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1301.0 - Year Book Australia, 2002  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 25/01/2002   
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Contents >> Financial System >> Financial intermediaries not elsewhere classified (n.e.c.)

This subsector comprises all institutions that meet the definition of a financial enterprise and have not been included elsewhere. It includes:

  • economic development corporations owned by governments;
  • cash, mortgage, equity and fixed interest common funds;
  • mortgage, fixed interest, balanced and equity public unit trusts;
  • wholesale trusts;
  • securitisers;
  • investment companies;
  • cooperative housing societies;
  • corporations registered in category J of the Financial Corporations Act 1974; and
  • housing finance schemes established by State Governments to assist first home buyers.

In addition to enterprises which engage directly in intermediation, the subsector also includes enterprises which undertake activity closely associated with intermediation such as:
  • fund managers;
  • insurance brokers; and
  • arrangers of hedging instruments such as swaps, options and futures.

Table 26.11 shows the financial assets of selected groups of financial intermediaries n.e.c.


26.11 FINANCIAL INTERMEDIARIES N.E.C., Financial Assets

Amounts outstanding at 30 June

1999

$m
2000

$m
2001

$m

Public unit trusts(a)
68,100
80,971
97,721
Equity unit trusts
42,842
51,859
65,484
Other unit trusts
25,258
29,112
32,237
Common funds
7,592
7,502
8,135
Securitisers
45,447
64,867
83,770
Cooperative housing societies
1,030
987
n.y.a.
Other(b)
36,080
58,904
n.y.a.
Total
158,249
213,231
226,037

(a) Excludes property and trading trusts.
(b) Includes investment companies, Category J financial institutions, economic development corporations, fund managers, insurance brokers, hedging instrument arrangers, wholesale trusts, and State government housing schemes.

Source: Australian National Accounts: Financial Accounts (5232.0); Managed Funds, Australia (5655.0); Annual Statistics on Financial Institutions (5661.0.40.001).

Economic development corporations are owned by governments. As their name implies, these bodies are expected to finance infrastructure developments mainly in their home State or Territory.

Common funds are set up by trustee companies and are governed by State Trustee Acts. They allow the trustee companies to combine depositors' funds and other funds held in trust in an investment pool. They are categorised according to the main types of assets in the pool, for example, cash funds or equity funds.

Public unit trusts are investment funds open to the Australian public. Their operations are governed by a trust deed which is administered by a management company. Under the Managed Investments Act 1997, the management company has become the single responsible entity for both investment strategy and custodial arrangements; the latter previously had been the responsibility of a trustee. These trusts allow their unit holders to dispose of their units relatively quickly. They may sell them back to the manager if the trust is unlisted, or sell them on the Australian Stock Exchange if the trust is listed. Public unit trusts are categorised according to the main types of assets in the pool; for example, property or equity. Only those which invest primarily in financial assets - mortgages, fixed interest, futures or equity securities - are included here. While public unit trusts are not subject to supervision by APRA or registered under the Financial Corporations Act 1974, they are subject to the provisions of corporations law which includes having their prospectus registered with the Australian Securities and Investments Commission (ASIC).

Wholesale trusts are investment funds that are only open to institutional investors - life insurance corporations, superannuation funds, retail trusts, corporate clients, high net worth individuals - due to high entry levels (e.g. $500,000 or above). They may issue a prospectus, but more commonly issue an information memorandum. Only those which invest in financial assets are included here.

Securitisers issue short and/or long term debt securities which are backed by specific assets. The most common assets bought by securitisation trusts/companies are residential mortgages. These mortgages are originated by financial institutions such as banks and building societies or specialist mortgage managers. Other assets can also be used to back these securities, such as credit card receivables and financial leases. Securitisers generally pool the assets and use the income on them to pay interest to the holders of the asset-backed securities.

Investment companies are similar to equity trusts in that they invest in the shares of other companies. However, investors in investment companies hold share assets, not unit assets.

Co-operative housing societies are similar to permanent building societies. In the past they were wound up after a set period, but now they too are continuing bodies. They raise money through loans from members (rather than deposits) and provide finance to members in the form of housing loans. Over recent years many cooperative housing societies have originated mortgages on behalf of securitisers.

Corporations registered in Category J of the Financial Corporations Act 1974 are classified to this sector because their liabilities are not included in the Reserve Bank's definition of broad money.

Fund managers, insurance brokers and arrangers of hedging instruments are classified as financial auxiliaries as they engage primarily in activities closely related to financial intermediation, but they themselves do not perform an intermediation role. Auxiliaries primarily act as agents for their clients (usually other financial entities) on a fee for service basis, and as such the financial asset remains on the balance sheet of the client, not the auxiliary. However, a small portion of the activities of auxiliaries is brought to account on their own balance sheet, and these amounts are included in table 26.11.

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