ASIC RG 179 — ASIC Regulatory Guide – RG 179 Managed discretionary accounts

Page 1 REGULATORY GUIDE 179 Managed discretionary accounts September 2026 About this guide This is a guide for Australian financial services (AFS) licensees and their representatives who provide managed discretionary accounts (MDAs) or other MDA services to retail clients, and their professional advisers. It sets out how we regulate MDAs provided to retail clients under the Corporations Act 2001 (Corporations Act). Page 2 REGULATORY GUIDE 179: Managed discretionary accounts © Australian Securities and Investments Commission September 2026 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 September 2026 and is based on legislation and regulations as at the date of issue. Previous versions:  Superseded Regulatory Guide 179, issued September 2016  Superseded Policy Statement 179, issued March 2004, rebadged as a regulatory guide 5 July 2007 Disclaimer This guide does not constitute legal advice.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 179: Managed discretionary accounts © Australian Securities and Investments Commission September 2026 Page 3 Contents A Overview ........................................................................................... 5 Who this guide is for .......................................................................... 5 Purpose of this guide ......................................................................... 5 Key terms used in this guide.............................................................. 6 MDAs and our approach to regulation ............................................... 6 Requirements for relief: MDA providers ............................................ 6 Requirements for relief: FSGs and MDA contracts ........................... 8 MDA services with different arrangements ........................................ 9 Obligations of financial product advisers ......................................... 10 Transitional requirements related to client reporting obligations ..... 10 B MDAs and our approach to regulation ........................................ 11 What is an MDA? ............................................................................. 11 Our approach to regulation of MDA providers ................................. 16 Our approach to regulation of financial product advisers ................ 17 C Requirements for relief: MDA providers ..................................... 19 Hold an AFS licence and relevant authorisations ............................ 19 Comply with AFS licence obligations ............................................... 21 Act honestly, in the best interests of the client, with reasonable care 22 Manage conflicts of interest ............................................................. 23 Comply with the requirements for holding client portfolio assets .... 28 Maintain adequate professional indemnity insurance ..................... 30 Maintain adequate internal control procedures and arrange for their audit ......................................................................................... 31 Notify ASIC of breaches .................................................................. 31 Obtain consent for investments in non-limited recourse products... 32 Obtain consent to ongoing fee arrangements ................................. 34 Follow client instructions on client portfolio assets .......................... 35 Comply with client reporting obligations .......................................... 35 Provide an annual investor statement and audit report ................... 36 Retain copies of disclosure documents ........................................... 37 D Requirements for relief: FSGs and MDA contracts .................... 39 Provide additional disclosure in the FSG ......................................... 39 Enter into an MDA contract before providing an MDA .................... 42 Include an investment program in the MDA contract ...................... 42 State that you will comply with obligations ...................................... 44 Provide clear disclosure in the MDA contract about indirect holdings . 45 Include a risk warning in the MDA contract if you invest in non- limited recourse products................................................................. 46 Include steps for terminating the MDA contract............................... 46 Disclose fees and costs in the MDA contract .................................. 46 State that you will comply with the investment strategy .................. 47 Review the MDA contract and investment program annually.......... 47 E MDA services with different arrangements................................. 49 How our relief applies to different MDA arrangements .................... 49 MDA with an external MDA custodian ............................................. 49 MDA with an external MDA adviser ................................................. 52 MDA with external administration support ....................................... 55 MDA where the client holds the legal title to portfolio assets .......... 55 MDA on a regulated platform ........................................................... 56 Market participants providing an MDA to family members .............. 58 F Obligations of financial product advisers ................................... 60 Comply with financial product advice licensing requirements ......... 60 Comply with the best interests duty and related obligations ........... 61 Page 4 REGULATORY GUIDE 179: Managed discretionary accounts © Australian Securities and Investments Commission September 2026 Page 4 Comply with obligations when preparing or reviewing an investment program............................................................................................ 61 Provide an SOA with clear content of advice .................................. 62 Manage conflicts of interest ............................................................. 63 Key terms ............................................................................................... 64 Related information ............................................................................... 68 Page 5 REGULATORY GUIDE 179: Managed discretionary accounts © Australian Securities and Investments Commission September 2026 Page 5 A Overview Key points This guide sets out how we regulate MDAs provided to retail clients under the Corporations Act 2001 (Corporations Act). It explains: • how we define an MDA and our approach to regulation; • the relief we have given to MDA providers from some of the managed investment scheme, fundraising and financial product disclosure requirements in the Corporations Act; • the additional requirements that apply to MDA providers under our relief; and • how we regulate the different arrangements that may be involved in providing MDA services. This section provides an overview (summary) of the information included in this guide. Who this guide is for RG 179.1 This guide is for: (a) Australian financial services (AFS) licensees and their representatives who provide managed discretionary accounts (MDAs) or other MDA services to retail clients, as well as their professional advisers; (b) custodians; and (c) financial product advisers. RG 179.2 This guide is not for: (a) MDA services offered