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Stockbrokers
DECEMBER 2018
www.stockbrokers.org.au
MEMBERSHIP
EVENTS
EDUCATION
And Financial Advisers MONTHLY POLICY &
REGULATORY ISSUES
FASEA issues revised
Stockbrokers
And Financial Advisers Professional Financial
Association Limited Adviser standards
CONTENTS
Inside...
3 Message from the CEO
5 FASEA issues revised Professional Financial Adviser standards
7 Financial advisers urged to ensure registration by 31 December 2018
8 ASIC leadership structure – effective 14 January 2019
8 Federal Court upholds Tax Practitioners Board decision
9 Committee News
10 High-frequency trading review reinforces strength of Australian market
structure
11 House of Reps Economics Committee inquiry into franking credits
12 Directors’ Conflicts of Interest
14 Forging a new path to keep up with the sophisticated investor
17 Deadline looming for LEI provision
18 SAFAA Obituary: Andrew Murdoch (9th September 1958 – 8th November 2018)
20 Super Snippets: Making contributions after age 65
Stockbrokers
And Financial Advisers
Association Limited
Stockbrokers And Financial Advisers Association Limited ABN 91 089 767 706
(address)Level 6, 56 Pitt Street, Sydney NSW 2000
(tel) +61 2 8080 3200 (fax) +61 2 8080 3299 (email) info@stockbrokers.org.au
www.stockbrokers.org.au
DISCLAIMER: This Newsletter is provided solely for the information of members of the Stockbrokers And
Financial Advisers Association. It does not constitute advice. The Stockbrokers And Financial Advisers
Association nor any of its officers or agents accepts no liability or responsibility for the accuracy, reliability
or completeness of any information contained in the Newsletter, and readers should rely on their own
enquiries and analysis in making any decision or taking any action that affects them.
p. 2 Stockbrokers And Financial Advisers Monthly | December 2018
NOVEMBER 2018 MESSAGE FROM THE CEO
Changing of the Guard SAFAA 2019 – don’t miss
At our AGM on 22nd November, Karl out
Morris, SAFAA’s Chairman for the last
One of the most interesting things
5 years, and a Director for 11 years,
about putting together the confer-
retired. Karl remains Executive Chair-
ence program is discerning what
man of Ord Minnett.
topics are front of mind.
On behalf of all members, I extend
Topics to be covered this year
thanks to Karl for his time and wise
include:
counsel.
Brian Sheahan was appointed • Ethics
Andrew Green
Chairman following the AGM. Brian • Governance
is Executive Chairman, Morgans • FASEA reforms
Financial Limited, and has been a • Operations & Technology
member of SAFAA’s board for 5 • Changing business models
years. WSU – cut-off date for
• New Masters of Stockbroking &
Joining the board as new Direc- Financial Advising enrolments
tors are:
• New CPD requirements If you are quick, you will be able to
• Neville Azzopardi, General
Manager – Advice, JB Were
• Use of AI to monitor compliance apply for WSU’s Masters of Stock-
• Richard Burns, Managing In conjunction with the conference broking and Financial Advising.
Director, Commonwealth we will also have: Application closing date is 7th
Securities Limited • Executive breakfast December.
• Michael Tritton, Senior Partner • Compliance breakfast
& Head of Advisory - NSW • Members breakfast FASEA – reforms in the
& QLD, Crestone Wealth • Fintech Breakfast pipeline
Management
• Accelerator Workshop delivered
Over the last month, FASEA has
On behalf of members, I welcome
by WSU for new Grad Dip
the new Chairman and Directors. released a raft of draft legislation for
consultation.
We have convened working groups
to discuss and on 30th November
lodged our latest submission.
I acknowledge and thank the mem-
bers of our FASEA Working Group
for their efforts.
The course that keeps on
giving
On November 21st, a near capacity
class attended A Day in the Life of
Trade.
Presented by Chris Harris, and
sponsored by GBST, this workshop
is a perennial favourite.
Run every couple of months, the
course takes students through each
stage of a transaction.
Financial Advisers
Register cut-off date
ASIC is keen to remind financial ad-
l-r: Chris Harris – A Day in the Life of a Trade Workshop presenter & Gillian Gilmore, visers who are currently authorised
Head of Education, Stockbrokers And Financial Advisers Association to make sure they are on the ASIC
www.stockbrokers.org.au p. 3
MESSAGE FROM THE CEO NOVEMBER 2018
Financial Advisers Register no later
than 31st December 2018, before
new professional standards require-
ments commence.
Inquiry into the
SAFAA 2019
implications of removing STOCKBROKERS AND FINANCIAL ADVISERS
refundable franking
credits CONFERENCE
On Wednesday, 19 September
2018, the Treasurer, the Hon Josh
Frydenberg MP, asked the House
SAFAA 2019
22 & 23 MAY 2019 | HILTON SYDNEY
www.stockbrokers.org.au/conference | #2019SAFAA
of Reps Economics Committee to
inquire into the implications of remov-
Adapting to Change
ing refundable franking credits.
The Committee has received many
submissions.
I had a casual glance through a few
of them and came across one that
really is very sad. It is reproduced
on page 11.
Submissions can still be made on-
line or by emailing economics.reps@
aph.gov.au.
Advance Australia tackles
franking credits issue
A new group has been established
to make people aware of the impact
of Labor’s proposed plans to remove
refundable franking credits.
You can voice your support for their
campaign for a fair go.
Democracy is a contest of ideas.
