Settlement Procedures

Last updated: 27 March 2017

For securities transactions entered into by the Reserve Bank as part of its domestic market operations, settlement takes place within the Austraclear system. Security movements must be on a delivery-versus-payment basis. The exception is security movements representing the receipt (or delivery) of margin on repurchase agreements with the Reserve Bank which may occur free-of-payment. All such settlements must occur in the Austraclear Sub Participant Account of the RITS member that has entered into the transaction with the Reserve Bank. The Reserve Bank's Standard Settlement Instructions are listed in the following table:

Standard Settlement Instructions
Austraclear (Sub Participant) Account Transaction type
RBAA20 Open Market Operations
Outright Transactions in Eligible Securities
RBAA21 Foreign Currency Repurchase Agreements
RBAA22 Open SF Repos at the Cash Rate
RBAA23 Open SF Repos at the Cash Rate plus Margin
RBAA25 SF (Intraday) Repos
RBAA29 AOFM Securities Lending Facility

The details of securities transactions agreed with the Reserve Bank should be entered into the Austraclear system as soon as practicable.

Settlement activity within the Austraclear system ceases at the close of the SWIFT End Session (6.30 pm AEST, 8.30 pm AEDT, unless otherwise advised). The Reserve Bank's standing facilities are available to eligible counterparties until the close of the SWIFT End Session. The Reserve Bank's Domestic Markets Desk is not staffed beyond this time. Requests for session extensions should be made directly to Austraclear via the Austraclear Help Desk (1300 362 257) or the RITS Help Desk.

For certain eligible securities, the Reserve Bank's intraday standing facility may be accessed through a unilateral settlement process within Austraclear: see Standing Facilities (Section 5). For instructions regarding the specific functionalities of the Austraclear system, refer to the Operating Rules of Austraclear Limited.

If at any stage it becomes apparent to a RITS member that it may fail to deliver cash or securities in settlement of an agreed transaction with the Reserve Bank, contact should be made immediately with the Reserve Bank's Domestic Markets Desk.

Tri-party Repo

The Reserve Bank has executed a Collateral Management Services Agreement for Collateral Receivers that allows ASX Collateral to act as tri-party agent to the Reserve Bank's reverse repurchase agreements. As agent, ASX Collateral is responsible for ensuring that securities delivered to the Reserve Bank's Austraclear accounts in settlement of tri-party repos are appropriately valued and meet the Reserve Bank's eligibility requirements.

There is no requirement for RITS members to settle repurchase agreements with the Reserve Bank via ASX Collateral. RITS members may instead confirm each individual security and its value bilaterally with the Reserve Bank prior to settlement. Those RITS members interested in settling their transactions with the Reserve Bank using ASX Collateral should contact the Reserve Bank's Domestic Markets Desk.

At the present time, only a subset of those securities eligible for reverse repurchase agreements in the Reserve Bank's domestic market operations may be delivered via tri-party repo. Specifically, those securities that can be delivered via ASX Collateral comprise: Australian Government Securities; semi-government securities; eligible securities issued by supranational agencies; eligible securities issued and/or guaranteed by foreign governments; eligible ADI issued securities; eligible corporate bonds; and eligible marketed asset-backed securities. Where an evaluated price is used by ASX Collateral, the margin applied for a reverse repo is 3 percentage points larger than indicated in Margin Ratios (Section 1).

There are some minor differences between the eligible securities that can be delivered bilaterally to the Reserve Bank's Austraclear accounts and those that can be delivered via ASX Collateral. Where such differences arise, securities that meet the Reserve Bank's eligibility requirements and are appropriately valued by ASX Collateral can be delivered to the Reserve Bank's Austraclear accounts.

ASX Collateral may be used to settle repos contracted in the Reserve Bank's open market operations (where the Reserve Bank is purchasing securities). Any tri-party repos contracted under the Reserve Bank's standing facility will be for a minimum term of one day and will be at a rate of interest set 25 basis points above the cash rate target. ASX Collateral may not be used to settle intraday standing facility (SF) Repos or open SF Repos contracted at the cash rate target.