only to wholesale clients, as defined in s761G of the Corporations Act; and (b) providers of other types of managed investment schemes, such as investor-directed portfolio services (IDPSs) and IDPS-like schemes. Purpose of this guide RG 179.3 The guide explains what MDA providers must do to rely on our relief from some of the managed investment scheme, fundraising, and financial product disclosure requirements in the Corporations Act. RG 179.4 This guide also explains requirements for: (a) financial product advisers in relation to MDAs; and (b) custodians that contract directly with retail MDA clients. Page 6 REGULATORY GUIDE 179: Managed discretionary accounts © Australian Securities and Investments Commission September 2026 Page 6 Key terms used in this guide RG 179.5 In this guide: (a) ‘MDA service’ means some or all of the services and functions involved in providing an MDA; (b) ‘MDA client’ means a person who receives services, or who will receive services, from an MDA provider; (c) ‘our relief’ means the relief in ASIC Corporations (Managed Discretionary Account Services) Instrument 2026/720 unless otherwise specified; and (d) references to sections (s), chapters (Ch), divisions (Div) and parts (Pt) are to the Corporations Act, unless otherwise specified. Note: For definitions of more terms used in this guide, see the Key terms. MDAs and our approach to regulation RG 179.6 We consider that an MDA generally falls within the definition of both a ‘managed investment scheme’ in s9 of the Corporations Act and a ‘facility for making a financial investment’ in s763B of the Corporations Act. As a result, MDAs are subject to some of the managed investment scheme, fundraising and financial product disclosure requirements in the Corporations Act. RG 179.7 However, we recognise that MDA providers have more limited functions than responsible entities of registered schemes. We therefore provide conditional relief from certain provisions: see ASIC Instrument 2026/720. Requirements for relief: MDA providers RG 179.8 If you’re an MDA provider, to rely on our relief you must comply with the requirements outlined in Table 1 and explained in Section C. You must also comply with requirements related to Financial Services Guides (FSGs) and MDA contracts. These are outlined in Table 2 and explained in Section D. Table 1: Overview of the requirements for an MDA provider under our relief in ASIC Instrument 2026/720 AFS licence Location of guidance You must hold an AFS licence and relevant authorisations. RG 179.43–RG 179.53 Compliance issues Location of guidance You must comply with AFS licence obligations RG 179.54–RG 179.55 Page 7 REGULATORY GUIDE 179: Managed discretionary accounts © Australian Securities and Investments Commission September 2026 Page 7 Compliance issues Location of guidance You must act honestly and in the best interests of the client, exercise reasonable care and diligence, give priority to the client’s interests, and not use information about the client to your advantage or to cause detriment to the client. RG 179.56–RG 179.64 You must manage conflicts of interest. RG 179.65–RG 179.83 You must comply with the requirements for holding client portfolio assets. RG 179.84–RG 179.88 You must maintain adequate professional indemnity insurance. RG 179.89–RG 179.90 You must have, and comply with, adequate documented compliance procedures and arrange for their audit. RG 179.91–RG 179.93 You must notify ASIC of breaches of the conditions of our relief RG 179.94–RG 179.98 You must not invest any of a client’s portfolio assets in products or arrangements where recourse is not limited—except in certain circumstances. RG 179.99–RG 179.107 You must obtain written consent from a client to enter into or renew an ongoing fee arrangement. RG 179.108–RG 179.113 Client instructions, reporting and record keeping Location of guidance You must follow each client’s instructions on corporate actions and communications about portfolio assets. RG 179.114–RG 179.116 You must provide to each client:  up to the year ending 30 June 2027—either a quarterly report or electronic access to information on a substantially continuous basis;  after the year ending 30 June 2027—electronic access to information on a substantially continuous basis; and  an annual investor statement and audit report. RG 179.117–RG 179.125 You must retain copies of the disclosure documents you provide to each client. RG 179.126–RG 179.127 FSG and MDA contract Location of guidance Comply with the conditions of relief related to FSGs and MDA contracts. Section D Page 8 REGULATORY GUIDE 179: Managed discretionary accounts © Australian Securities and Investments Commission September 2026 Page 8 Requirements for relief: FSGs and MDA contracts RG 179.9 If you’re an MDA provider, to rely on our relief you will need to comply with the requirements outlined below in Table 2 and explained in Section D. Table 2: Overview of the requirements relating to FSGs and MDA contracts under ASIC Instrument 2026/720 FSG Location of guidance You must include certain additional information in the FSG you give to each client about the MDA. The key additional content requirements are:  a statement that the client must first enter into an MDA contract with you before the MDA can be provided;  a statement that the MDA contract will include an investment program that is prepared in accordance with the applicable requirements in the Corporations Act;  a statement that the investment program will contain particular information, including: − the nature and scope of the MDA provider’s, or external MDA provider’s, discretions; − the investment strategy to be applied; − significant risks associated with the MDA contract; − a statement that the investment program will set out the basis on which the contract is suitable for the client; and − a statement that the investment program will contain the required warnings;  information about any significant risks associated with investing through the MDA service;  if an external MDA custodian or their agent holds the legal title to any client portfolio assets—information about the services for which the external MDA custodian and the MDA provider are responsible;  if the client portfolio assets may include non-limited recourse products— prescribed information about those products, such as the types of non-limited recourse products that may be included in the MDA, their key features, and information about leverage that may apply; and  any other information that a person would reasonably require for the purpose of making a decision, as a retail client, about whether to invest through the MDA service. RG 179.128–RG 179.130 and Table 7 MDA contract Location of guidance Enter into an MDA contract with the client before providing the MDA RG 179.131–RG 179.132 The MDA contract must include an investment program that complies with certain requirements. RG 179.133–RG 179.137 The MDA contract must state that you will act honestly and in the best interests of the client, exercise due care and diligence, give priority to the client’s interests and not use information about the client to your advantage or to cause detriment to the client. RG 179.138–RG 179.139 Provide clear disclosure in the contract about indirect holdings, including a prominent warning about the key