Have your say. Don’t let the chance
go by.
Christmas – a time for
reflection
I take this opportunity to thank mem-
bers for their support during the year,
especially those who have served on
our working groups.
I hope that Christmas provides time
for reflection and thanksgiving on
the year past and gives us renewed
enthusiasm as we come back for
2019. n
p. 4 Stockbrokers And Financial Advisers Monthly | December 2018
NEWS | PROFESSIONAL STANDARDS UPDATE
FASEA issues revised Professional
Financial Adviser standards
tory materials. FASEA will publish a
curriculum framework, recommended
reading lists and a practice exam.
SAFAA is pleased to see that a
curriculum framework, reading lists
and practice exam will be available.
Previously, FASEA had said that they
would not be. We argued that it was
not possible to meaningfully prepare
for any exam without them.
FASEA has referred to a “physical
digital offering”, without elaborating
on what this meant. FASEA has indi-
cated that re-sits of the exam will be
possible, but gives no further details
as to the entitlement to a re-sit.
SAFAA notes that FASEA refers
to a Provisional Relevant Provider
(an adviser undertaking their Pro-
I N NOVEMBER, the Financial
Adviser Standards and Ethics
Authority (FASEA) announced that
vice scenarios, testing the following
competency areas:
• Corporations Act (emphasis on
fessional Year) being required to
pass the National Exam before
moving to indirect supervision (i.e.
it would be progressively releasing Chapter 7 – Financial services approximately 6 months into the
for consultation a number of revised and markets) Professional Year). This is interest-
standards relating to the Professional • Financial Advice Construction ing, given that under the wording in
Financial Adviser framework. This – suitability of advice aligned to the Legislation, a person is only a
follows Draft Standards on which FA- different consumer groups, incor- Provisional Relevant Provider once
SEA had consulted earlier in the year. porating consumer behaviour and
they have passed the National Exam,
FASEA has so far released four decision making
which would mean that they would
Draft Legislative instruments for
• Applied ethical and professional
need to pass the exam before they
reasoning and communication
consultation, relating to the Profes- commence their Professional year.
– incorporating FASEA Code
sional Year; the term “Provisional Presumably, FASEA will be purport-
of Ethics and Code Monitoring
Financial Adviser/Planner”; Educa- ing to amend an Act of Parliament in
Bodies.
tional requirements; and the Code In the previous consultation, there its instrument.
of Conduct. were 5 subject areas listed for the
A legislative instrument is the tool exam, including Behavioural Finance Continuing Professional
by which each of the FASEA stan- and the FASEA Code of Ethics. Development (CPD)
dards is given binding effect. These two areas appear to have now
Key features of the revised FASEA been incorporated into the remaining FASEA has stated that a financial
standards are: 3 modules, so whether this reor- adviser will be required to undertake
ganisation amounts to any material 40 hours CPD annually (down from
National Exam change is not apparent. the 50 hours originally proposed).
FASEA has said that the duration of The reduction from 50 hours is
FASEA has stated that it has merged the exam has been set at 3.5 hours, welcomed, however this is still a
the curriculum for the Financial Ad- which includes reading time. The doubling of the existing 20 hours
viser Examination into 3 modules. The exam will consist of multiple choice CPD that has been a long standing
exam will focus on applied knowl- and some written response ques- standard in the stockbroking sector
edge acquired in actual financial ad- tions and will be open book for statu- (and which there is nothing to sug-
www.stockbrokers.org.au p. 5
NEWS& REGULATORY
POLICY ISSUES
| PROFESSIONAL STANDARDS UPDATE
gest has not been an effective CPD one or more of the designated fields Provisional Year (PY)
standard). of study, namely accounting, taxation
The 40 hours (of which 70% must law, finance law, finance business law FASEA has advised that it will require
be approved by the licensee) must (as defined by the Tax Practitioners that an adviser undertaking their
include the following minimums: Board), investment, estate law, bank- Professional Year to be referred to
ing or economics. Presumably, de- as a “Provisional Financial Adviser”
Technical.................................. 5 hours or a “Provisional Financial Planner”.
grees such as Engineering, Geology
Client Care and Practice...... 5 hours or Agriculture, will be non-relevant SAFAA members were of the view
degrees. It is not clear how, for ex- that the use of the term “Provisional”
Regulatory Compliance and would be viewed negatively by cli-
Consumer Protection............ 5 hours ample, a law degree will be treated,
if for instance it included finance law ents, and we provided this feedback
Professionalism and and estate law only. to FASEA, however FASEA is pro-
Ethics........................................ 9 hours FASEA is also now proposing ceeding with this terminology.
some degree of Recognition of The structure of the Professional
Professional reading will be count-
Prior Learning (“RPL”). Two “credits” Year is largely the same as that which
able, up to 4 hours per year. “Formal was proposed in Consultation. The
education” (whatever this means) is (which presumably means credits
for two “subjects”) will be available major change is that previously, the
capped at 25 hours per year. PY was to consist of 1800 hours,
SAFAA remains concerned about to anyone who holds an Advanced
being 1000 hours of work and 800
a number of aspects of these stan- Diploma of Financial Planning, or who
hours of education and training. In
dards, particularly the highly bureau- has completed the course work to at-
the final version, a PY is to consist
cratic nature of the requirements; tain the FPA’s Certificate of Financial
of 1600 hours, being 1500 hours of
the unclear “formal v non-formal” Planning or the AFA’s FchPP. FASEA
work and 100 hours of training.
distinction; the 9 hours per annum for has not made any mention of any
This in our view is a much more
ethics, and the 40 hour in total, both other Professional Diplomas in the
sensible approach, given that work
of which in our view are excessive. financial services industry that do
carried out under supervision should
not relate to financial planning, such
be the essence of a Professional
Education as SAFAA’s Professional Diploma in
Year.
