2007/08 Assessment of Clearing and Settlement Facilities in Australia 5. Assessment of CS Facilities against the Financial Stability Standards

The Reserve Bank monitors licensed CS facilities' compliance with the Financial Stability Standards on an ongoing basis and reports on its assessment once a year, covering the period to end-June. All four ASX licensees report financial information to the Reserve Bank quarterly, with the two central counterparties also reporting detailed risk-management information, including stress-test outcomes. These reporting requirements are supplemented by a regular dialogue with the licensees on issues relevant to compliance at both an operational and a policy level.

From this information, the Reserve Bank assesses each CS facility against each of the measures associated with the relevant standard, although the primary focus is on material changes over the assessment period.

The assessments that follow describe the key developments over the year to end-June 2008 for each facility and consider the implications of these developments for each facility's compliance with the relevant standard. Details of the information that the Reserve Bank has used to assess each facility against the relevant measures is presented in the attachment, which builds on material included in the 2006/07 Assessment.