The Australian Securities and Investments Commission (ASIC) and the Reserve Bank of Australia (RBA) have issued guidance outlining how the CPSS-IOSCO principles for financial market infrastructures apply to the country’s clearing houses and settlement systems.
The CPSS-IOSCO Principles, published in April 2012, are designed to ensure that the financial market infrastructures supporting global financial markets are robust and well placed to withstand financial shocks. Members of CPSS and IOSCO are expected to adopt and apply the principles within their regulatory frameworks, at least for those financial market infrastructures deemed to be systemically important.
The RBA and ASIC have joint responsibility under Australian law for the regulation of central counterparties and securities settlement facilities. The former is responsible for ensuring compliance with financial stability standards and reduction of systemic risk, while the latter is responsible for ensuring compliance with the remaining obligations.
To implement the CPSS-IOSCO Principles, ASIC has revised its regulatory guidance on licensing and oversight of clearing and settlement (CS) facility licensees in ‘Regulatory Guide 211 Clearing and settlement facilities: Australian and overseas operators’, which incorporates the CPSS-IOSCO Principles relevant to its regulatory remit. These cover both the framing of its advice to the Minister about a CS facility licence application and its annual assessment of compliance of a licensee’s continuing obligations.
The RBA’s Payments System Board meanwhile approved the determination of new financial stability standards in November 2012. Effective 29 March 2013, these are now aligned with the requirements in the CPSS-IOSCO Principles that address matters relevant to financial stability.
Under the guidelines, the Australian regulators will promote compliance with any periodic international recommendations or standards published by CPSS and IOSCO on CCPs and securities settlement systems.
Current CS facility licensees – ASX Clear, ASX Clear Futures, Austraclear and ASX Settlement – will be assessed against the new financial stability standards in 2013.
Consultation on the proposed regulatory regime as it applies to trade repositories, including implementation of the CPSS-IOSCO Principles, is planned in the coming months, with a view to finalising the regime in mid-2013.
ASIC chairman Greg Medcraft is due to begin an 18-month stint as IOSCO chairman in March 2013. At the time of his election in May 2012, he said his aim was “to make IOSCO the key global reference body for securities regulation, in much the way the Basel Committee is seen for banking regulation and supervision.”
Reporting by Richard Schwartz