Stockbroking.
Formal education is counted to-
There have been some changes to This is another indication that FA-
wards the 100 hours of training,
the Education standards/Bachelors SEA appears to be viewing its tasks
however given that the Provisional
Degree requirements. through a financial planning prism. Adviser may not commence the PY
The requirements for New Entrants SAFAA will be taking up the issue of until they have completed an Ap-
remain the same, namely a Bachelors stockbroking Diplomas with FASEA proved Degree, there may be a limit
Degree consisting of 24 subjects during consultation. to how much formal training will be
at AQF7 standard, or a Graduate Whilst it is not entirely clear from undertaken during that first year.
Diploma consisting of 8 subjects at the FASEA paper, it would appear As with the previous Consultation
AQF8 standard. that every existing adviser, regardless draft, there is a high administrative
For Existing advisers, the following of which of the 4 education options red tape involved in managing a PY
4 options are available: they proceed under, will be required program, including record keeping
and evidence collection, a “comple-
tion certificate” at the end of each
quarter and a “Final Completion
QUALIFICATION HELD ADDITIONAL EDUCATION NEEDED
Certificate” at the end of Q4.
FASEA Approved Degree 1 subject (Code of Ethics Bridging Course)
A “Relevant Degree” 4 subjects (3 bridging courses + Code of Conduct
1 FASEA approved subject)
FASEA has made some changes
A “non-relevant Degree” Graduate Diploma (7 subjects) to the wording of the 12 Standards
No Degree Graduate Diploma (8 subjects) set out in the previous draft of the
Code of Conduct. SAFAA was criti-
cal of the drafting of many of those
Standards, including the vagueness
of some of the language used, and
FASEA has defined a “Relevant to complete a Code of Ethics Bridg- whether some of the content war-
Degree” as a Degree of at least 8 ing Course or its equivalent, at the ranted being considered as a Con-
subjects at AQF7, 8 or 9 standard in very least. duct Standard.
p. 6 Stockbrokers And Financial Advisers Monthly | December 2018
NEWS | PROFESSIONAL STANDARDS UPDATE
SAFAA was also critical of the lack FASEA has gone backwards rather reasonable and represent value for
of correlation with the TPB’s Code of than improve on the Code. money for the client”.
Conduct for tax (financial) advisers, For example, the new draft now re- Overall, we are still of the view that
which we considered to be a far bet- quires an adviser to “actively consider the FASEA Code is not as concise
ter statement of Conduct standards. the broader, long term interests and or as good as the TPB Code of
In a number of cases, the FASEA likely circumstances of the client”. It Conduct, and the lack of correlation
redraft has considerably improved on would appear that a crystal ball may between the two Codes complicates
some of the problematic language in now be required. It is also proposed matters for advisers who are required
the previous draft of the Code. On that an adviser be required to satisfy to comply with both. n
the other hand, there is some new themselves that any fees and charges
wording in the Code which in our and benefits that the adviser or the
view is more concerning than the pre- principal will receive “are fair and
vious draft, and in those instances,
Financial advisers urged to ensure registration
by 31 December 2018
T HE AUSTRALIAN Securities
and Investments Commission
(ASIC) is reminding financial advis-
ers, who are currently authorised, to
make sure that they are on ASIC’s
Financial Advisers Register no later
than 31 December 2018, before new
professional standards requirements
take effect.
Professional standards reforms for
financial advisers were introduced
in March 2017 to raise the educa-
tion, training and ethical standards
of people providing personal advice
to retail clients on more complex
financial products.
The new requirements will be
implemented progressively from 1 Without recognition as an ‘existing provider’, financial
January 2019. advisers will be treated as ‘new entrants’ to the industry.
Under the reforms, only financial
advisers who were authorised at any
time between 1 January 2016 and From 1 January 2019, new entrants (AFS) licensees who authorise finan-
1 January 2019, and who are not will have to meet new education and cial advisers.
prohibited from providing advice on training requirements to be able to Authorised financial advisers
1 January 2019, will be recognised provide advice to clients. They will should speak to their AFS licensees
as an ‘existing provider’. have to complete an approved qualifi- to ensure that they are on the Reg-
Financial advisers can demonstrate ister before the deadline. Financial
cation and pass an exam before they
they are an ‘existing provider’ by hav- advisers can check if they are already
can be authorised to provide advice,
ing a status of ‘current’ on the Finan- registered by visiting the Financial
cial Advisers Register at any time in and they will also have to complete a Advisers Register.
this period. Without recognition as an year of supervised work and training. More information on new require-
‘existing provider’, financial advisers Registration on the Financial Ad- ments that take effect next year can
will be treated as ‘new entrants’ to visers Register is the responsibility be found at Professional standards
the industry. of the Australian financial services for financial advisers – reforms. n
www.stockbrokers.org.au p. 7
POLICY & REGULATORY ISSUES
ASIC leadership structure – effective 14
January 2019
I N NOVEMBER 2018, ASIC
announced to staff changes to its
structure that included a new group
• Rosanne Bell, Executive Direc-
•
tor, Registry
Joanna Bird, Executive Director,
• Michael Saadat, Executive Di-
rector, Financial Services
• Chris Savundra, General Coun-
of 10 Executive Directors that will sit Wealth Management sel, and
between the Commission and the • Sharon Concisom, Executive • Greg Yanco, Executive Director,
Senior Executive Leader group. Director, Market Enforcement Markets.
