ASIC RG 148 — ASIC Regulatory Guide – RG 148 Platforms that are managed investment schemes and nominee and custody services

Page 1 REGULATORY GUIDE 148 Platforms that are managed investment schemes and nominee and custody services February 2024 About this guide This guide is for:  platform operators (including operators of investor directed portfolio services (IDPSs) and responsible entities of IDPS-like schemes), issuers of investments available through platforms and people who provide financial product advice on platforms; and  operators and people involved in the operation of nominee and custody services. It explains:  our objectives when regulating, and the requirements for operating, platforms and nominee and custody services, and the related disclosure obligations; and  some of the obligations when issuing investments acquired through a platform or a nominee and custody service, and of financial product advisers who give advice about platforms. Page 2 REGULATORY GUIDE 148: Platforms that are managed investment schemes and nominee and custody services © Australian Securities and Investments Commission February 2024 Page 2 About ASIC regulatory documents In administering legislation ASIC issues the following types of regulatory documents. Consultation papers: seek feedback from stakeholders on matters ASIC is considering, such as proposed relief or proposed regulatory guidance. Regulatory guides: give guidance to regulated entities by:  explaining when and how ASIC will exercise specific powers under legislation (primarily the Corporations Act)  explaining how ASIC interprets the law  describing the principles underlying ASIC’s approach  giving practical guidance (e.g. describing the steps of a process such as applying for a licence or giving practical examples of how regulated entities may decide to meet their obligations). Information sheets: provide concise guidance on a specific process or compliance issue or an overview of detailed guidance. Reports: describe ASIC compliance or relief activity or the results of a research project. Document history This guide was issued in February 2024 and is based on legislation and regulations as at the date of issue. In September 2022 we made technical and clarifying amendments to RG 148.29, RG 148.32(a), RG 148.39, RG 148.41, RG 148.43 (note), RG 148.68, RG 148.78 (note), RG 148.103–RG 148.104, RG 148.116, RG 148.167, and the definition of ‘financial product’. In June 2025, we updated references to reflect changes to RG 1 and related guidance. Previous versions:  Superseded Regulatory Guide 148 Platforms that are managed investment schemes and nominee and custody services, issued December 2016, reissued September 2017  Superseded Regulatory Guide 148 Platforms that are managed investment schemes, issued June 2013  Superseded Regulatory Guide 149 Nominee and custody services, issued January 2000, incorporated into Regulatory Guide 148 in December 2016 and withdrawn  Superseded Policy Statement 148 Investor directed portfolio services, issued January 2000, rebadged as a regulatory guide 5 July 2007 Disclaimer This guide does not constitute legal advice. We encourage you to seek your own professional advice to find out how the Corporations Act and other applicable laws apply to you, as it is your responsibility to determine your obligations. Examples in this guide are purely for illustration; they are not exhaustive and are not intended to impose or imply particular rules or requirements. Page 3 REGULATORY GUIDE 148: Platforms that are managed investment schemes and nominee and custody services © Australian Securities and Investments Commission February 2024 Page 3 Contents A Overview ........................................................................................... 4 What is meant by the term ‘platforms’? ............................................. 4 What is meant by the term ‘nominee and custody service’? ............. 7 What requirements apply? ................................................................. 7 Our objectives .................................................................................... 8 B Requirements for operating a platform or a nominee and custody service .............................................................................. 10 Overview of the requirements .......................................................... 10 Meet the corporate structure requirement ....................................... 11 Comply with AFS licence obligations and ASIC instruments .......... 12 Manage conflicts of interest ............................................................. 15 Perform your obligations honestly and with care and diligence ...... 16 Hold assets on trust ......................................................................... 16 Comply with your financial requirements ......................................... 17 Maintain adequate insurance........................................................... 17 Have in place a voting policy ........................................................... 18 Issuer/seller dispute resolution requirements .................................. 19 Have in place policies for investors who do not opt in to continuing to receive financial product advice ........................................................ 20 Maintain adequate internal control procedures ............................... 21 Agreement in writing if outsourcing ................................................. 22 Acquisitions of investments and prohibitions on certain investments 22 Specific requirements if offering securities ...................................... 25 Specific requirements for IDPS-like schemes ................................. 26 C General disclosure obligations for platform operators ............. 28 When is a document ‘given’ to a person? ........................................ 28 Providing an IDPS Guide ................................................................. 30 Complying with quarterly reporting obligations ................................ 33 Providing an annual investor statement and audit report ................ 34 Providing notices relating to assets (if requested) ........................... 36 Specific requirements for IDPS-like schemes ................................. 36 D Content disclosure obligations for platform operators ............. 37 General content and presentation ................................................... 37 Incorporation by reference ............................................................... 37 Access to non-materially adverse information ................................. 38 Consumer warnings ......................................................................... 39 Access to dispute resolution schemes ............................................ 42 Selection of investments .................................................................. 42 Fees and costs information.............................................................. 43 Updated disclosure .......................................................................... 44 Retaining copies of disclosure documents ...................................... 44 Specific requirements for IDPS-like schemes ................................. 44 E Obligations if providing financial product advice on platforms . 45 Providing financial product advice ................................................... 45 Exemption from providing a PDS .................................................... 