If you facilitate the sale and purchase of interests in your schemes between existing and/or new investors, then you could be operating a financial market without a licence. However, as senior associate Kristy McCluskey explains here, ASIC exempts operators of low volume financial markets if certain criteria are met.
A financial market is 'a facility through which offers to acquire or dispose of financial products are regularly made or accepted'. This includes matching buyers and sellers of interests in schemes. Importantly, this seemingly innocuous matchmaking of willing buyers and sellers requires an Australian financial market licence, similar to what exchanges like the ASX hold.
Fortunately, ASIC exempts operators of low volume financial markets from having to hold such a licence if the operator can meet certain criteria.
A low volume financial market is one where no more than 100 transactions are entered and the value of the transactions does not exceed $1.5 million in a 12-month period from the date the exemption is granted.
This means an operator who relies on the exemption can facilitate the sale and purchase of interests in its schemes up to a maximum of 100 buy/sell transactions with an aggregate value of $1.5 million in any 12-month period.
To rely on the exemption, the operator must be authorised under an AFSL to provide certain financial services, apply to ASIC, and comply with several conditions, including—
Operating a financial market without a licence is an offence. If your investors are seeking your assistance to sell down or increase their interests in your schemes, then we can help you prepare an application to ASIC to rely on the exemption.