Under this structure, Executive • Warren Day, Executive Director, Additionally, two Chief Supervisory
Directors will have primary respon- Assessment & Intelligence Officers have been appointed to lead
sibility for ASIC’s day-to-day opera- • Carlos Iglesias, Executive Direc- ASIC’s Close and Continuous Moni-
tions and decision-making. The ASIC tor, Operations toring work. These officers are:
Commission will continue to provide • Greg Kirk, Executive Director, • Oliver Harvey, Chief Supervisory
strategic leadership. Strategy Officer
The Executive Directors report to • Tim Mullaly, Executive Director, • Louise Macaulay, Chief Super-
Commission. The Executive Direc- Financial Services Enforcement visory Officer. n
tors are:
Federal Court upholds Tax Practitioners Board
decision
C HAIR OF THE Tax Practitio-
ners Board (TPB), Mr Ian Taylor,
has today welcomed the decision of
Justice Logan dismissed the ap-
peal and upheld the AAT decision
which affirmed the TPB’s rejection
protect the public and to ensure the
integrity of the tax system.’
Mr Taylor added that the TPB takes
the Federal Court in the most recent of Mr Ham as a tax agent as he was these matters seriously, with around
case of Mr Philip Ham. not a ‘fit and proper person’. 400 current investigations into tax
Mr Ham was sued by a former Mr Taylor said the Federal Court’s practitioners across Australia.
client for breaches of ‘fiduciary ob- decision confirms the high ethical ‘This is particularly important fol-
ligations’ or trust after he derived and professional standards ex- lowing ATO research linking some
millions of dollars from the sale of pected of a trusted adviser like a tax tax practitioners with overclaimed de-
land in which his former client had an practitioner. ductions, tax avoidance and evasion.’
interest. He was later disciplined by ‘This case is an important reminder Mr Taylor urged taxpayers with
his professional association and was for all members of the tax profession concerns about their tax practitio-
excluded from membership but failed to act with competence and integrity, ners’ services to contact the TPB at
to disclose these issues to the TPB. to ensure that the community, the www.tpb.gov.au/complaints n
In 2017, the Administrative Ap- TPB and the ATO can have confi-
peals Tribunal (AAT) affirmed the TPB dence that services are provided
decision to reject Mr Ham’s renewal with professionalism,’ Mr Taylor said. FOR MEDIA ENQUIRIES, please contact
application for registration, determin- ‘Tax practitioners are engaged by Communications or phone 02 6216 2993.
ing his conduct was ‘inconsistent three quarters of individual Australian ABOUT THE TAX PRACTITIONERS BOARD:
with the qualities of moral soundness, taxpayers and entrusted to manage The Tax Practitioners Board regulates tax
uprightness and honesty that one their tax affairs in compliance with the practitioners in order to protect consumers.
The TPB aims to assure the community that
would expect of a tax agent’. Mr Ham law. It’s important that agents respect tax practitioners meet appropriate standards
pursued his case with an appeal to the mutual trust between client, agent of professional and ethical conduct. Follow
the Federal Court. and the TPB, and act properly to us on Twitter @TPB_gov_au and LinkedIn. n
SUBMISSIONS | Members can view submissions at www.stockbrokers.org.au
POLICY ENQUIRIES | Peter Stepek, Policy Executive, pstepek@stockbrokers.org.au
p. 8 Stockbrokers And Financial Advisers Monthly | December 2018
NEWS | COMMITTEE NEWS
Committee News
Recent and upcoming meetings of the Stockbrokers And Financial Advisers Association – Committees, Working
Groups and Advisory Panels:
Institutional Broking Committee Meeting, Thursday 6 December 2018
Chair: Scott Webster MSAFAA, UBS AG
Retail Broking Committee Meeting, Thursday 13 December 2018
Chair: Dean Surkitt MeSAFAA, Bell Potter Securities
Master Practitioner Member MSAFAA applications approved:
Richard Burns David Comben Samuel Croll
Caroline Curnow Hugo Dein Jean Findlay
Andrew Gladman Simon Goyder Mark Holden
Marcus Reade-Brown Darrell Seeto Craig Sidney
Sally Keyes Michael Tritton
Practitioner Member MeSAFAA applications approved:
Neville Azzopardi Robert Backer
Michael Briody Alberto Dimarco
Paul Hirth Benjamin Kerry
Michael Miller Nicole Neale
Marco Pandini Nicola Younger
Affiliate Member AfSAFAA application approved:
Yanhua Chen
www.stockbrokers.org.au p. 9
POLICY & REGULATORY ISSUES
High-frequency trading review
reinforces strength of Australian
market structure
O UR LATEST review of high-
frequency trading has revealed
it has reduced over the past three
technologies and are accessing
markets more quickly. They are un-
dertaking less arbitrage and more
but are confined to the lower volume
small-cap market where high-fre-
quency trading continues to expand
years but still retains a substantial position taking, with less intraday over a much lower base.
footprint across our markets. trading and longer holding times.
The report also finds substantial
Report 597 High-frequency trad- • High-frequency traders contribute
high-frequency trading activity in
ing in Australian equities and the positively to price formation, ben-
efiting all investors in the market. the Australian-US dollar cross rate.
