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Tuesday 18 December 2012

12-323MR ASIC releases amendments to clearing and settlement facilities guidance

ASIC today published its amended regulatory guidance for clearing and settlement facilities (CS facilities). The guidance takes into account updated international standards and recent Council of Financial Regulators (the Council) policy.

These changes ensure continuing access by Australian-based CS facilities to overseas participants and provide an appropriate degree of regulatory influence over foreign-based facilities that wish to offer services in Australia.

The amended regulatory guidance provides clarity for overseas CS facilities operating in Australia and domestic CS facilities seeking to move or outsource some operations overseas. It clarifies the circumstances under which a systemically important overseas CS facility with a strong domestic connection may need to hold a domestic licence.

The guidance also sets out examples of when we may advise the Minister to impose conditions on cross-border CS facilities, for example an overseas CS facility wising to offer services in Australia or a domestic CS facility operating overseas, to ensure appropriate influence for Australian regulators. ASIC intends to take a graduated and proportionate approach to advising the Minister to impose conditions. The nature of the conditions may vary depending on the characteristics of a CS facility and how it changes over time. For example, if a CS facility entered the Australian market with a small operation, the requirements for both systemically important facilities and those facilities with a strong domestic connection can apply should its market share grow substantially or the nature of its operations or participants change.

The regulatory guide provides examples of the types of conditions we may advise the Minister to impose, including requiring an overseas CS facility to establish a domestic operational presence and requiring a domestic CS facility to set controls around how it deals with outsourcing of critical functions.

ASIC will continue to work bilaterally with CS facility licensees and applicants taking into account the nature of the entity, the service it is providing and any other relevant circumstances.

Background

ASIC’s guidance for clearing and settlement facilities is in Regulatory Guide 211 Clearing and settlement facilities: Australian and overseas operators (RG 211).

The amendments to RG 211 were consulted on in September 2012 (refer: 12-221MR).

Report 322 Response to submissions on CP 186: Clearing and settlement facilities: International principles and cross-border policy (Update to RG 211) (REP 322) outlines ASIC’s response to matters raised in the consultation process.

The Reserve Bank of Australia (RBA) has also recently released new financial stability standards to take into account these policy developments.

The amendments align ASIC’s oversight of CS facilities with the recently released CPSS-IOSCO Principles for Financial Market Infrastructures. These principles were developed by the Committee on Payment and Settlement Systems (CPSS) and Technical Committee of the International Organization of Securities Commissions (IOSCO).

Download report from CPSS-IOSCO website (new window)

The amendments also provide guidance on how ASIC intends to ensure there is appropriate regulatory influence over cross-border CS facilities. These measures were foreshadowed in the Council’s July paper, Ensuring Appropriate Influence for Australian Regulators over Cross-Border Clearing and Settlement Facilities.

Download Council of Financial Regulator’s paper from Treasury website (new window)

Download:

  • Regulatory Guide 211 Clearing and settlement facilities: Australian and overseas operators (RG 211).

  • Report 322 Response to submissions on CP 186: Clearing and settlement facilities: International principles and cross-border policy (Update to RG 211) (REP 322)

Last updated: 18/12/2012 12:00