differences between acquiring financial products through an MDA (i.e. indirectly) and acquiring them directly. RG 179.140–RG 179.143 Page 9 REGULATORY GUIDE 179: Managed discretionary accounts © Australian Securities and Investments Commission September 2026 Page 9 MDA contract Location of guidance The MDA contract must include a risk warning if you invest in non-limited recourse products. RG 179.144–RG 179.145 The MDA contract must include steps for terminating the contract. RG 179.146–RG 179.148 The MDA contract must disclose fees and costs. RG 179.149–RG 179.150 Statements that you will be responsible to the client for compliance with:  the investment strategy set out in the MDA contract (except where the client has agreed in writing to a variation); and  any representations about how you will provide MDA services that are included in the FSG, unless otherwise agreed in writing by the client. RG 179.151 Review the MDA contract and investment program at least once every 13 months. RG 179.152–RG 179.157 FSG and MDA contract Location of guidance Retains copies of all disclosure documents. RG 179.126–RG 179.127 MDA services with different arrangements RG 179.10 We recognise that not all MDAs are the same. Our policy is flexible enough to accommodate different arrangements that may be involved in providing an MDA. Table 3 summarises these different arrangements. Table 3: Summary of different arrangements for the operation of an MDA Arrangement Description Location of guidance MDA with an external MDA custodian Another AFS licensee (an external MDA custodian) enters into a direct contract with the MDA clients to provide custody services relating to the MDA. In this case, the external MDA custodian is responsible to the client for the custody services. Note: If an MDA provider engages another AFS licensee to obtain custody services relating to the MDA services it operates, that licensee is not an external MDA custodian but is an agent of the MDA provider. RG 179.159–RG 179.166 MDA with an external MDA adviser Another AFS licensee (an external MDA adviser) deals directly with the client and is directly responsible to the client for providing personal advice relating to the MDA services by preparing or reviewing the investment program included in the MDA contract. Note: If an MDA provider uses its own in-house adviser to prepare or review the investment program included in the MDA contract, that adviser is not an external MDA adviser but is an agent of the MDA provider. RG 179.167–RG 179.177 MDA with external administration support The MDA provider outsources some or all of the administrative functions of an MDA. RG 179.178–RG 179.180 Page 10 REGULATORY GUIDE 179: Managed discretionary accounts © Australian Securities and Investments Commission September 2026 Page 10 Arrangement Description Location of guidance MDA where the client holds the legal title to portfolio assets Another AFS licensee provides dealing services to MDA clients by issuing its own financial products or by providing execution of trades. This would occur if the legal title to financial products in the client’s portfolio is held by the client and not by the MDA provider (or external MDA custodian). Because the MDA provider, and not the client, makes the relevant investment decisions, we give some relief to the other licensee for certain dealing services. RG 179.181–RG 179.185 MDA on a regulated platform An MDA provider provides an MDA on a regulated platform. RG 179.186–RG 179.193 AFS licensees who provide MDA services to family members only An AFS licensee who is a market participant provides MDA services to a family member of the licensee or a family member of a representative of the licensee. RG 179.194–RG 179.198 Note: An MDA may have one or a combination of any of the above variations. Obligations of financial product advisers RG 179.11 We expect financial product advice about MDAs to comply with the financial product advice requirements in the Corporations Act. We do not provide relief from these provisions. See Section F for more information about complying with these requirements. Transitional requirements related to client reporting obligations RG 179.12 As a transitional measure, if an MDA provider provided quarterly reports to clients under the previous relief, the provider can continue to provide those reports for quarters up to and including the quarter ending 30 June 2027: see RG 179.121. Note: For more information, see Section C of this guide. Page 11 REGULATORY GUIDE 179: Managed discretionary accounts © Australian Securities and Investments Commission September 2026 Page 11 B MDAs and our approach to regulation Key points An MDA generally falls within the definition of a ‘managed investment scheme’ in s9 of the Corporations Act and a ‘facility for making a financial investment’ in s763B of the Corporations Act. We regulate an MDA as a financial product. There are a wide variety of arrangements that can constitute an MDA. In this section, we provide guidance about what we consider to be the key features of an MDA. What is an MDA? RG 179.13 An MDA means a facility, other than a registered managed investment scheme (registered scheme) or an interest in a registered scheme, with the following features: (a) a person (MDA client) makes contributions; (b) the client portfolio assets are managed on an individual basis by another person (MDA provider) at the MDA provider’s discretion, subject to any agreed limitation; and (c) the client and the MDA provider intend that the MDA provider will use the client portfolio assets to generate a financial return or other benefit for the client. Table 4: Key features of an MDA Feature Description MDA provider An MDA provider is a person who enters into a contract with a client to provide an MDA: see RG 179.14. Client contributions Clients give the MDA provider (or grant the MDA provider access to) contributions of money or money’s worth: see RG 179.16–RG 179.17. Trading discretion The MDA provider has the discretion to invest in financial products using client contributions without prior reference to the client for each transaction, subject to any limitation that may be agreed between the client and the MDA provider: see RG 179.18–RG 179.22. Client portfolio management The client’s portfolio assets are managed as a discrete portfolio belonging to that client: see RG 179.23–RG 179.26. Benefits for clients The client and the MDA provider intend that the MDA provider will use the client contributions to generate a financial return or other benefit for the client (even if this does not ultimately occur): see RG 179.27. Page 12 REGULATORY GUIDE 179: Managed discretionary accounts © Australian Securities and Investments Commission September 2026 Page 12 Feature Description Retail clients Clients of the MDA include retail clients, as defined in s761G and s761GA of the Corporations Act and Div 2 of Pt 7.1 of the Corporations Regulations 2001 (Corporations Regulations). Note: Any person engaged by an MDA provider to carry out any of the functions of the MDA provider is an agent of the provider (e.g. a custodian appointed by the provider). However, external MDA custodians and external MDA advisers enter into a direct contract with the clients to provide these financial services and are directly responsible to the