Financial Stability Standard for Central Counterparties - FSS 2003.1

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Legislation au F2009B00026 Not in force Legislative Instrument

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 RESERVE BANK OF AUSTRALIA

Corporations Act 2001

Notification of Determination of Financial Stability Standards

The Reserve Bank of Australia (“Reserve Bank”) has, under subsection 827D(1) of the Corporations Act 2001, determined two financial stability standards which must be complied with by clearing and settlement (CS) facility licensees.  The standards are listed in the Schedule.  The standards are designed to ensure that CS facility licensees conduct their affairs in a way that promotes overall stability in the Australian financial system.

Under subsection 827D(5) of the Corporations Act 2001, the Reserve Bank has specified that the financial stability standards apply to CS facility licensees from 30 May 2003 (“Commencement Date”). 

The objective tests contained in the standards are supplemented by a series of measures which the Reserve Bank considers relevant for the purposes of meeting the standards.  During a specified transitional period (as set out in the Annex), the Reserve Bank will not consider that a specified CS facility licensee has not met the standards solely because that CS facility licensee has not met the measures specified in the Annex.

Copies of the financial stability standards and this notice are available:

  • on the Reserve Bank’s website at www.rba.gov.au; or
  • by telephoning 02 9551 9720; or
  • at the office of the Reserve Bank at 65 Martin Place, Sydney NSW 2000 (reference: Senior Manager, Payments System Stability, Payments Policy Department).

This notice is published by authority of the Reserve Bank under paragraph 827D(7)(a) of the Corporations Act 2001.

 

Signed

 

 


IJ Macfarlane
Governor
Reserve Bank of Australia

29 May 2003

SCHEDULE
Financial Stability Standard FSS 2003.1 – Financial Stability Standard for Central Counterparties
Financial Stability Standard FSS 2003.2 – Financial Stability Standard for Securities Settlement Facilities

ANNEX

Under subsection 827D(5) of the Corporations Act 2001, the Financial Stability Standard for Central Counterparties and the Financial Stability Standard for Securities Settlement Facilities come into force on 30 May 2003 (“Commencement Date”).

The two standards set out a number of measures that the Reserve Bank considers relevant in determining whether the CS facility licensee has met the relevant standard.  For the avoidance of doubt, during the periods specified below, the Reserve Bank does not consider that:

  1.            ASX Settlement and Transfer Corporation Pty Limited ABN 49 008 504 532 (ASTC) will not have met the Financial Stability Standard for Securities Settlement Facilities solely by reason of:
    1.                 Measure 7ii(b) – ASTC not meeting the requirements of measure 7ii(b) for the period from the Commencement Date until the earlier of:
      1. the date the Minister varies ASTC’s CS Facility licence under section 825A(1) of the Corporations Act; and
      2. 10 March 2004;
    2.                 Measure 7ii(c) – ASTC not meeting the requirements of measure 7ii(c) for the period from the Commencement Date until the first anniversary of the Commencement Date.
  2.            Options Clearing House Pty Limited ABN 48 001 314 503 (OCH) will not have met the Financial Stability Standard for Central Counterparties solely by reason of:
    1.                 Measure 5(b) – OCH not meeting the requirements of measure 5(b) for the period from the Commencement Date until the first anniversary of the Commencement Date; 
    2.                 Measure 7 – OCH not meeting the requirements of measure 7 for the period from the Commencement Date until the earlier of:
      1. the date the Minister varies OCH’s CS Facility licence under sections 825A and 826A of the Corporations Act; and
      2. 10 March 2004;
    3. Measure 9ii(b) – OCH not meeting the requirements of measure 9ii(b) for the period from the Commencement Date until the earlier of:
      1. the date the Minister varies OCH’s CS Facility licence under sections 825A and 826A of the Corporations Act; and
      2. 10 March 2004;
    4.                 Measure 9ii(c) – OCH not meeting the requirements of measure 9ii(c) for the period from the Commencement Date until the first anniversary of the Commencement Date.

 

Overview

The Corporations Act 2001, enacted by the Australian Parliament, provides the legal framework for regulating corporations in Australia. One of the Act's objectives is to promote a fair and efficient financial system and to protect consumers. To this end, the Act empowers the Reserve Bank of Australia to determine financial stability standards for clearing and settlement (CS) facility licensees to ensure overall stability in the Australian financial system. In exercising this power, the Reserve Bank has established two financial stability standards, FSS 2003.1 for central counterparties and FSS 2003.2 for securities settlement facilities, which apply from 30 May 2003. These standards are designed to be supplemented by a series of measures relevant to meeting the standards, with specified transitional periods during which non-compliance with certain measures will not result in a determination that the standard has not been met. The policy objective is to maintain financial stability and to protect the interests of consumers in the Australian financial system.

Scope and Application

The Reserve Bank of Australia has determined two financial stability standards under the Corporations Act 2001, which apply to clearing and settlement (CS) facility licensees. These standards, listed in the Schedule, aim to ensure that CS facility licensees conduct their operations in a manner that promotes the overall stability of the Australian financial system. The application of these standards to CS facility licensees commenced on 30 May 2003, as specified by the Act. While the standards include objective tests, they are also supplemented by a series of measures that the Reserve Bank deems relevant to meeting these standards. Notably, during a specified transitional period, the Reserve Bank will not deem a CS facility licensee to have failed to meet the standards solely due to non-compliance with certain measures, as outlined in the Annex. This transitional approach provides some flexibility to CS facility licensees during the initial phase of implementing the standards.

Key Provisions

The Reserve Bank of Australia has established two financial stability standards (sections 827D(1) and 827D(5)) for clearing and settlement (CS) facility licensees under the Corporations Act 2001. These standards, which are detailed in the Schedule, are intended to ensure that CS facility licensees operate in a manner that supports the overall stability of the Australian financial system. These standards came into effect on 30 May 2003, known as the Commencement Date. The standards consist of objective tests, complemented by additional measures that the Reserve Bank deems pertinent for assessing compliance. Notably, during a specified transitional period outlined in the Annex, the Reserve Bank will not consider a CS facility licensee to be in non-compliance if they have not yet fulfilled certain measures specified in the Annex. The obligations imposed by this legislation require CS facility licensees to comply with the financial stability standards. This involves adhering to the specified objective tests and meeting the relevant measures as outlined in the standards. The Reserve Bank has outlined a transitional period during which certain measures do not apply to ASTC and OCH, ensuring that these entities have sufficient time to meet the standards without immediate repercussions. This transitional period provides a buffer for these entities to adjust to the new requirements without facing immediate non-compliance penalties. Failure to comply with the financial stability standards can lead to various consequences. The Corporations Act 2001 may impose civil or criminal penalties for breaches, although specific penalties are not detailed within the provided text. Civil penalties typically include fines that can be substantial, depending on the severity and nature of the breach. Criminal penalties might include imprisonment for individuals found guilty of serious breaches, highlighting the seriousness with which the law treats non-compliance. The specific penalties would be determined based on the particular circumstances of the breach and the discretion of the court.

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.