ASIC Regulatory Guide 166 AFS Licensing: Financial Requirements (Australia)
ASIC Regulatory Guide 166 (July 2022), the financial requirements that Australian financial services licensees must meet under their licence conditions: solvency and positive net assets, the cash needs requirement met by one of five options with a projection the governing body approves, the annual audit report on compliance, surplus liquid funds where client money or property is held, adjusted surplus liquid funds with monthly certification and ASIC reporting triggers where the licensee deals as principal, the definitions of adjusted assets, adjusted liabilities, net tangible assets, eligible undertakings and excluded assets, and the tailored requirements for market participants, responsible entities, IDPS operators, custodians, margin lenders, foreign exchange dealers, retail OTC derivative issuers, crowd-sourced funding intermediaries and corporate directors of retail CCIVs.
ASIC Regulatory Guide 166 AFS Licensing: Financial Requirements (Australia) is a compliance framework from Australia with 4 domains and 12 controls. The largest domains are Appendices 1 to 9: tailored requirements for market participants, responsible entities, IDPS operators, custodians, margin lenders, foreign exchange dealers, retail OTC derivative issuers, crowd-sourced funding intermediaries and corporate directors of retail CCIVs – ASIC Regulatory Guide 166 AFS Licensing: Financial Requirements (Australia) (6 controls), Section B: the base level financial requirements (solvency and positive net assets, cash needs, audit) – ASIC Regulatory Guide 166 AFS Licensing: Financial Requirements (Australia) (3 controls), Sections C and D: the surplus liquid funds and adjusted surplus liquid funds requirements – ASIC Regulatory Guide 166 AFS Licensing: Financial Requirements (Australia) (2 controls). Every control below carries what it requires and what an assessor expects to see.
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Framework Domains (4)
Appendices 1 to 9: tailored requirements for market participants, responsible entities, IDPS operators, custodians, margin lenders, foreign exchange dealers, retail OTC derivative issuers, crowd-sourced funding intermediaries and corporate directors of retail CCIVs – ASIC Regulatory Guide 166 AFS Licensing: Financial Requirements (Australia)
| Code | Title |
|---|---|
| asic-regulatory-guide-166-afs-licensing-financial-requirements-australia::rg166-app1-market-participants | Market and clearing participants may rely on the financial requirements of a licensed market or clearing facility that ASIC has assessed as adequate, and must meet ASIC's requirements if that assessment lapses |
| asic-regulatory-guide-166-afs-licensing-financial-requirements-australia::rg166-app2-3-responsible-entities-idps | Responsible entities and IDPS operators meet tailored cash needs (twelve-month projection), tailored audit and net tangible asset requirements: the greater of one hundred fifty thousand dollars, one half of one per cent of scheme or IDPS property up to a cap of five million, or ten per cent of average revenue, with half held in cash or cash equivalents and the rest in liquid assets, reduced where an eligible custodian holds the assets |
| asic-regulatory-guide-166-afs-licensing-financial-requirements-australia::rg166-app4-custodians | Licensed custodial or depository service providers hold net tangible assets of at least ten million dollars (or the incidental provider level), meet the tailored cash needs and audit requirements, and give the written assurances clients rely on |
| asic-regulatory-guide-166-afs-licensing-financial-requirements-australia::rg166-app5-6-margin-lenders-fx-dealers | Margin lending facility issuers hold the adjusted surplus liquid funds requirement with the margin lending adjustments, and foreign exchange dealers may use the alternative treatments for their foreign exchange contracts |
| asic-regulatory-guide-166-afs-licensing-financial-requirements-australia::rg166-app7-retail-otc-derivative-issuers | Retail over-the-counter derivative issuers hold net tangible assets of the greater of one million dollars or ten per cent of average revenue, with half in cash or cash equivalents, prepare a twelve-month projection with stress scenarios approved by directors, and report to ASIC at the seventy-five and one hundred per cent triggers |
| asic-regulatory-guide-166-afs-licensing-financial-requirements-australia::rg166-app8-9-csf-intermediaries-corporate-directors | Crowd-sourced funding intermediaries meet the tailored twelve-month cash needs and audit requirements; corporate directors of retail CCIVs meet the responsible entity-style NTA, cash needs and audit requirements calculated on CCIV assets |
Section B: the base level financial requirements (solvency and positive net assets, cash needs, audit) – ASIC Regulatory Guide 166 AFS Licensing: Financial Requirements (Australia)
| Code | Title |
|---|---|