client—they are not agents of the MDA provider: see Section E for details of how our policy applies to these persons. MDA provider RG 179.14 An MDA provider is a person who enters into a contract with a client to provide an MDA. The MDA provider must hold an AFS licence authorisation to: (a) deal in a financial product to issue: (i) interests in managed investment schemes limited to MDA services; or (ii) miscellaneous financial investment products limited to MDA services; Note 1: In this guide, we refer to this as the ‘AFS licence authorisation to issue a financial product limited to MDA services’. Note 2: You must have this authorisation to benefit from the relief for MDA providers in ASIC Instrument 2026/720. (b) deal in all the financial products that are acquired with client portfolio assets under the MDA contract; (c) provide personal advice to clients in relation to the MDA—except where an external MDA adviser enters into a direct contract with each MDA client to provide financial product advice about the investment program; and (d) provide custodial or depository services in relation to the client portfolio assets—except where an external MDA custodian enters into a direct contract with each MDA client to provide the custodial or depository services. RG 179.15 The MDA provider may also provide administrative services relating to the MDA or outsource these services. Client contributions RG 179.16 A client can make contributions in two ways: (a) by giving the MDA provider money or other assets that can be converted to funds for investment purposes (e.g. the client transfers to the provider the legal title to the assets); or (b) by giving the MDA provider access to, and control of, these funds and assets (i.e. the client retains the legal title to the assets and the provider is given access to or control of the assets for trading purposes through a power of attorney or other authorisation such as a signatory arrangement). Page 13 REGULATORY GUIDE 179: Managed discretionary accounts © Australian Securities and Investments Commission September 2026 Page 13 Note 1: Cash management accounts and trust accounts that are operated for providing non-discretionary trading services (e.g. those operated by brokers) are not MDA services because they are not used for services involving discretionary trading by the MDA provider. Note 2: For MDAs provided by persons dealing in derivatives, we permit clients’ funds and assets to be held in brokers’ segregated accounts. RG 179.17 When a client gives access to, and control of, client contributions to an MDA provider, the provider can use these funds or assets to produce benefits for the client in the same way as if the provider held the legal title. We consider that these arrangements meet s9(a)(i) of the definition of a managed investment scheme in the Corporations Act, which deals with how people make contributions to the scheme: see RG 179.20 and RG 179.26 for how the other elements of this definition are met. Trading discretion RG 179.18 For an arrangement to be treated as an MDA, the MDA provider must have the discretion to make investments without prior reference to the client for each transaction. For this to occur, the client authorises the MDA provider to exercise trading discretion in relation to the client’s portfolio assets. Under the requirements for our relief, the nature and scope of the trading discretion must be clearly set out in the MDA contract that is given to each MDA client. Note: For more details about the MDA contract and investment program, see Section D. RG 179.19 The trading authority may allow the MDA provider to exercise its discretion under either: (a) a detailed investment program that identifies particular financial products or classes of financial product in which the client contributions and assets, derived directly or indirectly from the client contributions, will be invested; or (b) an investment program that contains only a broad investment strategy or an objective. RG 179.20 Trading discretions of this nature give the MDA provider the power to convert or dispose of the funds and assets representing that client’s contributions when operating the MDA. We consider that these arrangements meet the requirement in s9(a)(iii) of the definition of a managed investment scheme in the Corporations Act because the client has no day-to-day control over their portfolio assets (even if the client has the legal title to those assets and the discretionary trading is carried out under a power of attorney or other authorisation). RG 179.21 Although the client effectively delegates discretion to the MDA provider to select investments for their portfolio, the client may retain the right to direct the provider on matters such as the timing of the transfer or realisation of assets in their portfolio, and how the proceeds from the realisation of assets Page 14 REGULATORY GUIDE 179: Managed discretionary accounts © Australian Securities and Investments Commission September 2026 Page 14 should be used. The provider may also specifically reserve the right to recover amounts due from the client out of the assets in their portfolio (e.g. under margin lending arrangements, or for brokerage or other fees payable by the client). These arrangements do not necessarily mean that the arrangement is not an MDA. RG 179.22 If the trading discretion given to an MDA provider is confined merely to the time or price at which transactions may be effected, we do not consider that this arrangement constitutes an MDA that would be covered by our MDA relief. In some circumstances, however, it may be an IDPS. Note: For our policy on IDPSs, see Regulatory Guide 148 Platforms that are managed investment schemes and nominee and custody services (RG 148). Client portfolio management RG 179.23 As part of an MDA—subject to any contrary arrangements that the provider may have previously put in place to ensure the repayment of money owed by the client—the MDA provider typically undertakes to: (a) manage the assets in each client’s portfolio as a discrete portfolio; (b) provide reports to the client on their portfolio; and (c) follow the client’s instructions on: (i) the transfer and liquidation of assets in their portfolio; and (ii) the payment of proceeds from the realisation of assets. RG 179.24 Assets in the client’s portfolio under an MDA can be held in two ways: see RG 179.16. The management of each client’s assets as a discrete portfolio involves: (a) where the legal title to the assets is held by the MDA provider or the agent of the MDA provider (e.g. where the client has a beneficial interest in the assets)—the identification of those assets as belonging to that particular client; or (b) where the legal title to the assets is held by the client—an authorisation arrangement, such as a power of attorney or signatory arrangement. RG 179.25 In either case, under the requirements of our relief, the MDA provider must not pool one client’s portfolio assets with any other client’s portfolio assets for investment purposes (e.g. to access wholesale investments). This is because pooling would be inconsistent with the policy basis for our relief, which is that the client’s assets are managed as a discrete portfolio belonging to that client. Note: For guidance on the application of this requirement