Anti-Money Laundering and Counter-Terrorism Financing

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  • #5224 Reply

    Hi there,

    We’ve developed and are trading a quantitative/systematic and automated long/short futures strategy. Back tests are closely aligned with live results and it’s returning high double digits a “normal year” and did 150-200% over the GFC so low correlation to other asst classes. Back tests never show a loosing year and it’s developed with 10 years of historical data.

    We’d like to see if we can start building an official and marketable track record that can be used for public marketing (perhaps first 3 years to wholesale / sophisticated investors).

    If we start a unit trust (or similar vehicle), build an official track record for 12 – 18 months without an AFSL (and don’t seek investors) and then use/attach a fund services company’s AFSL (that we pay for), can we legally market the unit trust’s performance for the 12-18 months where the unit trust didn’t operate under an AFSL?

    All seed capital and trade notes etc. would be transparent and independently logged by Interactive Brokers or similar global and regulated broker.

    How are OS investors regarded, is an AFSL required if an OS entity wants to invest?

    Does anyone know the most low cost way of building an official track record that can legally be used in marketing?

    Thanks in advance.


    #5317 Reply


    Hi John,


    Thank you for your question.


    Past performance information may be used in marketing material for a financial service so long as it is not from an inappropriate or irrelevant investment period (ASIC RG53 at 9.1(a)).  The issue is that the period the product was unlicensed may constitute an inappropriate period for direct comparisons.


    However, “non-actual” performance information may be used given the product has not existed for long enough to produce “actual” past performance data (ASIC RG53 at 11.1) so long as specific terms are used to differentiate it clearly from “actual” data.


    As such, you can use the data from both back tests and from your time operating without an AFSL (providing this was in compliance with the law) so long as it is appropriately demarked from data created while the AFSL is in place.


    ASIC warns at RG11.1.2 that this has been a major problem area for misleading promotional material. It warns producers to exercise extreme care.


    With regard to the second question, an AFS licence is required if the provider wishes to provide financial services within Australia regardless of the nature or origin of the investor.


    Please feel free to contact our financial services team if you would like further assistance.


    Author: Samantha Hills (Senior Lawyer)

    Co-contributor: Hugo Sasse (Law Clerk)

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Reply To: Track record with out AFSL

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