Australia's current financial services regulatory & compliance landscape is changing rapidly - Clyde & Co's weekly Regulatory Roundup will ensure you are up to date with the most important changes. In each edition, we will set out key developments from the past week for you to consider. 

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1. Australian Government responds to review of the continuous disclosure regime: The Government has responded to Dr Kevin Lewis’ independent review of the continuous disclosure regime. Under the regime, disclosing entities are obliged to disclose market sensitive information in a continuous and timely manner. In 2021, the regime was amended to require litigants to prove that the company or its officers had acted with either knowledge, recklessness or negligence when breaching their continuous disclosure obligations. The Government agreed with the recommendation to remove the requirement for ASIC to prove that the disclosing entity acted knowingly, recklessly or negligently. The Government also agreed with the recommendation to retain the requirement for a private litigant to prove that the disclosing entity acted knowingly, recklessly or negligently. Finally, it agreed to amend the Corporations Act 2001 (Cth) to expressly provide how state of mind can be attributed to the entity within the continuous disclosure regime. 

2. ASIC commences proceedings against ASX for allegedly engaging in misleading conduct in relation to their CHESS replacement program: ASIC has commenced proceedings in the Federal Court against ASX Limited for allegedly making misleading statements in relation to its Clearing House Electronic Subregister System (CHESS) replacement project. The project would have integrated blockchain technologies into the CHESS system. ASIC alleges statements made in ASX announcements on 10 February 2022 that the project remained ‘on-track for go-live’ in April 2023 and was ‘progressing well’ were misleading and in breach of s 12DA of the ASIC Act. ASIC alleges those representations were misleading and deceptive because, at the time of the announcements, the project was not tracking to plan and ASX did not have any reasonable basis to imply the project was on track to meet future milestones. ASIC argues that ASX risked damaging confidence in the Australian financial system and market participants, other market operators, and service providers incurred, or were exposed to the risk that they would incur, sunk costs associated with the replacement of CHESS.  

3. Australian Government flags improvements to the Consumer Data Right (CDR) program: The CDR is an opt-in program where consumers can decide whether to allow their data to be shared between firms (who are part of the CDR), have full visibility of who it is being shared with and the purpose for sharing it. This includes financial institutions such as banks and insurers. The issue is that few businesses have signed up to the CDR. To fix this issue, the Albanese Government has taken several steps: (1) opened consultation on changes to consent and operational rules. The proposed changes will streamline consent for consumers, by enabling them to provide multiple consents in a single action, (2) released the Heidi Richards report, Consumer Data Right Compliance Costs Review, which found that the regulatory costs of implementing the CDR on its current track are substantial, (3) written to the Chair of the Data Standards Body to secure alignment with our direction for the CDR and (4) signalled the intention to expand CDR to non-bank lending in early 2025, making it operational by mid-2026 to provide a sufficient transition period. 

4. NSW Independent Commission Against Corruption (ICAC) warning to candidates in the state’s local government elections next month: ICAC is warning candidates standing in the state’s local government elections on 14 September 2024 to refrain from ‘weaponising’ the Commission as part of their campaigns. ‘Weaponising’ the Commission is a practice that involves directing allegations of corruption against political rivals, which may be accompanied by public statements that the matter has been referred to the Commission. Chief Commissioner the Hon John Hatzistergos AM warns that this conduct leaves the Commission with little time to assess and investigate the allegation, and could even jeopardise the Commission’s investigation opportunities in the case of evidence being destroyed. Whilst ICAC usually refrains from confirming or denying the existence of any allegation or investigation, if it becomes evident that its functions are being ‘weaponised,’ it may determine it to be in the public interest to clarify the status of its involvement in a matter. Chief Commissioner Hatzistergos is also writing to current councillors, registered political parties and registered candidates to advise and remind them of their obligations regarding integrity. Councillors are advised that they must not misuse council resources to assist their or others’ election campaigns, and that when considering their fundraising activities, they cannot vote on matters in which their reportable donors have an interest. 

International perspective: Former President Trump is on record as having big, supportive plans for digital assets if he wins, and it looks like the Democrats plan to follow.  Last week top Democrats joined a “Crypto4Harris” virtual town hall to show support both for the digital asset sector and for Vice President Kamala Harris’ campaign (crypto is proving to be a growing sector for PAC donations), with Senate Majority Leader Chuck Schumer stating that believes the Senate can realistically pass a bipartisan crypto regulation bill before the end of the year.