to an AFS licensee providing MDAs on a regulated platform, see RG 179.187. RG 179.26 However, an MDA provider will typically carry out some transactional and other functions relating to client portfolios on a collective basis (e.g. placing bulk orders or conducting research into financial products in which portfolio Page 15 REGULATORY GUIDE 179: Managed discretionary accounts © Australian Securities and Investments Commission September 2026 Page 15 assets are to be invested). ASIC Instrument 2026/720 does not prohibit this. Where this occurs, there may be pooling for administrative cost savings that are to be passed on to clients, which would satisfy s9(a)(ii) of the definition of a managed investment scheme. Note: ASIC Instrument 2026/720 does not prohibit carrying out transactions between client portfolios. However, if an MDA provider is a participant of a licensed market, it may be subject to restrictions relating to such transactions under the market’s operating rules. Benefits for clients RG 179.27 Generally, a client participates in an MDA with the intention that they will derive benefits, including from: (a) the MDA provider’s expertise in investment selection; (b) the MDA provider’s ability to respond quickly to market developments by trading in the client’s portfolio assets without referring to the client; and (c) possible cost reductions in the services offered as part of the MDA, which may include consolidated reporting and bulk ordering (although there is no pooling of different clients’ portfolio assets for investment purposes, such as accessing wholesale investments: see RG 179.25). RG 179.28 When coupled with the other features of an MDA (e.g. the client not having day-to-day control over their portfolio: see RG 179.20), we consider that MDAs generally fall within the definition of both a managed investment scheme (s9 of the Corporations Act) and a facility for making a financial investment (s763B of the Corporations Act). Arrangements that can constitute an MDA RG 179.29 There are a wide variety of arrangements that can constitute an MDA. Industry uses different terminology to refer to services that may have the relevant features of an MDA. For example, products commonly known by industry and investors as a separately managed account, individually managed account, investment advisory program or a managed discretionary portfolio service may fall within the definition of an MDA. Note 1: We do not consider that you could provide an MDA as an IDPS because an MDA involves the MDA provider making investment decisions about financial products acquired for the client’s portfolio. In an IDPS, the client (rather than the provider) makes the investment decisions. There are also other differences between IDPS services and MDA services. In particular, under our relief, an MDA provider is not permitted to pool different MDA clients’ funds and assets for investment purposes (e.g. to access wholesale investments): see RG 179.25. Note 2: For our policy on IDPS and IDPS-like schemes, see RG 148. Page 16 REGULATORY GUIDE 179: Managed discretionary accounts © Australian Securities and Investments Commission September 2026 Page 16 Our approach to regulation of MDA providers RG 179.30 As noted at RG 179.28, an MDA is generally both a managed investment scheme and a facility for making a financial investment under the definitions in the Corporations Act. We regulate an interest in an MDA as a financial product. If you enter into a contract with a client to provide an MDA, we treat you as the issuer of a financial product. RG 179.31 Our regulation also recognises that an MDA involves a range of functions and services, such as offering and trading in financial products, operating a custodial or depository service, and giving personal advice. RG 179.32 We understand that MDA providers have more limited functions than responsible entities of registered schemes. If you enter into a contract with a client to provide an MDA, we will therefore give you conditional relief under ASIC Instrument 2026/720 from: (a) the requirement in s601ED(5) that the MDA must be registered; (b) the requirement to prepare a PDS under Pt 7.9; and (c) the securities disclosure and related provisions in Pts 6D.2 and 6D.3 for securities held on behalf of the client under the MDA. RG 179.33 To have the benefit of our relief, you must comply with the requirements set out in Section C and Section D. RG 179.34 Our overriding objectives when regulating MDAs are to help promote investor and financial consumer trust and confidence in MDA services, and to apply the minimum appropriate regulation to MDA providers. This is consistent with the framework for the regulation of financial products and services under the Corporations Act. RG 179.35 Our regulatory approach seeks to allow for flexibility in the structuring of MDAs by ensuring that our requirements for MDA providers are appropriate and therefore tailored to take into account the nature of the financial products and services involved in providing the MDA. Our approach to MDAs is similar to our approach to registered schemes to the extent that the transactional and custodial functions undertaken by MDA providers are similar to those of responsible entities. MDA services provided only to wholesale clients RG 179.36 If you offer or issue an MDA only to wholesale clients, you do not need to rely on our relief to provide these services because the managed investment scheme provisions in Ch 5C and the disclosure requirements in Pt 7.9 only apply when financial products and services are offered or issued to retail clients. Note: Reg 7.1.27 of the Corporations Regulations provides that, when a client is a wholesale client in relation to a financial product, the client remains a wholesale client in relation to that product. The effect of reg 7.1.27 is that the MDA provider can continue to treat a client as a wholesale client in relation to the MDA. For example, Page 17 REGULATORY GUIDE 179: Managed discretionary accounts © Australian Securities and Investments Commission September 2026 Page 17 when a client contributes at least $500,000 to an MDA, the client is a wholesale client for any dealing provided on behalf of that client by the MDA provider, such as any custodial or depository service, or any financial product advice. MDA services provided to both retail and wholesale clients RG 179.37 If you issue an MDA to both retail and wholesale clients, you will need to rely on our relief because the exemptions in the Corporations Act from the requirement to register a managed investment scheme may not apply—that is: (a) the exemption under s601ED(2)—because this requires that all clients are persons to whom a Product Disclosure Statement (PDS) is not required to be issued; and (b) the exemption under s601ED(1)—because you may have, or be taken to have, more than 20 members; or you may qualify as a person who is in the business of promoting managed investment schemes. RG 179.38 If this is the case, and you issue an MDA to both retail and wholesale clients under our main relief (as set out in RG 179.32), you do not need to comply with certain requirements for the MDAs that you provide to wholesale clients. RG 179.39 Some of the Corporations Act requirements, which are modified by our relief or on which the conditions