Australian-US dollar cross rate (REP
597) was the result of our 2018 re- They also provide important liquid- High-frequency trading of the Aus-
view, building on our 2015 analysis of ity during market stress or peak tralian dollar peaked at 35% in early
equity and futures markets, which as- demand. 2013 but has since fallen and now
sessed the impact of high-frequency • There is a cost to natural market fluctuates at around 25%.
trading on our equity and foreign users from high-frequency trader To increase accessibility, we also
exchange markets. intermediation, but this cost is published a summary version of the
Notable findings from the review small, and it is trending down. report: see Report 598 High-fre-
are: The overall level of high-frequency
quency trading in Australian equities
• High-frequency traders are re- trading in Australia’s equity markets
and the Australian–US dollar cross
sponsible for a quarter of all mar- has fallen from a high of 33% in late
ket transactions in equities and 2015, to a low of 25% in March rate (summary version) (REP 598).
the AUD/USD cross rate, and it 2018. This compares to the 27% • Read REP 597
is trending down. we reported in our 2013 and 2015 • Read REP 598 (summary ver-
• Traders continue to invest in faster reviews. Pockets of growth do exist sion). n
HAPPY CHRISTMAS
On behalf of our team and our board, I thank you for your support during the year, and
extend best wishes for a happy Christmas and a prosperous 2019.
Kind regards
Andrew Green
p. 10 Stockbrokers And Financial Advisers Monthly | December 2018POLICY & REGULATORY
EDUCATION
ISSUES
House of Reps Economics Committee inquiry
into franking credits
T HE FOLLOWING submission to the House of Reps inquiry into franking credits is just one example of how
people will be impacted by Labor’s proposed changes to franking credits.
78
EDITS: SU BM ISS ION
AB LE FRAN KING CR
OF RE MOVING RE FU ND
refundable
IM PLICATIO NS
INQUI RY INTO TH E
rega rding the removal of
onomics Committee
Statement to the Ec
Franking Credits. ura gement of then Federal
Government. Up to the
wi th en co ngs plus
be en ma na gin g my SMSF since 19 95
m my sa lar y. I pa id 15% tax on the earni
I ha ve ns as well fro the
Employer Contributio ion Tax as provided by
year 2000, I received Fra nk ing Cr ed its to modify the Accumulat
e of 15%.I utilized
Income Tax Surcharg g that time.
Government. ted the ma xim um am ount to my Fund durin
was self employed. I
contribu the Federal
From 2000 to 2010 I era ll tax of the fun d, again promoted by
e the ov se which
nk ing Cr ed its we re again utilized to reduc the GF C de cim ate d my fund’s capital ba
Fra mmitte e,
be realized by the Co my retirement.
Government. As would so nable earning base for
re wa s to be a rea teriorating health.
had to be replaced if the
d for thi s tim e due to my wife’s de
ess in 2010 aged 72
. I wo rke ed the Franking
I retired from my busin ed by law . To au gm ent this pension, I need
uir
SMSF Pension as req
I then drew down my ref un da ble .
w fully
Credits which were no Franking Credits of
dra w do wn $7 80 00 annual earnings plus to keep her in the home
. I have used
I now 69 30 pe r an nu m
, I pay $4
is in a Nursing Home
$33000. As my wife Home charges.
to help fund the Nu rsi ng edits is to cease,
the Fra nk ing Cr ed its
$6 40 70 . If th e refund of Franking Cr
ion I receive to live
on is ibuting to my
My current net pens a me ag er am ou nt to live on after contr
—
uld reduce to $31070
My living pension wo . I am no w 80 years old.
I was 72
fund by working until
ference
thin the Terms of Re
General Comment wi r aspired to that.
g a Go ve rnm en t Pension. I have neve not large.
I do not intend ge ttin
pu t fin an cia l str es s on myself. $31000 is
Franking Credits will IS PARTISAN and
Obviously, losing the lic y of the alt ern ative Government. IT
d at the propose d po
However, I am annoye
DISCRI MI NATORY. y:--
UDED from the polic
Why should be EXCL
ds.
• Industry and Retail fun s both State and Federal.
Fund
• Parliamentary Super
• Universities.
• Charities.
tions
• Not-for-profit organiza
• Trade Unions fy.
r they may be to quali own funds and
• “Pensioners” whoeve pu lat ion who have set up their
0,000 people or 1%
of the po to suit a whim of the
Why target about 20 is it fai r an d rea so na ble to change the rules
Federal Law. How
managed them under those
manage the policy for
day.
of pe op le , it is go od for ALL. Trying to d ve ry dis cri mitory.
one group very difficult an
If the policy is good for o are no t is go ing to be
rve- outs) and those wh stop. Who would sign
up to a Super
who will be exempt (ca as a ca sh Co w ha s to
It would be
th the “Super System” in , say, 25 years time.
Continued fiddling wi ir sa vin gs wo uld be like
vings lost due
have no idea what the her than put up with sa
Fund when one would the be ne fits tod ay rat
even after tax, to get rules.
better the money now, d Go ve rnm en ts meddling with the
pe r Fu nd Fe es an
exorbitant Su
www.stockbrokers.org.au p. 11GUEST EDITORIAL
Directors’ conflicts
of interest
By Guy Griffin, Senior Lawyer, GRC Solutions, Sydney
C ONFLICTS OF interest can
arise in a variety of guises
but often the warning signs are •
fee being tied to the purchase of
company assets).
