Identifier
Created
Classification
Origin
08CANBERRA1112
2008-11-03 04:56:00
UNCLASSIFIED
Embassy Canberra
Cable title:
AUSTRALIAN REGULATOR GRANTS LIMITED ACCESS TO
how-toVZCZCXRO1270 PP RUEHPT DE RUEHBY #1112 3080456 ZNR UUUUU ZZH P 030456Z NOV 08 FM AMEMBASSY CANBERRA TO RUEHC/SECSTATE WASHDC PRIORITY 0465 INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY RUEHKO/AMEMBASSY TOKYO 3272 RUEHBJ/AMEMBASSY BEIJING 9234 RUEHWL/AMEMBASSY WELLINGTON 5502 RUEHGP/AMEMBASSY SINGAPORE 1600 RUEHLO/AMEMBASSY LONDON 1909 RUEHDN/AMCONSUL SYDNEY 3948 RUEHBN/AMCONSUL MELBOURNE 5739 RUEHPT/AMCONSUL PERTH 4010
UNCLAS CANBERRA 001112
SIPDIS
E.O. 12958: N/A
TAGS: EFIN AS
SUBJECT: AUSTRALIAN REGULATOR GRANTS LIMITED ACCESS TO
FROZEN FUNDS
REF: A. CANBERRA 1103
B. CANBERRA 1076
C. CANBERRA 1072
D. CANBERRA 1036
E. CANBERRA 1020
UNCLAS CANBERRA 001112
SIPDIS
E.O. 12958: N/A
TAGS: EFIN AS
SUBJECT: AUSTRALIAN REGULATOR GRANTS LIMITED ACCESS TO
FROZEN FUNDS
REF: A. CANBERRA 1103
B. CANBERRA 1076
C. CANBERRA 1072
D. CANBERRA 1036
E. CANBERRA 1020
1. (SBU) Summary: Australian regulators on October 31
announced new procedures to grant limited access for
investors to their frozen mortgage funds. Funds faced
problems before GOA announced bank guarantees, but the
guarantees made their situation more uncertain. Financial
industry response to ASIC's move has been generally positive.
End summary.
2. (U) Late on Friday October 31 the Australian Securities
and Investments Commission (ASIC) announced new procedures to
allow limited access on a case-by-case basis for investors to
frozen mortgage trusts, changing regulations that required
all investors to be treated equally. Specifically, they will
be allowed to take out A$20,000 (US$13,400) plus half of
their remaining investment; the Investment and Financial
Services Association (IFSA) says the average balance of these
funds is A$50,000. Such relief will be granted only be on
case-by-case basis of hardship, if the investor is unable to
meet immediate living expenses, on compassionate grounds
(i.e., funeral costs, serious illness, to prevent foreclosure
on family home),or if the investor faces permanent
incapacity.
3. (U) ASIC Chairman Tony D'Aloisio commented that the
decisions by funds to freeze of billions of dollars worth of
investment funds including mortgage trusts (reftels) were
useful because they prevent withdrawals from destabilizing
the funds, adding that a freeze does not mean the asset has
lost value nor that investors won't get their money back. He
said the freeze "is a prudent measure". Treasurer Wayne Swan
on November 1 praised the decision, and again refuted
Opposition and industry claims that the GOA decision to
guarantee bank deposits (reftels) had caused the freeze,
saying "There were at least 10 funds that had suspended
redemptions before the Government took its decision on the
bank guarantee." Industry sources said it would be difficult
to tell how many investors would qualify for such
consideration, but generally have responded positively. IFSA
CEO Richard Gilbert called it an "excellent decision" for
funds that still remain low on cash.
(SBU) Comment: An ASIC official told Embassy that the
decision came after the usual round of consultations with
other regulators. It wasn't strictly driven by the guarantee
for bank deposits, since the GOA is accurate in stating that
these funds were being targeted for redemption before PM
Rudd's October 12 announcement. But clearly the blanket and
initially unlimited bank guarantee made an uncertain
situation for these funds even worse, and the ASIC move is
intended to sooth the jagged nerves of Australian investors
and fund managers.
MCCALLUM
SIPDIS
E.O. 12958: N/A
TAGS: EFIN AS
SUBJECT: AUSTRALIAN REGULATOR GRANTS LIMITED ACCESS TO
FROZEN FUNDS
REF: A. CANBERRA 1103
B. CANBERRA 1076
C. CANBERRA 1072
D. CANBERRA 1036
E. CANBERRA 1020
1. (SBU) Summary: Australian regulators on October 31
announced new procedures to grant limited access for
investors to their frozen mortgage funds. Funds faced
problems before GOA announced bank guarantees, but the
guarantees made their situation more uncertain. Financial
industry response to ASIC's move has been generally positive.
End summary.
2. (U) Late on Friday October 31 the Australian Securities
and Investments Commission (ASIC) announced new procedures to
allow limited access on a case-by-case basis for investors to
frozen mortgage trusts, changing regulations that required
all investors to be treated equally. Specifically, they will
be allowed to take out A$20,000 (US$13,400) plus half of
their remaining investment; the Investment and Financial
Services Association (IFSA) says the average balance of these
funds is A$50,000. Such relief will be granted only be on
case-by-case basis of hardship, if the investor is unable to
meet immediate living expenses, on compassionate grounds
(i.e., funeral costs, serious illness, to prevent foreclosure
on family home),or if the investor faces permanent
incapacity.
3. (U) ASIC Chairman Tony D'Aloisio commented that the
decisions by funds to freeze of billions of dollars worth of
investment funds including mortgage trusts (reftels) were
useful because they prevent withdrawals from destabilizing
the funds, adding that a freeze does not mean the asset has
lost value nor that investors won't get their money back. He
said the freeze "is a prudent measure". Treasurer Wayne Swan
on November 1 praised the decision, and again refuted
Opposition and industry claims that the GOA decision to
guarantee bank deposits (reftels) had caused the freeze,
saying "There were at least 10 funds that had suspended
redemptions before the Government took its decision on the
bank guarantee." Industry sources said it would be difficult
to tell how many investors would qualify for such
consideration, but generally have responded positively. IFSA
CEO Richard Gilbert called it an "excellent decision" for
funds that still remain low on cash.
(SBU) Comment: An ASIC official told Embassy that the
decision came after the usual round of consultations with
other regulators. It wasn't strictly driven by the guarantee
for bank deposits, since the GOA is accurate in stating that
these funds were being targeted for redemption before PM
Rudd's October 12 announcement. But clearly the blanket and
initially unlimited bank guarantee made an uncertain
situation for these funds even worse, and the ASIC move is
intended to sooth the jagged nerves of Australian investors
and fund managers.
MCCALLUM