ASIC updates – Sandbox and Crowdfunding (plus #FinTech Hub)

In recent weeks, ASIC Commissioner, John Price and his team have been making presentations to the FinTech community on two key topics: the ASIC Regulatory Sandbox, and the forthcoming Equity Crowdfunding legislation.

Image by TeeKay, sourced from Wikimedia

blogged about the sandbox when it was announced last year, and at the time, the proposed safe harbour provisions for FinTech startups were seen as being key to fostering innovation within the sector. However, at the time of the presentation I attended (June 13), there was only one confirmed participant in the sandbox scheme. According to the Commissioner, the low take-up was probably due to the timing of the regulations, being so close to summer holidays.

On the other hand, the sandbox has such a limited application, that the Government is proposing to expand its scope to include the provision of products (not just distribution), the provision of credit services, and to extend the current 12-month license waiver period to two years.

The Commissioner also mentioned the consultation process on RegTech combined with a hackathon event to be held later this year, as evidence of the direction the ASIC Innovation Hub is taking. Let’s just hope they can keep up with how fast the FinTech community (especially in blockchain and crypto-currency) is evolving, since regulation usually lags innovation.

At a separate series of FinTech and startup briefings, Mr Price discussed the new equity crowdfunding provisions, due to take effect on September 29. Currently undertaking a consultation process on the detailed regulations, the legislation applies only to ordinary shares issued by companies with a maximum of $25m in assets and annual turnover, and which become public companies once the legislation comes into force.

Eligible crowd-sourced funding companies (CSF’s) can raise a maximum of $5m per annum, and investors can invest a maximum of $10,000 per company each year. CSF’s cannot invest in other businesses or securities, and cannot have simultaneous multiple offers on participating crowdfunding platforms.

The Commissioner spoke about the temporary reporting and corporate governance concessions under the scheme: eligible public companies don’t need to have Annual Public Meetings or audited accounts for a period of 5 years; and the offer documents do not have to be as detailed as a full IPO prospectus. Whether these concessions will be enough to attract issuers, or whether the limitations prove more of a deterrent, it will be interesting to see if the new legislation meets the expectations of government, ASIC, issuers and investors.

Meanwhile, things are getting interesting for anyone following the FinTech hub story, and the perennial Melbourne-Sydney startup rivalry:

First, the Victorian government has issued an RFP for a Melbourne FinTech Hub (submissions close tomorrow…). The state government has also announced its partnership with Fintech Australia and others to host the intersekt festival, following last year’s Collab / Collide event.

Second, Melbourne’s York Butter Factory has recently announced plans to expand into Sydney. While not purely a FinTech hub, this new venture will feature the Commonwealth Bank as an anchor tenant. With former ANZ CEO Mike Smith as its Chair, YBF might also be expected to make a submission to the Victorian RFP.

Third, Sydney’s Stone & Chalk has just announced it will be opening a new FinTech hub in Melbourne. Given that a number of key Melbourne-based financial institutions (such as ANZ, NAB, AustralianSuper, Findex, Genworth and Liberty Financial) are backing this new venture, could it suggest they can’t wait for the Victorian RFP process to finish?

Next week: StartupVic’s Machine Learning / AI pitch night

 

 

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