Major financial interests in the
Several provisions of the Corpora-
tions Act deal with directors’ conflicts
of interest. A failure to disclose
obvious. company of which you are a conflicts will incur criminal penalties
The Australian Institute of Com- director. of fines or imprisonment for up to
pany Directors notes the following • Major financial interests in other three months.
examples: companies that compete with,
Section 195(1) says a director with
supply to, or are customers of
• When as a director you are faced a ‘material personal interest’ in a mat-
the company of which you are a
with a corporate opportunity that ter being considered at a directors’
director.
you may be able to use in another meeting must not:
• Information that would be useful
arena to you in another arena. • be present while the matter is be-
• When your payment as a direc- • A termination fee that you may ing considered at the meeting, or
tor is conditional on some form receive as a director, particularly • vote on the matter
of successful outcome in your if that is a key term of a negotia- The Act requires every director of
duties (for example, a director’s tion during a takeover or merger. a company to disclose a ‘material
p. 12 Stockbrokers And Financial Advisers Monthly | December 2018GUEST EDITORIAL
personal interest’ in a notice to other
directors. (See section 191)
It does not define ‘material per- The Act requires every
sonal interest’ or require that the
interest be financial or pecuniary. director of a company
However, the case law says that it to disclose a ‘material
must be an interest: personal interest’
• That gives rise to “a real sensible
possibility of conflict”, and in a notice to other
• That has the ability to influence a directors.
director’s vote. (See section 191)
Give a notice to directors
when a conflict arises
Section 191(1) states that a director
who has a material personal interest Give a standing notice Voting when there is a
in a matter that relates to the affairs to directors at any other conflict: do’s and don’ts
of the company must give the other
directors notice of the interest except
time In a matter that is being considered
where the interest: Section 192(1) permits a director to at a board meeting, a director who
• Arises simply by virtue of the give other directors standing notice has a material personal interest that
directors’ common interests as about an interest. The notice may be must be disclosed to the directors
members of a company given at any time, before the interest must not vote on the matter unless
• Arises in relation to that director’s becomes a material personal interest, the directors who do not have a
remuneration as a director of the and whether or not it relates to the material interest in the matter have
company affairs of the company at the time the passed a resolution:
• Relates to a contract or proposed notice is given. • Identifying the director, the nature
contract with a related company and extent of the director’s inter-
est in the matter;
merely because the director is a How to manage a conflict • Stating the matter’s relation to
director of that related company
• Arises merely because the direc- STEP 1: the affairs of the financial institu-
tor is a guarantor or has given an Fully disclose your material tion; and
indemnity or security for all or any personal interest in a matter to • Stating that the directors are
part of a loan or proposed loan to other directors satisfied that the interest should
the company not disqualify the director from
The notice of disclosure to direc-
tors must:
voting. n
STEP 2:
• give details of: Abstain from participating and/or
−− the nature and extent of the voting on that matter at the board
interest, meeting
−− the relation of the interest to
the affairs of the company
• be given at a directors’ meeting SAFAA-ACCREDITED CPD TRAINING
GRC Solutions have developed a
as soon as practicable after the STEP 3: CPD product that is accredited by the
director becomes aware of his or Abstain from attending discussions Stockbrokers and Financial Advisers
her interest in the matter (section and/or voting on that matter Association. The e-learning delves into
the topics mentioned before and gives a
191(3)).
Courts have said that the disclo- well-rounded overview, including recent
cases and FS-related examples. It has
been developed with Australian retail
sure must: STEP 4:
and institutional stockbroking firms, and
• be of sufficient detail for the Take action to limit possible investment banks in mind.
board as a whole to understand damage arising from a conflict of
For further information, visit https://
the scope of the benefit and the interest
grcsolutions.com.au/services/salt-cpd/ or
potential profit to the director, and
email contactus@grcsolutions.com.au
• provide the board with the nec-
Salt CPD is not a tick-and-flick exercise: it
essary information to give its STEP 5: is a carefully developed program designed
informed consent Resign if necessary to help advisers and brokers grow their skills
and maintain high levels of competency.
www.stockbrokers.org.au p. 13GUEST EDITORIAL
Forging a new path
to keep up with the
sophisticated investor
By Wes Gillett, Head of Sales, Powerwrap
A new investment Advancing technology is also provid- measure for an economically viable
ing greater access to markets and client and asset pool.
paradigm What is becoming increasingly
products previously available only to
The world of broking and traditional the ultra-wealthy. obvious to brokers and other advis-
planning are merging. Traditional bro- ers is that managed funds and ASX
Retiring with a minimum of 7 to 10
kers are transforming into wholistic securities alone do not fulfill all their
times final annual salary in invest-
investment advisers, retail financial client’s investment need without
ible assets is seen as a reasonable diluting the core value in managing
planners are dealing more in listed
securities, and increasing wealth yardstick for security, and the previ- a domestic equity portfolio, wealth
is driving greater demand for in- ous benchmark of around a million advisers are looking for better ways
ternational and alternative assets. dollars now appears just a moderate of extending their services, achieving
p. 14 Stockbrokers And Financial Advisers Monthly | December 2018GUEST EDITORIAL
greater business efficiency to provide folio management, a comprehensive It is for these key reasons that
a more complete picture of their cli- product suite of domestic and global brokers will increasingly embrace
ent’s total portfolio. assets, and the flexibility to manage, solutions that bring together the best
We know allocation to international quickly, seamlessly and efficiently. of directly held assets and custodial
assets amongst Australia’s 750,000 A platform that brings together holdings to achieve a more diversified
SMSF’s is around 6%, which is very custodial holdings and directly held portfolio solution, and therefore, more
low when compared against every assets seems logically desirable. If consistent client outcomes.
