Clearing and Settlement Facilities Policies and Guidance

The Bank in its own right and as part of the Council of Financial Regulators (CFR) has published policies and guidance to support interpretation of its regulatory framework for clearing and settlement (CS) facilities.

Regulatory Expectations for Conduct in Operating Cash Equity Clearing and Settlement Services in

Council of Financial Regulators

In March 2016, the Government endorsed the recommendations of a review of competition in clearing Australian cash equities carried out by the Council of Financial Regulators (CFR) and the Australian Competition and Consumer Commission in early 2015. In accordance with these recommendations, this CFR policy statement establishes a set of expectations for ASX's conduct in operating its monopoly cash equity clearing and settlement services until such time as a committed competitor emerged. These regulatory expectations cover a range of governance, pricing and access issues relevant to ASX's engagement with, and provision of services to, users of its monopoly cash equity clearing and settlement services.

Minimum Conditions for Safe and Effective Competition in Cash Equity Clearing in Australia

Council of Financial Regulators

In March 2016, the Government endorsed the recommendations of a review of competition in clearing Australian cash equities carried out by the Council of Financial Regulators (CFR) and the Australian Competition and Consumer Commission in early 2015. In accordance with these recommendations, the Minimum Conditions (Clearing) aim to give potential entrants sufficient clarity as to the measures that the Regulators would require be taken before they could advise in favour of a licence application.

Application of the Regulatory Influence Framework for Cross-border Central Counterparties

Council of Financial Regulators

In July 2012, the CFR published the paper ‘Ensuring Appropriate Influence for Australian Regulators over Cross-border Clearing and Settlement Facilities’, which develops a graduated framework for imposing additional requirements on cross-border CS facilities proportional to the materiality of domestic participation, their systemic importance to Australia, and the strength of their connection to the domestic financial system or real economy. In response to interest from existing and prospective licensees, this paper provides further guidance on how the Australian Securities and Investments Commission (ASIC) and the Bank would apply the regulatory influence framework articulated in the July 2012 paper to central counterparties (CCPs) in various Australian financial markets.

Frequency and Scope of Regulatory Assessments of Licensed Clearing and Settlement Facilities


Reserve Bank of Australia

Under the Corporations Act 2001, where prescribed by regulation, the Bank is required to conduct annual assessments of how well each CS facility licensee is complying with the relevant Financial Stability Standards and its obligation to do all other things necessary to reduce systemic risk. The frequency of assessments of non-prescribed CS facility licensees (or individual facilities operated by non-prescribed CS facility licensees) is at the Bank's discretion. The scope and level of detail of such assessments is also at the Bank's discretion. This statement articulates the criteria the Bank uses in determining the frequency and scope of regulatory assessments, and confirms which CS facilities will be subject to a detailed annual assessment.

The Reserve Bank's Approach to Assessing Clearing and Settlement Facility Licensees


Reserve Bank of Australia

Under the Corporations Act, the Bank may do an assessment of how well each CS facility is complying with its obligation (to the extent that it is reasonably practicable to do so) to: comply with the Financial Stability Standards; and do all other things necessary to reduce systemic risk. This guidance sets out the Bank's approach to carrying out its assessments, drawing a distinction between the approach that it will take in respect of domestic facilities and overseas facilities.

Ensuring Appropriate Influence for Australian Regulators over Cross-border Clearing and Settlement Facilities

Council of Financial Regulators

In October 2011, the CFR consulted on a broad package of reforms to the regulatory framework for financial market infrastructures (FMIs). The CFR subsequently wrote to the Treasurer and Deputy Prime Minister outlining its final recommendations. Among its proposed reforms, the CFR recommended legislative change to underpin the imposition of graduated ‘location requirements’. These may be more broadly defined as measures to be taken by the Bank and ASIC to ensure they retain sufficient regulatory influence over cross-border FMIs that operate in Australia. The purpose of this paper is to elaborate on a framework within which such measures could be taken with respect to CS facilities.

Assessing the Sufficient Equivalence of an Overseas Regulatory Regime


Reserve Bank of Australia

Under the Corporations Act, an overseas CS facility licence may be granted at the Minister’s discretion, and only where the applicant is deemed to operate under a ‘sufficiently equivalent’ regulatory regime in its home jurisdiction. While the concept of sufficient equivalence is explicitly recognised in the Corporations Act, the Act provides no detail on how it is to be assessed. Guidance has been developed on how the Bank would approach the assessment of sufficient equivalence in relation to the degree of protection from systemic risk. This involves a three-step approach, considering: the clarity and coverage of the overseas regime; the oversight process of the overseas regulator; and observed outcomes.