45 Complying with the best interests duty ............................................ 46 Managing conflicts of interest .......................................................... 47 Content of advice and providing a Statement of Advice .................. 48 Key terms ............................................................................................... 51 Related information ............................................................................... 56 Page 4 REGULATORY GUIDE 148: Platforms that are managed investment schemes and nominee and custody services © Australian Securities and Investments Commission February 2024 Page 4 A Overview Key points This section provides an overview of our regulatory approach to: • investor directed portfolio services (IDPSs) and IDPS-like schemes (together, referred to as platforms); and • nominee and custody services. It explains: • what is meant by the terms ‘platform’ (see RG 148.1–RG 148.2) and the difference between an IDPS and an IDPS-like scheme (see RG 148.3– RG 148.7); • what is meant by the term ‘nominee and custody service’ (see RG 148.8–RG 148.9); • the requirements that apply to platforms and nominee and custody services (see RG 148.10–RG 148.13); and • our objectives when regulating platforms (see RG 148.14–RG 148.18) and nominee and custody services (see RG 148.19–RG 148.20). What is meant by the term ‘platforms’? RG 148.1 We recognise that, commercially, industry and investors generally refer to and understand the term ‘platforms’ to mean IDPSs and IDPS-like schemes, as well as superannuation master trusts and certain other superannuation funds. RG 148.2 In this guide, the term ‘platform’ means IDPS and IDPS-like schemes, unless a distinction needs to be made where different legal requirements apply, or in light of our historical position. References to ‘platform operators’ include both IDPS operators and responsible entities of IDPS-like schemes. The expression ‘platform’, as used in this guide, does not extend to: (a) nominee and custody services (see RG 148.8–RG 148.9 for what is meant by this term); (b) superannuation master trusts or other superannuation funds; (c) self-managed superannuation funds; or (d) managed discretionary accounts, as defined in Regulatory Guide 179 Managed discretionary accounts (RG 179). Page 5 REGULATORY GUIDE 148: Platforms that are managed investment schemes and nominee and custody services © Australian Securities and Investments Commission February 2024 Page 5 IDPSs RG 148.3 IDPSs are unregistered managed investment schemes for holding and dealing with one or more investments selected by investors. They are managed investment schemes because investors have the expectation of cost savings (e.g. through the netting of transactions or the pooling of funds to acquire investments) or access to investments that would not otherwise be available to them. RG 148.4 In broad terms, IDPSs provide custodial, transactional and reporting services where the investor makes all of the investment decisions. Specifically, IDPSs have the following features: (a) Assets in which an investor has an economic interest (or expects to derive a benefit) may be acquired or held by a custodian (which may or may not be an IDPS operator). (b) The investor has the sole discretion to decide what (but not necessarily when) assets will be acquired or disposed of through the IDPS, with limited exceptions (e.g. an IDPS operator may rely on standing instructions where they do not exercise any discretion, such as in the case of realising predefined assets to maintain a minimum agreed cash balance). (c) An investor may direct the IDPS operator to transfer assets in specie to them. This allows an investor to move in and out of the IDPS with minimum disruption to the underlying investments. Such transfers are limited to circumstances where the investor is able to hold the assets in their own right. A transfer is not required where, for example, there is a minimum holding requirement that is greater than the interest the investor would have after the transfer. (d) An investor may direct the IDPS operator to realise assets held on account for them, unless this is not possible under the law or the contractual terms under which the assets were issued. The realisation of an investor’s assets may be made on the direction of another person to pay money owing by the investor to: (i) pay fees associated with the IDPS where necessary; and (ii) cater for provisions typically found in margin lending agreements that enable the lender to sell assets provided as security where the borrower fails to meet a margin call. (e) Any discretion of the holder of assets held through the IDPS may be otherwise exercised only in accordance with the directions of the investor with limited exceptions (e.g. an IDPS operator may rely on standing instructions where they do not exercise any discretion). Page 6 REGULATORY GUIDE 148: Platforms that are managed investment schemes and nominee and custody services © Australian Securities and Investments Commission February 2024 Page 6 (f) Investors are led to expect, and are likely to receive, benefits from using the IDPS in the form of: (i) access to investments they could not otherwise directly access; or (ii) cost reductions through the pooling of investor funds (which allow the IDPS operator to make large investments that can be acquired on more favourable terms) or through the netting of transactions (where investors’ directions to buy and sell assets are offset against each other and a transaction for the net amount is entered into). This does not include a scheme under which material terms of any rights that may be acquired on behalf of a client are negotiated, or substantially determined. Note: Arrangements relating to ‘marketplace lending’ or ‘peer-to-peer’ lending are not generally covered by the IDPS definition because the loans are generally initiated through the platform. See Information Sheet 213 Marketplace lending (peer-to-peer lending) products (INFO 213) for more information on marketplace lending. RG 148.5 ASIC exempts IDPSs with these features from the requirement to be a registered managed investment scheme (registered scheme): see ASIC Corporations (Investor Directed Portfolio Services) Instrument 2023/669. IDPS-like schemes RG 148.6 IDPS-like schemes operate similarly to IDPSs in that investment decisions are generally made in accordance with specific member instructions, but are registered schemes. RG 148.7 An IDPS-like scheme is a scheme under which members are allowed, or which has a constitution that has provisions that allows members, to: (a) direct that an amount of money be invested in specific investments available through the scheme; and (b) receive capital and income distributions from the scheme determined by reference to amounts received by the custodian corresponding to their interests in the scheme and acquired in accordance with their directions (see ASIC Corporations (Investor Directed Portfolio Services Provided Through a Registered Managed Investment Scheme) Instrument 2023/668). Note: The ‘IDPS-like scheme’ definition in ASIC Instrument 2023/668 covers schemes that in substance have the features described above. The relevant test extends both to how the scheme functions as well as to the presence of specific provisions in the constitution. Page 7 REGULATORY GUIDE 148: Platforms that are managed investment schemes and nominee and custody services © Australian