NO.034

INCREASED BUDGET FUNDING FOR ASIC

The Australian Securities and Investments Commission (ASIC) will receive a significant funding boost of $234.6million over four years in the 2006-07 Budget. The additional funding will ensure that ASIC has sufficient funding to maintain its current regulatory focus, develop its presence in relation to non-exchange based market trading, enhance IT security and risk management, establish a new electronic registration system for company charges and undertake enforcement activities associated with the investigation and litigation of exceptional matters of significant public interest.

Additional funding of $71.3 million over four years will be provided to ensure that ASIC has sufficient funding to maintain its current regulatory focus with respect to the supervision and oversight of expanding financial markets and financial sector entities.

ASIC will receive $29.1 million over four years to increase its surveillance of the financial services sector and to develop its presence in non-exchange based market trading, including in the areas of bond markets, hedge fund activities and contracts for difference. Funding will also be provided for electronic surveillance tools to monitor these transactions.

Funding of $14.2 million over four years will be provided to support ASIC’s IT infrastructure. ASIC’s core systems are under pressure as a result of increasing demands from the public for company information. The additional funding will enable ASIC to upgrade its IT infrastructure, enhance security tools and software protecting ASIC’s core systems, establish a disaster recovery facility and implement a risk management strategy.

ASIC will receive $2.0 million in 2006-07, to be offset by ASIC over four years, to establish a new electronic registration system to enhance the convenience of registering company charges with ASIC. The new system will enhance the efficiency of registering company charges and will significantly reduce regulatory complexity and cut red tape for companies seeking to register a charge.

The additional funding includes $30 million per annum over the next four years to enable ASIC to undertake enforcement activities associated with the investigation and litigation of exceptional matters of significant public interest. This additional funding will ensure that ASIC is well resourced to investigate and litigate exceptional matters of significant public interest and will ensure that high profile defendants are unable to avoid prosecution by attempting to ‘price out’ the regulator.

CANBERRA

9 May 2006

Contact: David Alexander

(02) 6277 7340

Supporting Information

Why is this important?

• The demand for ASIC’s activities continues to grow as a result of growth in corporate and financial sector activities which ASIC oversights. Activity levels have been fuelled by market confidence supported by more than 14 years of economic expansion.
• The upward pressure on workload has also been accompanied by significant increases in the complexity of the financial products and markets that ASIC is required to assess and monitor.
• This initiative will strengthen ASIC’s enforcement response and will reduce the ability of high profile defendants to avoid prosecution by attempting to ‘price out’ the regulator.

Who will benefit?

• An appropriately resourced ASIC will benefit all Australians by maintaining the integrity of Australia’s financial framework and ensuring ongoing confidence in the Australian financial markets.

What funding is the Government committing to the initiative?

• The Australian Government is committing $234.6 million over four years to ensure that ASIC has sufficient funding to maintain its current regulatory focus.

What have we done in the past?

• The Australian Government provided $52.5 million over four years in the 2004-05Budget to meet increased demand for ASIC’s core operations, enhancing enforcement abilities and for additional consumer protection programmes.

When will the initiative conclude?

• This initiative is ongoing.