark.

This means the amendment is activity-based and status-based. It is not enough to say a business operates in finance generally. The relevant question is whether the business falls into one of the benchmark administration categories inserted into the levy law. A business may be highly regulated in other ways and still not be affected by this particular amendment if it is not administering a significant financial benchmark.

Businesses that may need to look closely at this include specialist benchmark operators, index or data businesses whose products are used as benchmarks, fintechs expanding into benchmark publication or methodology management, and corporate groups where benchmark functions are split across entities. The legal operator may not be obvious from the commercial structure.

Most businesses are usually outside the practical scope. That includes ordinary retailers, professional services firms, hospitality businesses, manufacturers, trades and most software startups. Even within financial services, many businesses will only use benchmarks rather than administer them. The amendment is directed at administration of significant financial benchmarks, not ordinary use of benchmark information.

The practical trigger is not the title of the Act. The trigger is the underlying business activity and legal status. If your business administers a significant financial benchmark, or may need a benchmark administrator licence, this amendment should be part of your compliance review.

A common trigger point is product evolution. A business may begin as a data provider, software platform or analytics service and later move into setting methodology, publishing values, maintaining benchmark rules or otherwise administering a benchmark. At that point, the legal analysis may change. If the benchmark is significant, licensing and levy questions can arise together.

Another trigger point is a group restructure or outsourcing arrangement. One entity may own the brand, another may maintain the methodology, and another may publish or operate the benchmark. The amendment makes entity classification important because the levy law works by identifying the relevant person or entity. Internal descriptions such as platform owner or product lead do not necessarily answer the legal question.

A further trigger point is where a business has assumed no licence is required. The text of the amendment expressly captures a person who administers a significant financial benchmark while contravening the requirement to hold a benchmark administrator licence. That means a business should not assume that being unlicensed keeps it outside the levy framework.

This amending Act is short, so it does not list every operational step a business must take under the broader levy regime. What it does clearly show is the connection between benchmark administrator licensing status and inclusion in the levy law's market infrastructure entity definition.

In practice, businesses in this area should first classify their activities correctly. The starting point is whether they are administering a significant financial benchmark and whether they are, or should be, a benchmark administrator licensee. If the answer may be yes, the principal levy legislation needs to be reviewed as part of the same exercise.

The amendment also highlights a risk that legal and finance teams sometimes treat separately. Licensing and levy exposure are linked here. A business that focuses only on licensing may miss levy consequences. A business that focuses only on levy notices may miss the underlying licensing issue. The text points to both.

Record-keeping is also important. Where multiple entities are involved, businesses should be able to show which entity administers the benchmark, what the benchmark is, and the basis on which the business considers itself licensed, not required to be licensed, or otherwise outside the relevant category. That helps with governance, budgeting and regulator engagement.

Businesses near the benchmark administration line should review both documents and actual conduct. Product descriptions, methodology documents, customer materials, website statements, internal governance papers and group service arrangements may all be relevant to understanding who administers the benchmark and what the business is really doing.

Conduct matters just as much as labels. A business may describe itself as a technology provider, but if it sets benchmark methodology, controls publication, determines calculation rules or otherwise administers the benchmark, the legal analysis may point in a different direction. The amendment is drafted by reference to benchmark administration and licensing status, not marketing language.

Corporate groups should also review intercompany arrangements. If one entity develops the benchmark and another entity publishes or maintains it, the group should not assume the answer is obvious. The legal operator should be identified clearly enough to support both licensing analysis and levy analysis.

For budgeting purposes, businesses in scope should also make sure finance teams know that supervisory cost recovery issues may arise under the principal levy framework. This Act does not set out the full charging mechanics, but it does determine who can be brought into the relevant population by these benchmark-related amendments.

Example 1. A fintech business creates and publishes an index used by counterparties in financial products. The founders think of the business as a software company. The legal question, however, is whether the company is administering a significant financial benchmark. If it is, the business may need to consider both benchmark administrator licensing and levy exposure.

Example 2. A corporate group has one entity that designs benchmark methodology and another that publishes benchmark values. If the group has not clearly identified which entity is the administrator, it may be difficult to assess who is in scope for licensing and levy purposes. That uncertainty can create avoidable compliance risk.

Example 3. A business has been operating on the assumption that its benchmark is not significant and therefore no licence is needed. If that assumption is wrong, the amendment shows that unlicensed operation does not necessarily keep the business outside the levy framework. The text expressly includes a person who administers a significant financial benchmark while contravening the licensing requirement.

The Act received Royal Assent on 11 April 2018. Sections 1 to 3 and anything not otherwise covered commenced on that day. Schedule 1 commenced at the same time as Part 1 of Schedule 1 to the Treasury Laws Amendment (2017 Measures No. 5) Act 2018. The commencement table records that date as 12 April 2018.

The legislation register entry identifies the Act as in force. As with any short amending Act, businesses should still check the current consolidated text of the principal legislation and the current Corporations Act framework before relying on a summary alone.

Before relying on this page for a live compliance decision, a business should confirm three things. First, whether its activities amount to administering a significant financial benchmark. Second, whether the relevant entity is, or should be, a benchmark administrator licensee under the Corporations Act 2001. Third, how the current ASIC Supervisory Cost Recovery Levy Act 2017 and any related materials apply once the entity is within the market infrastructure entity definition.

This is especially important for businesses with changing products, shared service models, outsourced benchmark functions or cross-entity operating arrangements. The amendment itself is clear, but it works by plugging benchmark-related persons into a broader levy framework and by using concepts defined elsewhere.

This page is based on the Federal Register of Legislation text for the ASIC Supervisory Cost Recovery Levy Amendment Act 2018, No. 24 of 2018. The available text confirms the short title, commencement provisions and the Schedule 1 amendments to the definition of market infrastructure entity in the ASIC Supervisory Cost Recovery Levy Act 2017.

The text also confirms that the amendment adds benchmark administrator licensees and certain unlicensed administrators of significant financial benchmarks to that definition, with the Corporations Act 2001 supplying the relevant benchmark concepts and the licensing requirement referred to in subsection 908BA(1).