John Williams (NSW, National Party) Share this | Hansard source

I rise to make a few brief comments in support of schedule 5 of this bill, the Treasury Laws Amendment (2017 Measures No. 1) Bill 2017, that relate to strengthening client money protection in the retail or over-the-counter derivatives area. This legislation brings Australia into line with global and industry best-practice regulations in handling client money and ensures retail investors are better protected. It fixes an anomaly where investors in CFD and FX products were potentially exposed to losing their funds in insolvencies, frauds or mismanagement as, until now, licensees in this area could actually use client money for their own purpose.

This was at odds with virtually all other jurisdictions around the world and other asset classes such as shares. These reforms provide ASIC with the power to effectively monitor the limitations on the use of derivative client money by enabling ASIC to make client money reconciliation and reporting rules. I commend ASIC for pushing for these reforms. It is now up to ASIC and the industry to work together to implement the new regulatory environment.

I would like to also commend the work of the industry body that has strongly supported and explained the need for these reforms, the Australian CFD and FX Forum, in particular a founder of the forum and a current director, Tamas Szabo, and his team. They have consistently called for this reform for almost a decade now, and the member firms of the forum long ago self-regulated to properly segregate their client moneys. Forum members also took the initiative to form themselves into an industry association with the goal of working with regulators to boost investor confidence. They have formulated best practice standards, had them examined and authorised by the ACCC and now all voluntarily adhere to them. Apart from segregating and properly handling all client moneys, the standards cover communications and education materials, client qualifications, risk management and collateral, trading policy, appropriate hedging and financing, and customer relations protocols.

As I have said many times, the key for better investor outcomes is transparency and regulatory protection to allow investors to educate themselves about and understand the investments they are making, while providing them with a secure regulatory environment that prevents losses outside their control and judgement. Schedule 5 of the bill is another step in the right direction and I commend the bill to the Senate.