| asic-regulatory-guide-166-afs-licensing-financial-requirements-australia::rg166-b-audit | Lodge the annual audit report in which the auditor opines on the financial requirements, the cash needs documentation and internal controls, with negative assurance where ASIC specifies |
| asic-regulatory-guide-166-afs-licensing-financial-requirements-australia::rg166-b-cash-needs | Meet the cash needs requirement by one of the five options, with a rolling three-month cash flow projection (or twelve months for some licensees) approved by the governing body and updated when the projection ceases to hold |
| asic-regulatory-guide-166-afs-licensing-financial-requirements-australia::rg166-b-solvency-net-assets | Be solvent at all times and keep total assets above total liabilities, as shown in the balance sheet and in the required projections |
Section E: definitions for calculating the requirements (adjusted assets, liabilities, NTA, eligible undertakings, excluded assets) – ASIC Regulatory Guide 166 AFS Licensing: Financial Requirements (Australia)
| Code | Title |
|---|---|
| asic-regulatory-guide-166-afs-licensing-financial-requirements-australia::rg166-e-definitions-adjusted-assets-liabilities-nta | Calculate adjusted assets, adjusted liabilities and net tangible assets on ASIC's definitions: exclude intangible and related-party assets, apply the standard discounts, add back subordinated debt only where approved, and recognise eligible undertakings on their terms |
Sections C and D: the surplus liquid funds and adjusted surplus liquid funds requirements – ASIC Regulatory Guide 166 AFS Licensing: Financial Requirements (Australia)
| Code | Title |
|---|---|
| asic-regulatory-guide-166-afs-licensing-financial-requirements-australia::rg166-c-surplus-liquid-funds | Hold surplus liquid funds of at least fifty thousand dollars plus five per cent of adjusted liabilities over one million up to ten million, and the lower marginal rate above, where the licensee holds more than one hundred thousand dollars of client money or property |
| asic-regulatory-guide-166-afs-licensing-financial-requirements-australia::rg166-d-adjusted-surplus-liquid-funds | Where the licensee transacts with clients as principal, hold adjusted surplus liquid funds covering five per cent of adjusted liabilities over the thresholds and the counterparty and market risk adjustments, with monthly certification, governing body affirmation and reporting triggers |
What is ASIC Regulatory Guide 166 AFS Licensing: Financial Requirements (Australia) and who does it apply to?
ASIC Regulatory Guide 166 AFS Licensing: Financial Requirements (Australia) is a compliance framework from Australia with 4 domains and 12 controls. ASIC Regulatory Guide 166 (July 2022), the financial requirements that Australian financial services licensees must meet under their licence conditions: solvency and positive net assets, the cash needs requirement met by one of five options with a projection the governing body approves, the annual audit report on compliance, surplus liquid funds where client money or property is held, adjusted surplus liquid funds with monthly certification and ASIC reporting triggers where the licensee deals as principal, the definitions of adjusted assets, adjusted liabilities, net tangible assets, eligible undertakings and excluded assets, and the tailored requirements for market participants, responsible entities, IDPS operators, custodians, margin lenders, foreign exchange dealers, retail OTC derivative issuers, crowd-sourced funding intermediaries and corporate directors of retail CCIVs. It is used by organisations to establish and maintain compliance with industry standards and regulatory requirements.
What does ASIC Regulatory Guide 166 AFS Licensing: Financial Requirements (Australia) actually require?
ASIC Regulatory Guide 166 AFS Licensing: Financial Requirements (Australia) has 12 controls organised across 4 domains. The largest domains are Appendices 1 to 9: tailored requirements for market participants, responsible entities, IDPS operators, custodians, margin lenders, foreign exchange dealers, retail OTC derivative issuers, crowd-sourced funding intermediaries and corporate directors of retail CCIVs – ASIC Regulatory Guide 166 AFS Licensing: Financial Requirements (Australia) (6 controls), Section B: the base level financial requirements (solvency and positive net assets, cash needs, audit) – ASIC Regulatory Guide 166 AFS Licensing: Financial Requirements (Australia) (3 controls), Sections C and D: the surplus liquid funds and adjusted surplus liquid funds requirements – ASIC Regulatory Guide 166 AFS Licensing: Financial Requirements (Australia) (2 controls). Each control defines specific requirements that organisations must implement to achieve compliance.
If I already comply with another framework, how much of ASIC Regulatory Guide 166 AFS Licensing: Financial Requirements (Australia) do I already cover?
ASIC Regulatory Guide 166 AFS Licensing: Financial Requirements (Australia) does not currently have cross-framework mappings in our system. Check back as we continuously expand our mapping database.
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