Payment Systems and Netting Regulations 2001

Administered by Department of the Treasury

Legislation au F2001B00305 Regulations In force Legislative Instrument

Legislation content

Payment Systems and Netting Regulations 2001

Select Legislative Instrument No. 224, 2001

made under the

Payment Systems and Netting Act 1998

Compilation No. 6

Compilation date: 1 November 2023

Includes amendments up to: F2023L01458

Registered: 24 November 2023

About this compilation

This compilation

This is a compilation of the Payment Systems and Netting Regulations 2001 that shows the text of the law as amended and in force on 1 November 2023 (the compilation date).

The notes at the end of this compilation (the endnotes) include information about amending laws and the amendment history of provisions of the compiled law.

Uncommenced amendments

The effect of uncommenced amendments is not shown in the text of the compiled law. Any uncommenced amendments affecting the law are accessible on the Register (www.legislation.gov.au). The details of amendments made up to, but not commenced at, the compilation date are underlined in the endnotes. For more information on any uncommenced amendments, see the Register for the compiled law.

Application, saving and transitional provisions for provisions and amendments

If the operation of a provision or amendment of the compiled law is affected by an application, saving or transitional provision that is not included in this compilation, details are included in the endnotes.

Editorial changes

For more information about any editorial changes made in this compilation, see the endnotes.

Modifications

If the compiled law is modified by another law, the compiled law operates as modified but the modification does not amend the text of the law. Accordingly, this compilation does not show the text of the compiled law as modified. For more information on any modifications, see the Register for the compiled law.

Self‑repealing provisions

If a provision of the compiled law has been repealed in accordance with a provision of the law, details are included in the endnotes.

 

 

 

Contents

1 Name of Regulations

3 Definitions

3A Declaration under definition of market netting contract

4 Declaration under definition of netting market

5 Financial property

6 Eligible obligations

7 Obligations to which section 15A of the Act applies

Endnotes

Endnote 1—About the endnotes

Endnote 2—Abbreviation key

Endnote 3—Legislation history

Endnote 4—Amendment history

 

 

1  Name of Regulations

  These Regulations are the Payment Systems and Netting Regulations 2001.

3  Definitions

  In these Regulations:

Act means the Payment Systems and Netting Act 1998.

3A  Declaration under definition of market netting contract

 (1) For paragraph (b) of the definition of market netting contract in section 5 of the Act, a gas trading exchange agreement is declared to be a market netting contract for the purposes of the Act.

 (2) In this regulation:

AEMO means Australian Energy Market Operator Limited (ACN 072 010 327).

gas trading exchange means a facility:

 (a) established by AEMO exercising its functions under subsection 91BRK(1) of the National Gas Law set out in the Schedule to the National Gas (South Australia) Act 2008 (SA); and

 (b) through which persons may elect to buy and sell natural gas or related goods or services (including pipeline capacity).

gas trading exchange agreement means an agreement:

 (a) that relates to participation in, and the operation and administration of, a gas trading exchange; and

 (b) to which AEMO, or a person appointed by AEMO to operate the gas trading exchange, and a person who becomes a member of the exchange, are parties.

4  Declaration under definition of netting market

  For paragraph (b) of the definition of netting market in section 5 of the Act, each of the following is declared to be a netting market:

 (a) the arrangement consisting of the system for the settlement, by CLS Bank International, of payment instructions arising from foreign exchange transactions;

 (b) the arrangement consisting of the system for the settlement, by CLS Bank International, of derivative payment instructions.

5  Financial property

 (1) This regulation is made for paragraph (g) of the definition of financial property in section 5 of the Act.

 (2) The following property is declared to be financial property for the purposes of the Act:

 (a) a document evidencing ownership of gold, silver or platinum;

 (b) cash collateral (including cash, certificates of deposit and bank bills);

 (c) property described in paragraph 5(b), (c) or (e), or paragraph 25, of Attachment H to Prudential Standard APS 112—Capital Adequacy: Standardised Approach to Credit Risk, made by APRA under section 11AF of the Banking Act 1959 and as in force from time to time, as property that may be recognised as eligible collateral (ignoring any conditions set out in the Attachment);

 (d) property described in paragraph 5(d) of Attachment H to that prudential standard, ignoring:

 (i) the words “and the ADI holding the security has no information suggesting that the security justifies a rating below this level”; and

 (ii) any conditions set out in the Attachment;

 (e) a covered bond (within the meaning of the Banking Act 1959).

6  Eligible obligations

Obligations that may be eligible obligations

 (1) An obligation that relates to an arrangement that is a forward, swap or option, or any combination of those things, in relation to one or more commodities, is prescribed for the purposes of paragraph 14A(8)(a) of the Act.