industry accepted diversified asset it works, it will result in several key Powerwrap was developed to
blend. There is opportunity there for benefits to all stakeholders: achieve exactly that outcome. It rep-
those that are willing. 99Management of ASX securities resents a full solution for brokers and
remains unchanged via broker advice professionals servicing the
A better way of doing sponsored HINs. needs of the wealthy. The product mix
99Access to specialist managers and is unparalleled - it supports the ongo-
things products in other asset classes ing execution of HIN based holdings
such as global equities. alongside international products and
Many clients and wealth advisers will
be resistant to moving assets into
99Automation of broker models currency, alternate assets, bonds and
with smarter tech, leading to less wholesale funds to meet the shift in
custody for a variety of administrative
admin. demand from sophisticated inves-
and security concerns. It will also be
difficult to convince investors and
99Full valuation, transaction and tors. A platform that can unleash the
taxation reporting across all asset full potential of relationships wealth
advisers on the need to pay more for
holdings. managers have with their clients.n
choice and better information. The
answer is a platform solution that
99Increased revenue and value
from broader and better product Wes Gillett is the Head of Sales for
can preserve the centrality of HIN
choices. Powerwrap, and is contactable via
(Holder Identification Number) based
domestic securities and provide them
99Transparency and control of all wesgillett@powerwrap.com.au
assets leads to better advice and FOR MORE INFORMATION
with a complete set of tools for port-
lower risk outcomes visit powerwrap.com.au
www.stockbrokers.org.au p. 15NEWS | POLICY & REGULATORY ISSUES Master of Stockbroking and Financial Advising Developed jointly by the Stockbrokers And Financial Advisers Association and Western Sydney University’s highly regarded Sydney Graduate School of Management (SGSM), the Master of Stockbroking and Financial Advising is set to become the benchmark qualification that employers, regulators, and clients expect from practitioners who work in the stockbroking and financial advisory industry. SAFAA ACCELERATOR PROGRAM You can get the qualifications you need, without having to pause your career with the SAFAA Accelerator Program. SGSM is offering experienced advisers the opportunity to absent themselves from the unit course work and undertake an assessment in two program units. The program also involves the candidates sitting a Challenge Exam. Interested candidates attend a two hour information session on what is involved in sitting the Challenge Exam. Challenge Exams are typically three hours in duration and will be held on published day/ times in approved venues. To find out more about the SAFAA Accelerator Program and our Master of Stockbroking and Financial Advising contact education@stockbrokers.org.au or call 02 8080 3200. p. 16 Stockbrokers And Financial Advisers Monthly | December 2018
GUESTEDUCATION
EDITORIAL
Deadline looming
for LEI provision
By Chris Donohoe, CEO, APIR Systems
The impact of the new Markets in Financial Instruments Directive (MiFID II) regime on a range of
funds, planners, brokers, traders and trustees of SMSFs in Australia was unexpected, but it is an
impact that can’t be ignored.
T H E L E I is a mandatory
requirement of the MiFID II
reporting regime that was introduced
transactions, regardless of jurisdic-
tion, although the application of the
LEI varies between jurisdictions.
position as the industry standard for
coding and identification of managed
funds, superannuation funds and
in Europe. The MiFID II regulations For instance, in Europe under managed accounts in Australia.
were seven years in the making. MiFID II, the LEI is required for both It’s a good example of how glo-
They aim to improve the functioning exchange and OTC transactions. In balisation is impacting the Australian
of European financial markets in Australia, it depends on the party financial services industry. Increas-
the wake of the global financial through whom you are transacting. ingly, regulatory developments in
crisis, and achieve this by shining However, current regulations will one jurisdiction can impact op-
a light on some opaque aspects of require an LEI to be used for all over erators in other jurisdictions, even
certain financial transactions. This the counter transactions from March when the overseas development is
strengthens investor protection. 31, 2019.
not a local regulatory requirement.
Although a European stipulation, Many brokers already ready require
While this increasing harmonisa-
its impact has been felt on a range clients and entities to provide LEI’s,
tion of financial services regulations
of Australian financial service enti- particularly those have a European
across jurisdictions is seen by many
ties. These entities may be unable to based parent.
transact with European counterpar- as an increased, and unwanted,
In November 2017, APIR and the
ties if they don’t have a Legal Entity London Stock Exchange announced compliance burden, it has also facili-
Identifier (LEI). a partnership to support the issu- tated cross border investment, while
LEIs are a global identification ance and maintenance of LEIs and ensuring that the regulatory frame-
standard introduced in response to associated reference data in the Asia work is robust. This potentially
regulators’ requirements to identify Pacific region. In line with this, APIR will result in greater opportunity f
counterparties in a range of cross issues LEI’s on behalf of the London or Australian operators and, quite
border financial transactions. They Stock Exchange, and it is the only possibly, better investment outcomes
are now the globally preferred identi- issuer that charges in AUD. for consumers. n
fier for entities entering into financial This complements APIR’s existing
www.stockbrokers.org.au p. 17SAFAA OBITUARY
SAFAA OBITUARY
Andrew Murdoch
9th September 1958 – 8th November 2018
I T IS WITH great sadness that
I advise the passing of Andrew
Murdoch, one of the industry’s
billions of dollars transferred every
day. Still today, it all balances to the
cent and this is in no small part down
longest-serving and most esteemed to Andrew’s genius.
colleagues, on Thursday 8th I would see Andrew regularly. We
November 2018. would talk about industry matters.