Securities and Investments Commission February 2024 Page 7 What is meant by the term ‘nominee and custody service’? RG 148.8 A nominee and custody service is an arrangement that does not have the characteristics that normally mean a platform is a managed investment scheme. A nominee and custody service has the following features: (a) Assets in which an investor has an economic interest (or expects to derive a benefit) may be acquired or held by a custodian (which may or may not be the operator). (b) The investor has the sole discretion to decide what (but not necessarily when) assets will be acquired or disposed of through the nominee and custody service, with limited exceptions (e.g. an operator may rely on standing instructions where they do not exercise any discretion, such as in the case of realising predefined assets to maintain a minimum agreed cash balance). (c) The service is not an IDPS or provided under an IDPS-like scheme. Note: While nominee and custody services and platforms have a number of characteristics in common, ordinarily a nominee and custody service does not have the characteristics of a managed investment scheme (unlike platforms) because it does not provide cost savings or access to investments that the client could not otherwise access directly. RG 148.9 Typically, a nominee and custody service is an arrangement for the holding of securities or other financial products and incidental functions, such as the banking of dividends and the receipt of communications. Usually, it provides some form of consolidated reporting and does not have a menu of investment opportunities associated with it. What requirements apply? RG 148.10 Australian financial services (AFS) licensees that are licensed to operate a platform must comply with ASIC Instrument 2023/668 (for IDPS-like schemes) or ASIC Instrument 2023/669 (for IDPSs). RG 148.11 An operator of a nominee and custody service will generally require an AFS licence to arrange for the issue of financial products on behalf of its clients, and holders of assets held through a nominee and custody service will require an AFS licence authorising the provision of a custodial or depository service. ASIC Corporations (Nominee and Custody Services) Instrument 2016/1156 modifies the Corporations Act 2001 (Corporations Act) to require a nominee and custody service operator to meet certain obligations and be exempt from certain other obligations. Page 8 REGULATORY GUIDE 148: Platforms that are managed investment schemes and nominee and custody services © Australian Securities and Investments Commission February 2024 Page 8 RG 148.12 We also require IDPS operators, nominee and custody service operators and responsible entities of IDPS-like schemes to comply (as relevant) with the financial requirements set out in: (a) ASIC Corporations (Financial Requirements for Responsible Entities, IDPS Operators and Corporate Directors of Retail CCIVs) Instrument 2023/647; and (b) ASIC Corporations (Financial Requirements for Custodial or Depository Service Providers) Instrument 2023/648. RG 148.13 When providing advice about using platforms, we also expect advisers to comply with the financial product advice provisions of the Corporations Act. Our objectives Our objectives for platforms RG 148.14 Our overriding objectives when regulating platforms are to: (a) promote investor confidence in the sector and help investors make informed decisions about platforms by requiring: (i) appropriate and compliant personal advice about these vehicles (if given); (ii) adequate disclosure about platforms and investments held through them, including the key differences between investing through a platform and investing directly; (iii) reliable investor reporting; (iv) effective compliance controls; (v) custodial and transactional integrity; and (vi) access to adequate dispute resolution in relation to financial products held through the platform as if they were held directly; (b) apply the minimum appropriate regulation to platform operators, consistent with the framework for the regulation of financial services and products in the Corporations Act; and (c) treat IDPSs and IDPS-like schemes similarly where there is no regulatory basis for different treatment. RG 148.15 To achieve these objectives: (a) when regulating IDPSs, we require operators to comply with certain requirements set out in this guide and ASIC Instrument 2023/669in particular, IDPS operators must hold an AFS licence and comply with the requirements under ASIC Instrument 2023/669; Page 9 REGULATORY GUIDE 148: Platforms that are managed investment schemes and nominee and custody services © Australian Securities and Investments Commission February 2024 Page 9 (b) when regulating IDPS-like schemes, we give responsible entities relief from some of the managed investment scheme, fundraising, financial product disclosure and other investor rights requirements provided for in the Corporations Act where responsible entities comply with the requirements under ASIC Instrument 2023/668; (c) we require IDPS operators and responsible entities of IDPS-like schemes to comply with the financial requirements set out in ASIC Instrument 2023/647 and ASIC Instrument 2023/648 (as relevant); and (d) when regulating advice about using platforms, we expect advisers to comply with the financial product advice provisions of the Corporations Act. We expect platform operators to comply with this guide to meet the requirements of ASIC Instrument 2023/647, ASIC Instrument 2023/648, ASIC Instrument 2023/668 and ASIC Instrument 2023/669 (as relevant). Principles underlying our regulatory approach RG 148.16 We have given IDPS operators relief in ASIC Instrument 2023/669 because, unlike most responsible entities, they do not make any investment decisions and therefore have more limited functions. However, to the extent that the transactional and custodial functions undertaken by IDPS operators are similar to the activities of responsible entities, we apply a regulatory approach similar to that for registered schemes, where this is relevant. RG 148.17 The disclosure requirements we have imposed seek to ensure that platform investors receive an adequate level of disclosure about the platform and the investments that can be accessed through the platform. This promotes a clear understanding of the differences between investing through a platform and investing directly, and, consequently, more informed and confident investor decision making about using platforms and making investments through them. RG 148.18 Our regulatory approach also seeks to provide flexibility in the structuring of a platform, while ensuring certain basic safeguards. Our objectives for nominee and custody services RG 148.19 ASIC Instrument 2016/1156 seeks to ensure that the regulatory protections that would have applied to a direct acquisition by a client will apply if the client makes an acquisition through a nominee and custody service. RG 148.20 Nominee and custody service operators must also comply with the financial requirements set out in ASIC Instrument 2023/648. Page 10 REGULATORY GUIDE 148: Platforms that are managed investment schemes and nominee and custody services © Australian Securities and Investments Commission February 2024 Page 10 B Requirements for operating a platform or a nominee and custody service Key points This section sets out the specific requirements that apply to platform operators and nominee and custody service