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Global rules on foreign direct investment (FDI)
Cross-border acquisitions and investments increasingly trigger foreign direct investment (FDI) screening requirements.
Australia | Publication | May 2024
ASIC has released Consultation Paper 378 'Safeguard mechanism reforms: Updates to RG 236' (CP 378) which proposes to update Regulatory Guide 236 Do I need an AFS licence to participate in carbon markets (RG 236). The updates will address safeguard mechanism reforms which commenced on 1 July 2023 and allow the Clean Energy Regulator to issue a new type of carbon product - Safeguard Mechanism Credit units (SMCs). The Clean Energy Regulator will be able to issue SMCs from January 2025.
RG 236
The current RG 236 provides guidance on whether market participants require an AFS licence to participate in or give financial advice in relation to the carbon market. RG 236 has not been updated since May 2015.
On 1 July 2023 the safeguard mechanism reforms commenced which allow the Clean Energy Regulator to issue SMCs as a type of Eligible International Emission Unit (EIEU). EIEUs are a regulated financial product under the Corporations Act.
Proposed updates
ASIC is proposing to update RG 236 to specifically address SMCs and the implications of providing advice, dealing in or making a market in SMCs. In addition to these changes ASIC is seeking industry feedback on its proposals to update guidance on:
Additionally, ASIC proposes to provide updated examples of the types of financial products that may involve emissions units other than ACCUs and SMCs, such as derivative and managed investment schemes.
Next steps
ASIC is seeking feedback from stakeholders in relation to the updates by 3 June 2024. In the second half of 2024, ASIC proposes to update RG 236 and Information Sheet 156 Regulated emissions units: Applying for or varying an AFS licence (INFO 156).
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Cross-border acquisitions and investments increasingly trigger foreign direct investment (FDI) screening requirements.
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European asset managers are excited about the revised European long-term investment funds (ELTIF) regime and hope that the greater flexibility for managing and distributing ELTIFs will open up new markets for their long-term investment strategies.
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The recent publication of the Investment Association’s Second Interim Report on Fund Tokenisation and regular news articles in the financial press evidence continued enthusiasm for the adoption of digital technologies such as tokenisation amongst players in the financial services markets. Indeed, the global market for tokenised real-world assets is already currently estimated to be around $600 billion and has been predicted to reach $16 trillion by 2030.
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