Andrew made an incredible contri- You could always get a unique and
bution to Australian financial services original perspective. But after dis-
and to capital markets generally. He cussing a thorny point, we would
joined GBST in 1987 as a mature always return to talk about his family.
age graduate with a Bachelor of Andrew will be dearly missed by
Applied Science from QUT and his his past and present colleagues
talent was immediately recognised. at GBST and those in the industry
Software is a science we have all with whom he worked. They will
come to depend on. It is completely remember him for his wealth of in-
invisible, only made real by its use. dustry knowledge and his unique and
The key to good software is its us- original insight.
ability. This is what Andrew did so I will remember him as a role model
well - made it real and usable. for the ultimate father. In our case - I
He was the lead architect and the will remember him as the father of
father of Shares, GBST’s product for Shares. He is survived by his fam-
transacting on the Australian Stock ily who he passionately loved and
Exchange and beyond. Shares has admired. His work lives on. n
been dealing with other people’s
money in real time every weekday for John Puttick
the past twenty-five years - literally 22 November 2018
RE Refresher WORKSHOP
Sydney | Tuesday 11 December | REGISTER TODAY!
p. 18 Stockbrokers And Financial Advisers Monthly | December 2018Master of
EDUCATION
Stockbroking and
Financial Advising
Key Dates 2019
Quarter 1 Quarter 2 Quarter 3 Quarter 4
Application
7 December 2018 20 March 2019 12 June 2019 23 August 2019
Closing Dates
Online
4 January 2019 27 March 2019 19 June 2019 11 September 2019
Orientation
Online Classes 7 January – 1 April – 24 June – 16 September –
Start Dates 24 March 16 June 8 September 1 December
Census* 31 January 2019* 24 April 2019* 17 July 2019* 9 October 2019*
31 August –
Exams 16 -24 March 8 – 16 June 23 – 30 November
8 September
* Census date is the last chance to withdraw with no financial penalty.
www.stockbrokers.org.au p. 19SUPER
POLICY SNIPPETS
& REGULATORY ISSUES
| EDUCATION
Making contributions
after age 65
By Peter Grace
I TOOK A PHONE call last week
and it went like this.
Caller: So, working 24 hours on one
day isn’t enough.
Caller: When I make my deliveries,
children leave me presents and I can’t
Caller: Can you tell me if I can put [This was even stranger.] possibly eat or drink all they leave for
money into my super? me. So, I have a stall on the Boxing
Me: No. What sort of work do you
Me: Of course, are you working at Day market and make some money
do to have to work for a whole day?
the moment? that way.
Caller: Well, special deliveries, I sup-
Caller: Well not today. But I’ll be very [The penny dropped and I knew who
pose you’d say.
busy later this month. my caller was.]
Me: Well there might be an alter-
Me: OK, can I ask, are you under Me: Have a Merry Christmas Santa
native. You can ask your employer
age 65? and a happy new year.
to make contributions out of your
Caller: Um probably not. wages. Caller: Ho Ho Ho. And the same to
you and all your readers. n
[This was a strange answer but I Caller: But I’m not paid for my work.
carried on.] Me: Well, voluntary work doesn’t
Me: Then you need to pass a work count in the work test.
test before you can put money [I was a bit concerned about my Anti Our RG146 Superannuation course is
into super – we call it making a Money Laundering obligations as I highly recommended for anyone who
contribution. hadn’t asked the caller for any ID.] advises on securities in self managed
or other superannuation funds. For
Caller: And what’s the work test? Me: If you don’t get paid for your details of SAFAA’s Superannuation
Me: Well you have to work 40 hours work, where does the money come course, please contact SAFAA’s Head of
or more in any 30-day period. from that you want to put into super? Education, Gillian Gilmore.
p. 20 Stockbrokers And Financial Advisers Monthly | December 2018STOCKBROKERS AND FINANCIAL ADVISERS CONFERENCE
22 & 23 MAY 2019 | HILTON SYDNEY
SAFAA 2019 www.stockbrokers.org.au/conference
#2019SAFAA
Adapting to Change
PROPOSED CONFERENCE TOPICS
INCLUDE:
99 Why & how investors should protect long
positions
99 Decline in the use of derivatives exposes
D A T E . ..
portfolios to unnecessary risk
SA VE THE
99 Sovereignty of Data: ownership, governance
A 2 0 1 9
& usage
SAF A
a y 2 0 1 9
2 & 23 M
99 Code Monitoring Schemes
99 Royal Commission related topics including:
2 it
99 Will the regulatory pendulum swing too far
information vis
further e
and damage the international competitiveness For
.au/co nferenc
of the Australian Financial Services Sector?
ckbro kers.org
www.sto
99 Should NEDs be required to be more deeply
involved in the operations and governance of
companies of which they are a director?
99 How to improve transparency in financial
services.
99 Reducing the costs of providing financial advice
ANY SUGGESTIONS?
PLEASE EMAIL Andrew Green,
Chair, SAFAA 2019 Steering Committee
SPONSORSHIP & EXHIBITOR PACKAGES AVAILABLE
Please email dtran@stockbrokers.org.auYou can also read