operators: see Table 1 for an overview of the requirements. Additional specific requirements apply to you if you offer securities through a platform or a nominee and custody service (see RG 148.89–RG 148.90) or if you operate an IDPS-like scheme (see RG 148.91–RG 148.99). Overview of the requirements RG 148.21 An IDPS or nominee and custody service may have more than one operator, each of which takes responsibility for a part of the IDPS or nominee and custody service. An IDPS or nominee and custody service operator may engage others to provide some or all of the services you contract to provide to the investor. The nature and extent of your obligations will vary with the functions––custodial, transactional and/or reporting––you carry out. RG 148.22 Table 1 provides an overview of the requirements that apply to platform operators and nominee and custody service operators, which are explained in this section. Table 1: Overview of the requirements Requirement Who the requirement applies to Cross-reference Meet the corporate structure requirement Platform operators See RG 148.23–RG 148.24 Comply with your AFS licence obligations and the requirements of the relevant ASIC instrument(s) Platform operators and nominee and custody service operators See RG 148.25–RG 148.41 Have adequate arrangements in place to manage conflicts of interest Platform operators and nominee and custody service operators See RG 148.42–RG 148.44 Perform your obligations honestly and with reasonable care and diligence IDPS operators See RG 148.45–RG 148.46 Hold all investments within the IDPS (not including assets held by an investor) on trust for investors of the IDPS IDPS operators See RG 148.47–RG 148.50 Page 11 REGULATORY GUIDE 148: Platforms that are managed investment schemes and nominee and custody services © Australian Securities and Investments Commission February 2024 Page 11 Requirement Who the requirement applies to Cross-reference Comply with the financial requirements in ASIC Instrument 2023/647 and ASIC Instrument 2023/648 (where relevant) and described in Appendices 3–4 of Regulatory Guide 166 AFS licensing: Financial requirements (RG 166) Platform operators and nominee and custody service operators See RG 148.51 Maintain professional indemnity insurance and insurance against fraud by your officers Platform operators See RG 148.52–RG 148.55 Have in place a voting policy that includes information about your voting practices on company and scheme resolutions Platform operators See RG 148.56–RG 148.62 Have a reasonable belief that financial product issuers or sellers have a dispute resolution system in place for any client that would be acquiring as a retail client if they acquired directly, and to facilitate dispute resolution between investors and financial product issuers Platform operators and nominee and custody service operators See RG 148.63–RG 148.67 Have in place policies for investors who do not opt in to continuing to receive financial product advice Platform operators See RG 148.68–RG 148.70 Maintain adequate internal control procedures IDPS operators See RG 148.71–RG 148.75 Agreement in writing if outsourcing IDPS operators See RG 148.76 Requirements relating to acquisitions of investments and prohibitions on certain investments Platform operators and nominee and custody service operators (as relevant) See RG 148.77–RG 148.88 Specific requirements if offering securities Product issuer or seller offering securities through a platform or nominee and custody service under an ASIC instrument See RG 148.89–RG 148.90 Specific requirements for IDPS-like schemes Responsible entity of an IDPS-like scheme See RG 148.91–RG 148.99 Meet the corporate structure requirement RG 148.23 To operate a platform, you must be a public company that holds an AFS licence specifically authorising you to operate an IDPS or IDPS-like scheme: see ASIC Instrument 2023/669 for the requirement as it applies to Page 12 REGULATORY GUIDE 148: Platforms that are managed investment schemes and nominee and custody services © Australian Securities and Investments Commission February 2024 Page 12 IDPS operators and s601FA of the Corporations Act for the requirement as it applies to responsible entities of IDPS-like schemes. Note: In this document, references to sections (s), divisions (Divs), parts (Pts) and chapters (Chs) are to the Corporations Act, unless otherwise specified. RG 148.24 This requirement ensures that platform operators have suitable operating structures to conduct their financial services businesses and promote greater transparency, including through increased financial accountability requirements and disclosure requirements about related party transactions. Comply with AFS licence obligations and ASIC instruments RG 148.25 You must comply with your AFS licence obligations and the requirements in the relevant ASIC instrument(s)—that is, ASIC Instrument 2023/647, ASIC Instrument 2023/648, ASIC Instrument 2023/668, ASIC Instrument 2023/669 and ASIC Instrument 2016/1156. RG 148.26 If you breach an AFS licence obligation (including where applying because of an ASIC instrument), you will be in breach of your obligations as an AFS licensee to comply with the relevant financial services laws. We will consider the nature, scope and effect of any breach to determine an appropriate regulatory response. Licensing authorisations Platforms RG 148.27 If you wish to operate a platform under a relevant ASIC instrument, you must tell us this when applying for an AFS licence or seeking an appropriate variation. We will consider this when assessing your application or variation and, if we grant you a licence, you will need to comply with the requirements of the relevant ASIC instrument(s). Custody for IDPS and nominee and custody services RG 148.28 For an IDPS or nominee and custody service, if you hold investments that are financial products or beneficial interests in financial products on behalf of investors under an arrangement with the investor or with another person who has an arrangement with the investor, you will be regulated as a provider of custodial or depository services. You may enter into a contract with: (a) the investor to provide the service to that investor and consequently be an operator; or (b) the operator to discharge that operator’s duty to arrange custody. Page 13 REGULATORY GUIDE 148: Platforms that are managed investment schemes and nominee and custody services © Australian Securities and Investments Commission February 2024 Page 13 Licensing requirements RG 148.29 In deciding whether to grant an AFS licence authorisation to issue interests in and to operate a platform or a nominee and custody service, and in assessing ongoing compliance, we will assess the capacity and expertise of the applicant to act as an operator in accordance with its obligations as an AFS licensee, such as the capacity to operate efficiently, honestly and fairly. This assessment will be based on our guidance, including in: (a) Regulatory Guide 1 Applying for and varying an AFS licence (RG 1); (b) Regulatory Guide 104 AFS licensing: Meeting the general obligations (RG 104); (c) Regulatory Guide 105 AFS licensing: Organisational competence (RG 105); (d) Regulatory Guide 126 Compensation and insurance arrangements for AFS licensees (RG 126); (e) Regulatory Guide 132 Funds management: Compliance and oversight (RG 132); (f) Regulatory Guide 133 Funds management and custodial services: Holding assets (RG 133); (g) Regulatory