|Date||31 July 2012|
|Embargo||For Immediate Release|
Payments System Issues: Exchange Settlement Account Policy for Central Counterparties
The Payments System Board is changing the eligibility requirements for Exchange Settlement Accounts (ESA) at the Reserve Bank.
The Bank has created a specific category of ESA for central counterparties (CCPs) and has developed a policy for use of these accounts. This formalises the existing arrangements for currently licensed CCPs, under which ASX Clearing Corporation Limited holds an ESA for Australian dollar settlements arising from the activities of the two licensed CCPs in Australia, ASX Clear Pty Limited and ASX Clear (Futures) Pty Limited.
The new policy on ESAs has two elements:
- Any Australian-licensed CCP with payment arrangements that give rise to Australian dollar settlements may apply to hold an ESA, in its own name or in the name of a related body corporate acceptable to the Bank.
- Any Australian-licensed CCP that the Bank determines to be systemically important in Australia must settle Australian dollar margin-related receipts or payments, and the CCP’s Australian dollar securities- or derivatives-related obligations, across an ESA held in its own name, or that of a related body corporate acceptable to the Bank.
The new policy recognises the important role that access to an ESA can play in assisting a CCP to manage its liquidity and settlement risks. The policy applies to any CCP that holds an Australian Clearing and Settlement Facility Licence.
The Bank will take into account a number of factors in determining the systemic importance of a CCP including:
- the size of the facility in Australia (for example, the value of transactions processed by the facility in Australian dollar-denominated products, or its market share; or the total amount of initial margin held in respect of Australian dollar-denominated products)
- the availability of substitutes for the facility's services in Australia
- the nature and complexity of the products cleared or settled by the facility
- the degree of interconnectedness with other parts of the Australian financial system.
Reserve Bank of Australia
Phone: +61 2 9551 9720
Fax: +61 2 9551 8033
Notes to editors
The Bank has also taken the opportunity to consolidate policy statements on ESA eligibility included in Media Release 1999-02 (and the associated application details) and the March 2003 joint APRA and Reserve Bank media release in a single policy statement. This statement also clarifies the conditions under which an Authorised Deposit-taking Institution (ADI) would be required to settle across its own ESA and also sets out the procedure for ESA applications.