Obligations that are not eligible obligations

 (2) None of the following are eligible obligations in relation to a close‑out netting contract:

 (a) an obligation under a credit facility (as defined in regulations made for the purposes of subparagraph 765A(1)(h)(i) of the Corporations Act 2001), including:

 (i) a margin lending facility (within the meaning of the Corporations Act 2001); and

 (ii) an obligation under a financial product that is declared by the Australian Securities and Investments Commission under subsection 761EA(9) of the Corporations Act 2001 not to be a margin lending facility;

 (b) an obligation under a deposit‑taking facility;

 (c) an obligation under a reciprocal purchase agreement (otherwise known as a repurchase agreement), a sell‑buyback arrangement or securities loan arrangement;

 (d) an obligation under a contract of insurance, including a life policy or a sinking fund policy within the meaning of the Life Insurance Act 1995;

 (e) an obligation under a managed investment scheme (within the meaning of the Corporations Act 2001);

 (f) an obligation under a lease or licence;

 (g) an obligation under a guarantee;

 (h) an obligation to pay money under:

 (i) a cheque; or

 (ii) an order for the payment of money; or

 (iii) a bill of exchange.

Authority for subregulation (2)

 (3) Subregulation (2) is made under subsection 14A(9) of the Act.

7  Obligations to which section 15A of the Act applies

  For the purposes of paragraphs 15A(1)(a) and (2)(a) of the Act, an obligation of a party to a close‑out netting contract to which a regulated body is a party is prescribed, if the obligation is created under one of the following:

 (a) a reciprocal purchase agreement (otherwise known as a repurchase agreement);

 (b) a sell‑buyback arrangement;

 (c) a securities loan arrangement.

Endnotes

Endnote 1—About the endnotes

The endnotes provide information about this compilation and the compiled law.

The following endnotes are included in every compilation:

Endnote 1—About the endnotes

Endnote 2—Abbreviation key

Endnote 3—Legislation history

Endnote 4—Amendment history

Abbreviation key—Endnote 2

The abbreviation key sets out abbreviations that may be used in the endnotes.

Legislation history and amendment history—Endnotes 3 and 4

Amending laws are annotated in the legislation history and amendment history.

The legislation history in endnote 3 provides information about each law that has amended (or will amend) the compiled law. The information includes commencement details for amending laws and details of any application, saving or transitional provisions that are not included in this compilation.

The amendment history in endnote 4 provides information about amendments at the provision (generally section or equivalent) level. It also includes information about any provision of the compiled law that has been repealed in accordance with a provision of the law.

Editorial changes

The Legislation Act 2003 authorises First Parliamentary Counsel to make editorial and presentational changes to a compiled law in preparing a compilation of the law for registration. The changes must not change the effect of the law. Editorial changes take effect from the compilation registration date.

If the compilation includes editorial changes, the endnotes include a brief outline of the changes in general terms. Full details of any changes can be obtained from the Office of Parliamentary Counsel.

Misdescribed amendments

A misdescribed amendment is an amendment that does not accurately describe how an amendment is to be made. If, despite the misdescription, the amendment can be given effect as intended, then the misdescribed amendment can be incorporated through an editorial change made under section 15V of the Legislation Act 2003.

If a misdescribed amendment cannot be given effect as intended, the amendment is not incorporated and “(md not incorp)” is added to the amendment history.

 

Endnote 2—Abbreviation key

 

ad = added or inserted

o = order(s)

am = amended

Ord = Ordinance

amdt = amendment

orig = original

c = clause(s)

par = paragraph(s)/subparagraph(s)

C[x] = Compilation No. x

/sub‑subparagraph(s)

Ch = Chapter(s)

pres = present

def = definition(s)

prev = previous

Dict = Dictionary

(prev…) = previously

disallowed = disallowed by Parliament

Pt = Part(s)

Div = Division(s)

r = regulation(s)/rule(s)

ed = editorial change

reloc = relocated

exp = expires/expired or ceases/ceased to have

renum = renumbered

effect

rep = repealed

F = Federal Register of Legislation

rs = repealed and substituted

gaz = gazette

s = section(s)/subsection(s)

LA = Legislation Act 2003

Sch = Schedule(s)

LIA = Legislative Instruments Act 2003

Sdiv = Subdivision(s)

(md) = misdescribed amendment can be given

SLI = Select Legislative Instrument

effect

SR = Statutory Rules

(md not incorp) = misdescribed amendment

Sub‑Ch = Sub‑Chapter(s)

cannot be given effect

SubPt = Subpart(s)

mod = modified/modification

underlining = whole or part not

No. = Number(s)

commenced or to be commenced

 

Endnote 3—Legislation history

 

Number and year

Registration

Commencement

Application, saving and transitional provisions

224, 2001

23 Aug 2001

23 Aug 2001 (s 2 and gaz 2001, No S345)

 

181, 2002

1 Aug 2002

1 Aug 2002 (s 2 and gaz 2002, No S288)

—

402, 2004

23 Dec 2004

23 Dec 2004 (s 2 and gaz 2004, No S544)

—

365, 2007

18 Dec 2007 (F2007L04731)

19 Dec 2007 (s 2)

—

33, 2014

14 Mar 2014 (F2014L00261)

Sch 2 (item 5): 15 Mar 2014 (s 2)

—

 