Guide 166 AFS licensing: Financial requirements (RG 166); (h) Regulatory Guide 167 Licensing: Discretionary powers (RG 167); (i) Regulatory Guide 181 Licensing: Managing conflicts of interest (RG 181); and (j) Regulatory Guide 271 Internal dispute resolution (RG 271). RG 148.30 We require a platform operator or a nominee and custody service operator to hold an AFS licence and meet its licence obligations and the requirements of our instruments, some of which are described in this guide, because we want to ensure that the operator has the necessary expertise and capacity to administer investor assets. This is a key consideration when we are deciding whether to grant a licence to a proposed operator, or assessing compliance by an operator with its obligations as a licensee. Where relevant, our approach to assessing an IDPS operator will be similar to our approach to assessing a responsible entity. Note: To lodge the AFS licence application form online, see Form FS01 Application for AFS licence. See also RG 1 and the AFS Licensing Kit on our website. For a paper application form or for help with applying online, phone ASIC on 1300 300 630. RG 148.31 Where relevant, IDPS operators must meet additional AFS licence conditions that reflect the requirements applying to the responsible entities of registered schemes: see Pro Forma 209 Australian financial services licence conditions (PF 209). Page 14 REGULATORY GUIDE 148: Platforms that are managed investment schemes and nominee and custody services © Australian Securities and Investments Commission February 2024 Page 14 Relief for operators of, or persons involved in, operating or promotion of an IDPS or nominee and custody service RG 148.32 We provide an exemption under ASIC Instrument 2023/669 and ASIC Instrument 2016/1156 for operators of, or persons who are involved in operating or promoting, an IDPS or a nominee and custody service. These persons are exempt: (a) for an IDPS, from the registration requirements in Ch 5C; (b) from the requirements of Pts 6D.2 and 6D.3 applying to offers of equitable interests in securities acquired through the platform or nominee and custody service; and (c) from the financial product disclosure provisions and other provisions relating to the issue, sale and purchase of financial products in Pt 7.9 and the hawking provisions in Div 8 of Pt 7.8 relating to interests in the managed investment scheme constituted by an IDPS, and relating to financial products acquired through the IDPS or nominee and custody service. Note: The exemptions from Pt 7.9 do not extend to s1017E, 1020D and 1021O. RG 148.33 The exemption in RG 148.32(b) applies to persons who do not issue the securities acquired through the IDPS or nominee and custody service. Additional FSG relief for operators of an IDPS RG 148.34 If you are an IDPS operator, under ASIC Instrument 2023/669, you also have limited relief to allow multiple operators of an IDPS to use the one IDPS Guide as your Financial Services Guide (FSG), which must set out the parts of the FSG for which each operator is responsible. Relief for responsible entities of IDPS-like schemes RG 148.35 Under ASIC Instrument 2023/668, we provide relief for responsible entities of IDPS-like schemes from the fundraising and financial product disclosure provisions of the Corporations Act to the extent that they require disclosure about securities and financial products held within the IDPS-like scheme. RG 148.36 The requirements in ASIC Instrument 2023/668 aim to ensure that members receive similar information about investments made through the scheme and similar periodic reporting to investors of an IDPS. RG 148.37 ASIC Instrument 2023/668 also: (a) allows members of IDPS-like schemes to withdraw assets without following the procedures for withdrawal from non-liquid schemes; and (b) gives relief from the requirements for responsible entities to give cooling-off rights under Div 5 of Pt 7.9 because it may not be practicable to realise the investment held within the scheme relating to the member (see RG 148.92–RG 148.93). Page 15 REGULATORY GUIDE 148: Platforms that are managed investment schemes and nominee and custody services © Australian Securities and Investments Commission February 2024 Page 15 Failure to comply with an ASIC instrument RG 148.38 If you do not comply with a requirement in ASIC Instrument 2023/647, ASIC Instrument 2023/648, ASIC Instrument 2023/668, ASIC Instrument 2023/669 and/or ASIC Instrument 2016/1156, you will be in breach of your obligations as an AFS licensee to comply with the relevant financial services laws. RG 148.39 You must report to us any breach or likely breach of a core obligation that is significant, or any other reportable situation, within 30 days after you first know that, or are reckless as to whether, there are reasonable grounds to believe a reportable situation has arisen: see s912DAA. Note: For more information about breach reporting, see Regulatory Guide 78 Breach reporting by AFS licensees and credit licensees (RG 78). RG 148.40 We will consider the nature, scope and effect of any breach of the requirements, or failure to report any such breach, to determine an appropriate regulatory response. This may include, where appropriate, exclusion from reliance on our relief by way of a notice from ASIC or revocation or suspension of your AFS licence. RG 148.41 In exercising our administrative powers, we will apply the considerations set out in Regulatory Guide 98 ASIC’s powers to suspend, cancel and vary AFS licences and make banning orders (RG 98). Manage conflicts of interest RG 148.42 An AFS licensee must comply with its AFS licence obligations, including the requirement under s912A(1)(aa) that it has in place adequate arrangements for the management of conflicts of interest in the provision of financial services. To do so, we expect licensees to have regard to RG 181, including having in place a comprehensive conflicts of interest policy that contains appropriate measures to identify, document and manage conflicts, and following that policy in the running of its business (e.g. disclosure in the IDPS Guide or PDS (as relevant), where appropriate). The policy should be adequate to give confidence that a conflict will not cause the operator to breach its duties. Platform operators RG 148.43 Platform operators typically have associations with other parties in the product distribution chain that may give rise to conflicts of interest. For example, a platform operator may be more likely to select investments for inclusion in the investment menu of its platform if the product issuer is associated with the platform operator and this interest may conflict with the platform operator’s obligations. In this case, we would expect the platform operator’s conflicts of interest policy to address (at a minimum): Page 16 REGULATORY GUIDE 148: Platforms that are managed investment schemes and nominee and custody services © Australian Securities and Investments Commission February 2024 Page 16 (a) how decisions about the investment menu for the platform are made and the potential for any conflicts to arise and affect decision making, including what processes and procedures are in place to assist platform operators to manage conflicts of interest obligations in the selection process––for example, use and composition of investment committees and administrative or technological limitations that may affect the breadth of investment options available on