of our relief are based (e.g. the requirements relating to the Financial Services Guide (FSG)), do not apply to financial services provided to wholesale clients. Therefore, these conditions do not apply to MDAs issued to wholesale clients. RG 179.40 The conditions and modified provisions under our relief that have a general application will apply to MDA services provided to wholesale clients because they cannot be separated from the conditions that otherwise apply to MDA services provided to retail clients. For example, you must have a specific AFS licence authorisation to issue an interest in a managed investment scheme limited to MDA services, or miscellaneous financial investment products limited to MDA services. You must also maintain adequate documented compliance measures for all MDA services. Note 1: For information on the conditions that apply to you when you provide an MDA under our relief, see Sections C and D. Note 2: Our relief does not prevent you from voluntarily entering into a contract with your wholesale clients to provide MDA services on conditions that are similar to those required for the MDAs you provide to retail clients. However, by not doing so, you will not breach the conditions of our relief, which only apply in relation to retail clients. Our approach to regulation of financial product advisers RG 179.41 If you are making recommendations or statements of opinion about investing in an MDA or investing through an MDA (including providing an investment program and/or annual review of the investment program), you will be providing financial product advice under s766B of the Corporations Act. Page 18 REGULATORY GUIDE 179: Managed discretionary accounts © Australian Securities and Investments Commission September 2026 Page 18 RG 179.42 This means that you must: (a) comply with the licensing requirements for providing financial product advice (see RG 179.199–RG 179.201); (b) act in the best interests of the client and comply with related obligations (see RG 179.202–RG 179.206); (c) provide a Statement of Advice (SOA) that clearly sets out the personal advice and the reasons for your advice, as well as disclosures about any relevant benefits or remuneration (see RG 179.207–RG 179.210); and (d) manage conflicts of interest (see RG 179.211–RG 179.215). Page 19 REGULATORY GUIDE 179: Managed discretionary accounts © Australian Securities and Investments Commission September 2026 Page 19 C Requirements for relief: MDA providers Key points If you enter into a contract with a retail client to provide an MDA, we will give you conditional relief from the managed investment scheme provisions in Ch 5C, and certain disclosure requirements in Ch 6D and Pt 7.9. To rely on our relief, you must: • hold an AFS licence authorisation to issue a financial product limited to MDA services, and hold other authorisations relevant to the MDA services you provide (see RG 179.43–RG 179.53); and • comply with certain requirements (see RG 179.54–RG 179.125). You must also meet the requirements in Section D. For an overview of the requirements, see Table 1 and Table 2 in the Overview. Hold an AFS licence and relevant authorisations RG 179.43 Before you may enter into a contract with a client to provide an MDA service under our relief, you must hold a specific AFS licence authorisation to issue a financial product limited to MDA services: see RG 179.14. You will also need to obtain licence authorisations relevant to any other MDA services you provide. RG 179.44 If we grant you an AFS licence with the relevant authorisations, you will need to comply with the requirements in ASIC Instrument 2026/720. Note: If the only MDAs you provide are MDAs for your family members or the family members of your representatives, see RG 179.194. RG 179.45 The types of authorisation you require will depend on the functions and services you will undertake in relation to the MDA. RG 179.46 In addition to the AFS licence authorisation to issue a financial product limited to MDA services, you must hold an AFS licence authorising you to: (a) deal in all the financial products in which a client’s portfolio may be invested under the terms of the MDA contract; (b) provide financial product advice on an MDA if you provide that financial product advice; (c) provide financial product advice on all the financial products in which a client’s portfolio may be invested, unless you have an external MDA adviser (see RG 179.47); and (d) provide a custodial or depository service, unless you have an external MDA custodian (see RG 179.49). Page 20 REGULATORY GUIDE 179: Managed discretionary accounts © Australian Securities and Investments Commission September 2026 Page 20 Note: You do not need an authorisation to operate a custodial or depository service if the client holds the legal title to the financial products in their portfolio. External MDA adviser RG 179.47 If you provide an MDA to a client, and an external MDA adviser enters into a direct contract with that client to provide financial product advice about the investment program, you may not be required to hold an AFS licence authorising you to give financial product advice to clients. This is because the relevant licence authorisation will be held by the external MDA adviser. RG 179.48 If you provide an MDA with an external MDA adviser, you will need to consider whether you require an AFS licence authorisation to give financial product advice. You should consider whether you make recommendations or statements of opinion about investing in an MDA, or about acquiring or disposing of financial products that are client portfolio assets independent of the investment program and annual review of the investment program. Note: For details of how our policy applies to MDAs with an external MDA adviser, see Section E. External MDA custodian RG 179.49 If an external MDA custodian enters into a direct contract with each client to whom the MDA provider provides MDA services to provide custodial or depository services in relation to the client portfolio assets, the MDA provider is not required to hold an AFS licence authorising it to provide custodial or depository services. In this case, the relevant licence authorisation will be held by the external MDA custodian. Note: For details of how our policy applies to MDAs with an external MDA custodian, see Section E. How we will assess your application for authorisation RG 179.50 When deciding whether to grant the relevant AFS licence authorisations, we will assess whether you have the necessary resources and expertise to provide financial services involved in providing an MDA in accordance with your obligations as an AFS licensee, and in compliance with the requirements in ASIC Instrument 2026/720. RG 179.51 We will also consider whether you have the capacity to provide the relevant MDA services efficiently, honestly and fairly. RG 179.52 We will base our assessment on our regulatory guidance, including: (a) the general requirements in: (i) Regulatory Guide 1 Applying for and varying an AFS licence (RG 1); (ii) Regulatory Guide 104 AFS licensing: Meeting the general obligations (RG 104); Page 21 REGULATORY GUIDE 179: Managed discretionary accounts © Australian Securities and Investments Commission September 2026 Page 21 (iii) Regulatory Guide 105 AFS licensing: Organisational competence (RG 105) (to the extent that these requirements apply to dealing in financial products, custody services and giving financial product advice); (iv) Regulatory Guide 126 Compensation and insurance arrangements for AFS licensees (RG 126); (v) Regulatory Guide 271 Internal dispute resolution (RG 271); and (vi) Regulatory Guide 166 AFS licensing: Financial requirements (RG 166); and (b) the more specific requirements in: (i) Regulatory Guide 132 Funds management: Compliance and oversight (RG 132); and (ii) Regulatory Guide 133 Funds management and custodial services: Holding assets (RG 133) (except for the compliance committee requirements)—where the client (or client’s agent) does not hold the legal title to portfolio assets. Note: We will apply these requirements as if references to managed investment schemes were to MDA services. How we will assess previous experience RG 179.53 You must have the knowledge and skills that demonstrate that you: (a) can provide all of the financial products and services covered by your AFS licence, including providing the MDA, and understand the legal and compliance obligations relating to those products and services; and (b) understand the investment and operational issues of all the types of client portfolio assets under management (see RG 105). Comply with AFS licence obligations RG 179.54 This guide focuses on the obligations that apply to an MDA provider or persons who provide services and functions relating to an MDA under ASIC Instrument 2026/720. In addition, you must comply with the general obligations that apply to an AFS licensee under the Corporations Act and your AFS licence conditions. RG 179.55 An MDA provider that breaches an AFS licence obligation—including the obligations that apply because of ASIC Instrument 2026/720—will be in breach of its obligations as an AFS licensee to comply with the relevant financial services laws. Note: If you become aware that you can no longer meet or have breached any condition of our relief or the financial services laws, including your AFS licence conditions, you must notify ASIC: see RG 179.94. Page 22 REGULATORY GUIDE 179: Managed discretionary accounts © Australian Securities and Investments Commission September 2026 Page 22 Act honestly, in the best interests of the client, with reasonable care RG 179.56 Under our relief, we impose obligations that are based on the duties of a responsible entity of a registered scheme under Ch 5C. RG 179.57 You must also assume these obligations contractually with each MDA client. This means you must state in the contract that you will comply with these obligations—see RG 179.138–RG 179.139 for details. RG 179.58 We impose these additional obligations on MDA providers because they have discretionary authority to make and implement investment decisions on behalf of their clients. The obligations ensure that MDA clients have a level of protection that is comparable to the protection given to members of a registered scheme in relation to those duties. RG 179.59 The obligation in our relief to act in the best interests of the client in performing your duties in relation to the MDA is a separate and additional obligation to the obligation for advisers providing personal advice to retail clients to act in the client’s best interests when providing personal advice. Note: For guidance for financial product advisers, see Section F. RG 179.60 Providing an MDA includes a broader range of financial services than the provision of personal advice. The duty to act in the best interests of the client under our relief applies across all activities undertaken in providing the MDA. RG 179.61 We expect that, as part of your obligation to maintain adequate documented measures to ensure compliance with your obligations under our relief (see RG 179.91), you will implement processes and procedures to ensure that your representatives comply with the duty to act in the best interests of the client in relation to all the services provided under the MDA. RG 179.62 We consider that you would breach your duty to act honestly and in the best interests of the client if, for example, you are aware that the size or frequency of your transactions under an MDA are excessive, taking into account the investment objectives, financial situation and needs of the client. RG 179.63 Even if you are not aware that the transactions are excessive, if you make such transactions, you may be in breach of the duty to exercise reasonable care and diligence. Note: Excessive transactions may be an indicator of ‘churning’. Churning is trading of a size or frequency that has the effect of generating excess commissions. Example 1 Scenario Anouke, a retail client, has invested in an MDA. Her investment objectives have a long-term focus. She has expressed to the MDA provider that she wants to invest in blue-chip, ‘steady Australian shares’ and wants to receive regular fully franked dividends. Page 23 REGULATORY GUIDE 179: Managed discretionary accounts © Australian Securities and Investments Commission September 2026 Page 23 Commentary In this scenario, the criteria that may be applied to determine whether or not trading is excessive or inappropriate, and whether the MDA provider breaches its obligation to exercise care and diligence, may include, but are not limited to, whether: • the shares are in the ASX 100 or producing a significant net profit after tax at the time of the trade; • significant amounts of the shares are sold within 30 days of purchase and a fully franked dividend is not received; • the trade results in a fully franked dividend being received; • the brokerage, commission or management fees earned by the MDA provider or its agents during the period are high when expressed as a percentage of the change in value of the MDA portfolio for the period; and • the trade is contrary to the client’s relevant circumstances. Note 1: In this guide, we use the term ‘client’s relevant circumstances’ to refer to the objectives, financial situation and needs of a client that would reasonably be considered relevant to the subject matter of advice sought by the client. Note 2: Under Rule 3.3.2 of the ASIC Market Integrity Rules (ASX Market) 2010, a market participant must not enter into a market transaction on an MDA for a retail client if the size or frequency of the market transaction may be considered excessive, taking into account the client’s relevant circumstances. RG 179.64 Similarly, we consider that you would breach your obligation to act honestly, as well as your AFS licence obligations, if you conduct discretionary trading outside the terms of the MDA agreement and investment program. Note: Under Rule 3.3.1 of the ASIC Market Integrity Rules (ASX Market) 2010, a market participant must not enter into a market transaction for a client, or allocate a market transaction to a client’s account, except under an exercise of discretion in relation to that particular client’s MDA (i.e. within the terms of the MDA contract). Manage conflicts of interest RG 179.65 You must comply with the requirement under s912A(1)(aa) to have in place adequate arrangements for managing conflicts of interest that may arise in relation to the provision of financial services by you or your representatives (the ‘conflict management obligation’). We