Name

Registration

Commencement

Application, saving and transitional provisions

Financial System Legislation Amendment (Resilience and Collateral Protection) Regulation 2016

9 May 2016 (F2016L00724)

Sch 2: 1 June 2016 (s 2(1) item 1)

—

Treasury Laws Amendment (ALRC Financial Services Interim Report) Regulations 2023

31 Oct 2023 (F2023L01458)

Sch 2 (item 39): 1 Nov 2023 (s 2(1) item 1)

—

 

Endnote 4—Amendment history

 

Provision affected

How affected

r 2.....................

rep LA s 48D

r 3.....................

am No 181, 2002; No 402, 2004

r 3A....................

ad No 33, 2014

r 4.....................

rs No 181, 2002; No 402, 2004; No 365, 2007

r 5.....................

ad F2016L00724

r 6.....................

ad F2016L00724

 

am F2023L01458

r 7.....................

ad F2016L00724

 

 

Overview

The Payment Systems and Netting Regulations 2001, made under the Payment Systems and Netting Act 1998, address the need for a regulatory framework to manage and mitigate risks associated with payment systems and netting arrangements. These regulations were enacted to provide a comprehensive structure for the operation of financial systems in Australia, ensuring the stability and efficiency of financial transactions. The regulations were formulated and enacted by the Australian Parliament and serve to enhance the protection of financial institutions and participants in payment systems by clearly defining various financial instruments and obligations. They aim to provide a clear, predictable, and enforceable legal environment for financial transactions, thereby contributing to the overall integrity and resilience of the financial system. The Payment Systems and Netting Regulations 2001 outline specific definitions and declarations that further clarify the scope and application of the Act. For instance, they detail what constitutes a market netting contract and a netting market, and they designate certain types of financial property and obligations. The regulations also provide exemptions and specify the types of obligations that are eligible for close-out netting, thereby ensuring that financial institutions can effectively manage their risks. The ongoing amendments to these regulations reflect the evolving nature of financial markets and the need for regulatory adjustments to maintain the effectiveness and relevance of the legal framework.

Scope and Application

The Payment Systems and Netting Regulations 2001, which operate under the Payment Systems and Netting Act 1998, apply to entities involved in payment systems and netting within Australia, including financial institutions and other participants in relevant payment systems. These regulations are designed to regulate the conduct, transactions, and properties related to payment systems and netting, providing a comprehensive framework for their operation. The geographic reach of these regulations is national, applying across all states and territories of Australia. Certain exclusions and exemptions may apply, but they are not detailed within this legislative instrument. The application of these regulations may be extended or restricted through subordinate instruments, which are not exhaustively detailed here but can be accessed via the Australian legislation website. Additionally, specific declarations and definitions are provided within the regulations, such as the identification of particular agreements and properties as market netting contracts, netting markets, and financial property, thereby shaping the scope and application of the overarching Act.

Key Provisions

The Payment Systems and Netting Regulations 2001, as amended, include a variety of provisions that define and regulate the operation of payment systems and netting arrangements in Australia. The regulations serve to implement and elaborate on the provisions of the Payment Systems and Netting Act 1998, by providing specific definitions, classifications, and requirements. For example, Regulation 3A specifies certain agreements as market netting contracts, while Regulation 4 declares particular arrangements as netting markets (s 3A, s 4). These declarations are essential for determining the scope of the Act's application to specific financial agreements and markets. Additionally, Regulation 5 outlines various types of financial property that are subject to the Act, including documents evidencing ownership of precious metals, cash collateral, and covered bonds (s 5). The regulations also detail which obligations are eligible for close-out netting, and which are excluded, under Regulation 6 (s 6). Furthermore, Regulation 7 identifies the types of obligations that are subject to specific sections of the Act, such as those arising from reciprocal purchase agreements or securities loan arrangements (s 7). These regulations impose a series of obligations on parties and entities governed by the Act. For instance, they require the accurate classification and reporting of financial agreements and property to ensure compliance with the Act. Financial institutions and other regulated bodies must adhere to the specific definitions and classifications provided in the regulations when entering into and managing payment and netting arrangements. This includes ensuring that agreements and obligations are properly identified and documented to facilitate the effective operation of netting mechanisms, and to prevent the circumvention of the Act's protections. Failure to comply with the requirements of the Payment Systems and Netting Regulations 2001 can result in various penalties and consequences. Under the Act, non-compliance with the regulations can lead to civil penalties, including fines and, in some cases, criminal penalties for individuals involved in the breach. The specific penalties are not detailed within the regulations themselves but are outlined in the Payment Systems and Netting Act 1998. For example, the Act provides for significant financial penalties for both individuals and corporations found to be in breach of the Act or the regulations, with the exact amount of the penalty dependent on the nature and severity of the breach. In cases of serious or repeated non-compliance, the Act also allows for the imposition of criminal penalties, which may include imprisonment for individuals found to be at fault.

Legal classification tags

Area of Law
Financial Law
Instrument
Regulation
Concepts
Definitions & Interpretation
Financial Property
Obligations

Interactions

Authorises

All Versions

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.