the platform; and (b) how to manage conflicts that arise because of relationships between those in the product distribution chain, including whether an independent assessment is conducted when the platform operator selects investments. Note: The Corporations Act bans platform operators from accepting volume-based benefits (s963L) and volume-based shelf space fees (s964A(1)). For further details, see Regulatory Guide 246 Conflicted and other banned remuneration (RG 246) and RG 148.198–RG 148.200. RG 148.44 To the extent that any conflicts do not need to be avoided to ensure that the platform operator will comply with its AFS licence obligations, particularly in circumstances where the platform operator undertakes a duty for selecting investments for inclusion on its investment menu, the conflicts should be managed appropriately and/or fully disclosed in the IDPS Guide or PDS (as relevant). Perform your obligations honestly and with care and diligence RG 148.45 While we do not compel IDPS operators to satisfy fiduciary duties to act in the best interests of investors by way of specific obligations, certain fiduciary duties will apply by virtue of investors’ assets being held on trust. RG 148.46 As an IDPS operator, you must perform your obligations honestly and with reasonable care and diligence. You must accept liability to investors for acts and omissions of people you engage to perform functions of the IDPS as if they were your acts or omissions. Hold assets on trust RG 148.47 As an IDPS operator responsible to investors for holding their assets, you, or a custodian engaged by you, must hold all investments held within the IDPS (not including assets held by an investor) on trust for the investor. RG 148.48 You must ensure that all money that you, or a person engaged by you, receive from investors, or in which investors have an interest, is promptly paid into a designated trust account with an Australian authorised deposit- taking institution (ADI), including a foreign corporation which is authorised. Page 17 REGULATORY GUIDE 148: Platforms that are managed investment schemes and nominee and custody services © Australian Securities and Investments Commission February 2024 Page 17 RG 148.49 These requirements protect investors against the loss of assets or money if you become insolvent, and ensure that the duties of a trustee under general law will apply. RG 148.50 RG 133 requires asset holders to meet certain minimum standards. If an IDPS operator holds investor assets, it must meet the standards. Note: For further details about arrangements for holding scheme property, see RG 133. Comply with your financial requirements RG 148.51 If you are a platform operator or a nominee and custody service operator, you must meet the requirements set out in ASIC Instrument 2023/647 and ASIC Instrument 2023/648 (where relevant) and described in Appendices 3– 4 of RG 166, including: (a) the standard solvency and positive net assets requirement; (b) a tailored cash needs requirement; (c) a tailored audit requirement; and (d) a net tangible assets (NTA) requirement. Maintain adequate insurance RG 148.52 A platform operator must maintain professional indemnity insurance and insurance against fraud by its officers. This insurance must be adequate for the functions of a platform operator and must cover claims up to, and in aggregate, $5 million or the value of scheme assets, whichever is less. Scheme assets include assets held under the platform and also any registered scheme for which you are a responsible entity. RG 148.53 This requirement is in addition to our general requirements for AFS licensees to have compensation arrangements, which are set out in RG 126. The same insurance may be relied on to meet both requirements. RG 148.54 The requirement for insurance to be held ensures that you provide some protection for the risk to you from claims by investors against loss because of negligent administration or fraud. RG 148.55 In any business there is a risk of funds or assets being misappropriated or misused by officers of the business. When an entity is managing another person’s money or assets, the risk and impact of negligence or fraud may increase. Therefore, we impose minimum insurance requirements for platform operators that reflect those applying to responsible entities of registered schemes. Page 18 REGULATORY GUIDE 148: Platforms that are managed investment schemes and nominee and custody services © Australian Securities and Investments Commission February 2024 Page 18 Have in place a voting policy RG 148.56 A platform operator must have in place a voting policy that includes information about its voting practices on company and scheme resolutions. The platform operator must disclose its voting policy in its IDPS Guide or PDS (as relevant). This will ensure transparency to investors about their ability to actively participate in votes or other corporate actions affecting investments held through platforms (e.g. their ability to make a decision whether to participate in a share buy-back), while also enhancing market efficiencies by promoting resolutions in a commercially viable way. IDPS operators RG 148.57 If you are an IDPS operator, where the voting policy allows investors to vote, the policy should provide key information about what actions you will take in response to company or scheme resolutions, and what rights (if any) the investor has in determining how a vote will be exercised. It should also provide information about how company and scheme resolutions and other corporate actions will be communicated to the investor as soon as practicable and how investors can give voting instructions to the IDPS operator. This may, for example, be in the form of an electronic webpage or a communications bulletin to advisers that act as agents for investors. RG 148.58 Where an IDPS operator’s voting policy allows the investor to exercise their voting rights on company or scheme resolutions, the IDPS operator (or a custodian acting on its behalf) must: (a) give investors any information that they require about proposed company or scheme resolutions that is made available to them as soon as practicable; (b) identify how such information will be given to an investor; (c) identify the steps that will be taken once voting instructions have been communicated by an investor; and (d) identify whether any cost will be charged to an investor for exercising the voting rights. RG 148.59 An IDPS operator must only vote when, and as, instructed by investors–– including under a standing instruction––and not otherwise. That is, an IDPS operator cannot vote unless it is instructed by investors. RG 148.60 If an IDPS operator charges investors a fee to exercise their voting rights, this fee must be no more than a reasonable estimate of the cost of the investor exercising their voting right. Page 19 REGULATORY GUIDE 148: Platforms that are managed investment schemes and nominee and custody services © Australian Securities and Investments Commission February 2024 Page 19 RG 148.61 If an IDPS operator’s voting policy does not allow voting by investors in certain circumstances, or altogether, the voting policy must state this and that this restriction will be disclosed prominently in the IDPS Guide. In these circumstances, the IDPS operator must: (a) disclose in the IDPS Guide that voting rights are not available when investing through the platform; and (b) include this information in a clear and prominent