expect you to take into account our guidance in Regulatory Guide 181 AFS Licensing: Managing conflicts of interest (RG 181) to comply with this obligation. RG 179.66 If you provide an MDA in reliance on our relief, you must comply with additional obligations to the conflict management obligation that applies to all AFS licensees. You must ensure that each MDA contract obliges you to: … act in the best interests of the retail client in performing your duties in relation to the MDA and, if there is a conflict between the interests of the client and your own interests in performing those duties, give priority to the client’s interests (ASIC Instrument 2026/720). Page 24 REGULATORY GUIDE 179: Managed discretionary accounts © Australian Securities and Investments Commission September 2026 Page 24 RG 179.67 ASIC Instrument 2026/720 imposes this additional, more specific obligation on MDA providers because they have discretionary authority to make and implement investment decisions on behalf of their clients. The obligation ensures consistency between the obligations imposed on MDA providers and those imposed on responsible entities of registered schemes under s601FC. Common conflicts of interest RG 179.68 The provision of an MDA will often give rise to conflicts of interest that you need to manage. Some common conflicts of interest that may arise in providing an MDA include the following: (a) An MDA provider that derives revenue from transaction fees (e.g. brokerage) may have a conflict between their interest in generating revenue by increasing the number and/or size of transactions for a client and the client’s interest in avoiding unnecessary transaction fees: see RG 179.62. (b) An MDA provider that issues other financial products may have a conflict between its interest in generating additional revenue from those other financial products and its client’s interest in being invested in the most appropriate investments, given their relevant circumstances. (c) An MDA provider that has interests in other investments or companies (e.g. as an investor or officer) may have a conflict between its interest as an investor or officer and its client’s interests in being invested in the most appropriate investments, given their relevant circumstances. (d) An MDA provider that underwrites or acts as lead manager for capital raisings may have a conflict between its interest in the success of those capital raisings and its client’s interest in being invested in the most appropriate investments, given their relevant circumstances. Note 1: These are examples only and not an exhaustive list of all conflicts of interest that may arise in the course of providing an MDA. You should review your individual circumstances to identify divergent interests, and assess those interests and potential conflicts. Note 2: AFS licensees, including MDA providers, must comply with the provisions in the Corporations Act relating to conflicted remuneration and other prohibited remuneration. You need to consider your obligations under these provisions and ensure that you comply with all relevant obligations, including prohibitions on giving and accepting conflicted remuneration relating to financial product advice. For further guidance on these obligations, see Regulatory Guide 246 Conflicted and other banned remuneration (RG 246). Managing conflicts of interest as an MDA provider RG 179.69 To comply with your conflicts management obligation, and the specific requirements in relation to conflicts under our relief, you must, on an ongoing basis, have adequate documented conflicts management arrangements in place that ensure that you and your representatives: (a) identify actual or potential conflicts of interest; Page 25 REGULATORY GUIDE 179: Managed discretionary accounts © Australian Securities and Investments Commission September 2026 Page 25 (b) evaluate and assess those conflicts; and (c) act in the best interests of each client and, where there is a conflict, prioritise each client’s interests over your own interests. RG 179.70 RG 181 identifies three measures that AFS licensees would generally use to manage conflicts of interest. These measures are: (a) avoiding conflicts of interest; (b) controlling conflicts of interest; and (c) disclosing conflicts of interest. Note: Effective conflicts management will generally involve a combination of avoiding, controlling, and disclosing conflicts of interest. We expect you to take into account the guidance in RG 181 to comply with the obligation to manage conflicts of interest. Avoiding conflicts of interest RG 179.71 Some conflicts of interest are likely to have such a serious or significant potential impact on an MDA client, or an MDA provider, that the only way to adequately manage that conflict is to avoid it. RG 179.72 You are responsible for identifying and avoiding such conflicts. You need to ensure that you have adequate arrangements in place to enable you to identify and assess such conflicts. RG 179.73 Measures you can consider using to avoid certain conflicts of interest include: (a) declining to enter into an MDA contract in certain circumstances; (b) declining to enter into other arrangements or business activities that give rise to a serious conflict of interest in relation to your responsibilities as an MDA provider; or (c) using remuneration and fee-charging models that negate certain conflicts of interest. Example 2 Scenario XY Invest is a small, boutique financial planning business that offers MDAs to retail clients. The principals of XY Invest also undertake trading in shares and derivatives on their own behalf. Bryce seeks personal advice from one of the principals of XY Invest about setting up an MDA account with them. He has some existing shareholdings that he would like to be incorporated into an MDA account, and he would like XY Invest to also exercise discretionary authority over those holdings as part of the MDA. One of Bryce’s holdings is a stock that the principal of XY Invest short sells from time to time. Commentary The interests of the principal of XY Invest who is short selling the relevant stock are not aligned with the interests of Bryce as an existing stockholder. Page 26 REGULATORY GUIDE 179: Managed discretionary accounts © Australian Securities and Investments Commission September 2026 Page 26 This conflict of interest means that if XY Invest were to manage an MDA on Bryce’s behalf, a significant and serious conflict of interest would arise. To comply with its obligations under s912A(1)(aa) and ASIC Instrument 2026/720, we consider that XY Invest would need to avoid this conflict of interest. For example, XY Invest might offer the MDA to Bryce but decline to hold discretionary authority over those shares. Alternatively, they might undertake not to engage in short selling of those shares on its own behalf while it holds that discretionary authority over Bryce’s holding. Controlling conflicts of interest RG 179.74 Some conflicts of interest that may arise with MDAs can be effectively managed by implementing internal controls to ensure that you and your representatives act in the client’s best interests and, where there is a conflict, that the client’s interests are prioritised over your own. RG 179.75 You could use some or all of the following measures to control conflicts of