How to apply

You can apply for a designation if you intend to offer financial products, and your view is, based on their economic substance, they should not be regulated under the FMC Act, or they should be classified and treated as a different category of financial product.

This section helps you answer these questions:

How do I make an application?

Should I apply for a designation or an exemption?

What information do I include in my application?

How much does it cost?

How long does it take?

What designations cannot be given?

 

How do I make an application?

You apply for a designation by emailing your application to us. You also need to send a hard copy letter identifying your emailed application. Your letter should be forwarded to our offices and addressed to 'Exemptions Team'.

Should I apply for a designation or an exemption?

A designation changes how a financial a product is classified under the FMC Act.  It may change a financial product from one category to another (eg equity to debt) or declare that something is not a financial product at all.  The result of these designations is to change the statutory obligations that apply to the product under the FMC Act.

You should consider applying for a designation if you have products that have extraordinary characteristics that you think should fit a different category, or should not be regulated as a financial product at all.

You should consider applying for an exemption rather than a designation when you think a product, in economic substance, is similar to other products of its type but that some aspects of the regulatory regime need to be adjusted for the circumstances. If your application relates to products that are already issued or transferred then this is another situation where you should consider applying for an exemption rather than a designation.

What information do I include in my application?

An important part of your application is telling us what designation you are seeking.

The designation information you need to include are:

  • the full name, address and corporate status of the person(s) seeking the designation
  • the relevant designation power in section 562 of the FMC Act
  • the financial products or class of financial products you want the designation to cover
  • what you want the designation to do
  • any terms or condition you think should apply
  • the jurisdiction where the applicant is incorporated or constituted, and any securities exchanges where the applicant’s financial products are going to be listed
  • details of any related exemption you are seeking for the particular designation.

Explain why are you seeking this designation

You need to explain why you need the designation and justify the reasons. You should include an explanation of how the designation sought is consistent with the policy of the FMC Act, and how it meets the statutory tests in section 563.

Your application should explain the economic substance of the relevant financial product and why this supports the designation you are seeking.

It should explain how the designation will promote one or more of the purposes of the FMC Act regime:

  • confident and informed participation in financial markets
  • development of fair, efficient and transparent financial markets
  • to provide for timely, accurate, and understandable information for investment decisions
  • to ensure appropriate governance arrangements for financial products and services that allow for effective monitoring and reduce governance risks
  • to avoid unnecessary compliance costs
  • to promote innovation and flexibility in the financial markets.

Your application should also specify any proposed terms or conditions for the circumstances of the designation.

Related exemption application

If you think your financial product may be subject to unnecessary or inappropriate new disclosure or compliance obligations that come with the designation given, you might want to apply for an exemption to modify certain aspects of the new disclosure or compliance obligations. 

Draft declaration

You must include a draft declaration to give effe ct to the designation you seek. The declaration should include:

  • the financial products the designation will apply to
  • the new category you want the financial products to belong to, or if you think the financial products should no longer be regulated at all
  • the company’s, or other entity’s, proper legal names
  • any terms that need to be defined
  • the particular provisions of the relevant legislation
  • the terms and conditions for the designation sought
  • a summary of the key reasons for the designation (consistent with the policy of the FMC Act, and that meet the statutory tests for us to make a designation)

How much does it cost?

Designation fees are set by regulations and apply from 17 December 2015. You need to send a cheque with your application for $1,265 to cover the application fee of $115 and an advance fee for fees and costs to be incurred. We will charge any additional time spent on an hourly basis (the hourly rate for FMA Board members is $230 and the hourly rate for FMA staff is $178.25).  

We can also recover the cost of obtaining expert assistance in relation to particular applications.  Applicants must also reimburse us for the costs of notifying the declaration notice in the Gazette.

How long does it take?

Once we receive your application, it generally takes 8 to 12 weeks to process individual designations (that is applications relating to a particular person or transaction). However, this may take longer if significant policy issues arise.

When designations cannot be made

Designations cannot be retrospective. That means we are unable to make designations for financial products that have already been issued or transferred.

If you want to alter disclosure or compliance obligations for financial products that have already been issued or transferred, then you should consider applying for an exemption.