consumer warning acknowledgement in the application form where an investor is required to acknowledge that they are aware that they do not have voting rights when investing in financial product(s) through the platform. IDPS-like schemes RG 148.62 Responsible entities must act in the best interests of the members of the scheme (s601FC(1)(c)) in the exercise of any power to vote arising from holding scheme property. We expect that a responsible entity of an IDPS- like scheme will consider whether it is in the best interests of members to vote on company or scheme resolutions and/or other corporate actions in all circumstances and, if it is in the best interests of members to do so, that it will ensure the vote is exercised. The responsible entity of an IDPS-like scheme must also disclose information about its voting policy in the PDS: see RG 148.56. Issuer/seller dispute resolution requirements Reasonable belief issuer or seller has a dispute resolution system covering certain acquisitions for retail clients RG 148.63 From 1 January 2018, a platform operator or a nominee and custody service operator must not acquire financial products (other than securities) for a retail client unless it reasonably believes that the issuer or seller has a dispute resolution system that: (a) covers complaints against the issuer or seller to the same extent as if the client had acquired the product directly from the issuer or seller as a retail client; and (b) complies with s912A(2). RG 148.64 Product issuers and AFS licensees must meet dispute resolution requirements where financial services are provided to retail clients. As such, where financial products are held through a platform or a nominee and custody service, clients should have the same rights of complaint as they would have had about the issue or sale and the provision of financial services by the issuer or seller as if they had acquired the financial products directly. Page 20 REGULATORY GUIDE 148: Platforms that are managed investment schemes and nominee and custody services © Australian Securities and Investments Commission February 2024 Page 20 RG 148.65 We expect that a platform operator or a nominee and custody service operator will generally be able to rely on a written statement by the product issuer or seller that it will keep in place the required dispute resolution arrangements, unless there is reason to doubt a product issuer’s representations. We think that a reasonable belief can generally be held based on representations by the product issuer, in a PDS or directly to the operator. Contractual warranties might assist an operator. We do not expect each operator to ask for details of the product issuer’s dispute resolution arrangements. Further inquiries may be needed if there is a particular reason to doubt a product issuer’s representations. Facilitating dispute resolution RG 148.66 A platform operator or a nominee and custody service operator must take reasonable steps to facilitate dispute resolution between investors and financial product issuers, including, for example, by informing investors about the product issuer’s dispute resolution procedures and providing evidence of the investor’s holding or transfer of financial products to the investor or product issuer or seller (if required). RG 148.67 Platform operators must also make clear and prominent disclosure in the IDPS Guide or PDS (as relevant) about who investors may complain to about different types of complaints: see RG 148.163. Have in place policies for investors who do not opt in to continuing to receive financial product advice RG 148.68 Platform operators must have a written policy that outlines how they will deal with investors who do not opt in to continue to receive financial product advice from their financial product advisers or who otherwise decide not to retain or continue to retain the services of any financial product adviser or a financial product adviser meeting certain requirements. This policy must be clearly disclosed in the IDPS Guide or PDS (as relevant). RG 148.69 If an investor does not opt in to receiving further advice from a financial product adviser approved or permitted by the platform operator, we consider it good practice for the platform operator to allow the investor to use any financial product advisers acting under an AFS licence so that they can continue investing through the platform. Alternatively, where the investor does not choose to continue to retain a financial product adviser, we consider it good practice that the investor be allowed direct access to manage their investments. Page 21 REGULATORY GUIDE 148: Platforms that are managed investment schemes and nominee and custody services © Australian Securities and Investments Commission February 2024 Page 21 RG 148.70 We expect a platform operator will have procedures for: (a) contacting the investor and offering details of other financial product advisers the investor may use to assist them with using the platform and investing through it; (b) contacting the investor to arrange for the investor to stop investing through the platform, including transferring investments directly to the investor and/or their nominee (where that is possible) or selling out their investments in the portfolio after reasonable notice; and/or (c) allowing the investor to transact directly through the platform, if applicable. Maintain adequate internal control procedures RG 148.71 If you are an IDPS operator, you must maintain, document and comply with adequate internal control procedures to ensure compliance with financial services laws. This is in addition to the AFS licence obligation to establish and maintain compliance measures that ensure that the licensee complies with the financial services laws. Note: For further information about requirements for internal control procedures, see RG 132. RG 148.72 The internal control procedures must be audited annually after the end of your financial year to determine whether: (a) you have complied with the internal control procedures; and (b) the internal control procedures operate to ensure, as far as is reasonably practicable, compliance with financial services laws at all times during the financial year. RG 148.73 If you engage another person to perform a function associated with the IDPS, you must contract with that person to give the auditor all reasonable assistance and access to allow the auditor to carry out the audit of the functions performed by that person. RG 148.74 The auditor must be a registered company auditor. You may use the same auditor as you do for the purposes of s989B. You must lodge this auditor’s report with us when lodging your accounts and auditor’s report under s989B. RG 148.75 These requirements, which are based on those applying to compliance plans for registered schemes, provide assurance that you are complying with your regulatory obligations. Page 22 REGULATORY GUIDE 148: Platforms that are managed investment schemes and nominee and custody services © Australian Securities and Investments Commission February 2024 Page 22 Agreement in writing if outsourcing RG 148.76 If, as an IDPS operator, you are responsible for custodial or transactional functions and you engage another person to perform any of these functions on your behalf, you must enter into a written agreement with the person. We expect the agreement to specify (among other things) how you will give instructions to the person and liability provisions applying