Welcome to the latest issue of the KHQ Super Alert. This week, APRA registered a new version of CPS 226 and released guidance in relation to investments in crypto-assets. The ATO also issued a reminder to trustees on the importance of reporting account balances after an SFT.
APRA – Initial risk management expectations and policy roadmap for crypto-assets released
On 21 April 2022, APRA published a letter outlining its ‘initial risk management expectations’ for all regulated entities engaging with crypto-assets and ‘a policy roadmap for the period ahead’.
Recognising the rapid growth of crypto-assets in recent years, APRA emphasised its expectation that ‘all regulated entities will adopt a prudent approach if they are undertaking activities associated with crypto-assets’ and ‘ensure that any risks are well understood and well managed before launching material new initiatives’. APRA advised that trustees ‘considering investments in crypto-assets as part of their investment strategy must ensure they can demonstrate how the investment is consistent with the duty to act in the best financial interests of beneficiaries, meets the investment strategy covenants and complies with existing prudential requirements for investment governance’.
APRA will ‘continue to closely monitor industry trends and emerging risks associated with crypto-assets, engage with other regulators domestically and internationally, and provide further guidance as required’.
Click here for details.
Legislation – Amended prudential standard for margining and risk mitigation for non-centrally cleared derivatives registered
On 19 April 2022, a new version of Prudential Standard CPS 226 Margining and risk mitigation for non-centrally cleared derivatives (CPS 226) was registered on the Federal Register of Legislation.
According to the Explanatory Statement, only minor changes to CPS 226 have been made. This includes updating ‘the list of foreign bodies contained in Attachment D to include the Prudential Regulation Authority and the Financial Conduct Authority in the UK […] in response to new regulatory jurisdictions resulting from the UK’s withdrawal from the European Union’.
The instrument commences on 18 April 2022.
Click here for details.
ATO – Reminder issued on the importance of reporting account balances after an SFT
On 19 April 2022, the ATO issued a reminder to trustees on the importance of reporting account balances promptly after an SFT, warning funds that ‘it could be 12 months before members can see the balance in their successor fund’ otherwise.
The ATO explained that ‘[a]long with enhancing the member experience, reporting account balances in a timely manner allows members to:
- see their account balance early (reducing inbound calls to your fund); and
- manage their contribution caps when there are product or account changes’.
Click here for details.