to the person breaching their agreement with you. Acquisitions of investments and prohibitions on certain investments Acquisitions under a direction RG 148.77 The circumstances in which a platform operator or a nominee and custody service operator acquires financial products under a direction of an investor include: (a) an allocation of entitlements relating to the financial products to the interest of the investor in the platform, or holding through a nominee and custody service; and (b) an increased investment in a financial product in respect of which an investor’s interest in the platform, or holding through a nominee and custody service, has been allocated entitlements. Acquisitions of securities RG 148.78 If you are a platform operator or a nominee and custody service operator, you must only acquire or instruct the custodian to acquire securities for an investor if: (a) you are reasonably satisfied that the investor has been given the disclosure document for the securities that would have been required had the securities been offered to the investor directly at the time of the acquisition and you have no reason to believe that the disclosure document is defective as if it were prepared at that time; (b) you are reasonably satisfied that the securities could have been lawfully offered and issued or sold, as the case may be, to the investor directly without the investor being given a disclosure document under Ch 6D; (c) for platforms, the acquisition is under a dividend or distribution reinvestment scheme (see RG 148.110–RG 148.112); or Page 23 REGULATORY GUIDE 148: Platforms that are managed investment schemes and nominee and custody services © Australian Securities and Investments Commission February 2024 Page 23 (d) for a CSF offer, if the investor would not have acquired the shares as a wholesale client if the investor had acquired the shares directly under the CSF offer, you reasonably believe that the investor: (i) has accessed the CSF platform of a CSF intermediary containing the CSF offer document for the CSF offer and you have no reason to believe the document is defective as at the time of the acquisition of the shares; (ii) has completed the acknowledgement that would be required under s738ZA(3)(b) if the investor had applied as a retail client; (iii) was able to use the relevant communication facility for the CSF offer provided under s738ZA(5); (iv) was able to withdraw the direction within five business days after it was made; (v) has not been provided with financial assistance in relation to the CSF offer by any of the following: (A) a person referred to in s738ZE(1) (i.e. the company making the CSF offer, a related party of that company, the CSF intermediary that is or intends to be the intermediary in relation to the CSF offer, and an associate of such a CSF intermediary); (B) you; or (C) one of your associates that is not an Australian ADI; and (vi) has not in total paid for, become liable to pay for, or given directions under an IDPS, an IDPS-like scheme or a nominee and custody service for the acquisition of, shares under a CSF offer of the company making the CSF offer that together exceed the cap on investment in s738ZC(1)(b). Note 1: For further details about the requirements to provide disclosure under Ch 6D, see RG 148.89–RG 148.90. Note 2: For further information about CSF offers, see Regulatory Guide 261 Crowd- sourced funding: Guide for companies (RG 261) and Regulatory Guide 262 Crowd- sourced funding: Guide for intermediaries (RG 262). RG 148.79 The requirement to give a disclosure document helps ensure that persons investing through a platform or a nominee and custody service receive the same quality of disclosure as if they were investing directly. RG 148.80 These requirements also aim to ensure that securities are not offered through a platform, or in some circumstances a nominee and custody service, as a device for avoiding the disclosure requirements (e.g. by keeping the number of offerees within the exception provided for in s708) or the rights and protections for CSF offers. Page 24 REGULATORY GUIDE 148: Platforms that are managed investment schemes and nominee and custody services © Australian Securities and Investments Commission February 2024 Page 24 Acquisitions of financial products RG 148.81 Under s1012IA, a platform operator or a nominee and custody service operator must give a PDS to an investor before making each regulated acquisition of financial products through a platform or a nominee and custody service, if a PDS would have been required for an equivalent direct acquisition by the investor. RG 148.82 We have given some limited exemptions from s1012IA. A platform operator or a nominee and custody service operator is exempt from giving a PDS for a financial product under s1012IA if: (a) the investor has already been given a PDS by an operator for a previous acquisition of a financial product of the same kind as the investor’s investment; (b) you reasonably believe that the investor has access to, and knows they have access to, a PDS; (c) the PDS the investor has access to is the most current in use or does not differ from the most current in use in a way that is materially adverse for the investor; and (d) you have no reason to believe the PDS the investor has access to is defective as if it were prepared at the time of the acquisition. RG 148.83 An investor only knows they have access to a particular PDS if they know that an identified PDS exists. It is not sufficient for the investor to merely be aware that PDSs will exist from time to time. Note 1: If a person issues financial products that are available for acquisition through a platform or nominee and custody service, and they become aware that the PDS they have provided to the platform or nominee and custody service operator has become defective, s1021J requires the person to take reasonable steps to direct the operator not to distribute the PDS. Note 2: The operation of s1012IA is discussed in Regulatory Guide 184 Superannuation: Delivery of product disclosure for investment strategies (RG 184). RG 148.84 Under our relief, you must also give a PDS if: (a) as a result of an additional investment by you in a financial product, or a transfer of entitlements to financial products that the custodian already holds, the investor acquires an interest in the financial product or an increased interest in the financial product; and (b) you would have to give a PDS under s1012IA if the investor’s interest or increased interest was because of an acquisition. The limited exemptions apply in RG 148.82–RG 148.83 equally in these circumstances. Page 25 REGULATORY GUIDE 148: Platforms that are managed investment schemes and nominee and custody services © Australian Securities and Investments Commission February 2024 Page 25 RG 148.85 We do not consider that relief is needed to allow issuers of financial products to give an ordinary PDS (appropriate for investors who are acquiring the financial product directly) to persons who are acquiring the financial product through a platform or nominee and custody service. The provisions in Pt 7.9 about disclosure in a PDS must be interpreted in the context of s1012IA, which sets out when a PDS for financial products available through a platform or a nominee and custody service must be given, and implies that the PDS to be given is one that would be given for an equivalent direct acquisition. Prohibition on certain investments RG 148.86 Yo