Financial Stability Standards for Securities Settlement Facilities – December 2012 Standard 19: Regulatory Reporting

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Note: The headline standard and numbered ‘sub’-standards determined under section 827D(1) of the Corporations Act 2001 have been formatted in bold text while the guidance to these standards has been formatted as plain text. For more information see the Introduction for Standards and Introduction for Guidance. Although the Reserve Bank has taken due care in compiling this page, the published version of the Standards and Guidance should be used in the case of any differences between the two.

A securities settlement facility should inform the Reserve Bank in a timely manner of any events or changes to its operations or circumstances that may materially impact its management of risks or ability to continue operations. A securities settlement facility should also regularly provide information to the Reserve Bank regarding its financial position and risk controls on a timely basis.

Guidance

The Corporations Act 2001 and the SSF Standards impose requirements for notification to the Reserve Bank in certain circumstances. This Standard sets out some of these requirements and imposes additional reporting requirements.

Oral notification to the Reserve Bank may be appropriate, particularly in circumstances where timely communication is needed. In practice, this should be followed by notification in writing.

To assist in meeting this Standard, formal points of liaison will be agreed upon between the securities settlement facility and the Reserve Bank.

19.1 A securities settlement facility should inform the Reserve Bank as soon as reasonably practicable if:

  1. it breaches, or has reason to believe that it will breach:
    1. an SSF Standard; or
    2. its broader legislative obligation to do, to the extent that it is reasonably practicable to do so, all things necessary to reduce systemic risk;
  2. it becomes subject to external administration, or has reasonable grounds for suspecting that it will become subject to external administration;
  3. a related body to the securities settlement facility becomes subject to external administration, or if the securities settlement facility has reasonable grounds for suspecting that a related body will become subject to external administration;
  4. a participant becomes subject to external administration, or if the securities settlement facility has reasonable grounds for suspecting that a participant will become subject to external administration;
  5. a participant fails to meet its obligations under the securities settlement facility's risk control requirements or has its participation suspended or cancelled because of a failure to meet the securities settlement facility's risk control requirements;
  6. it fails to enforce any of its own risk control requirements;
  7. it plans to make significant changes to its risk control requirements or its rules, policies and procedures;
  8. it or a service it relies on from a third party or outsourced provider experiences a significant operational disruption, including providing the conclusions of its post-incident review;
  9. any internal audits or independent external expert reviews are undertaken of its operations, risk management processes or internal control mechanisms, including providing the conclusions of such audits or reviews;
  10. its operations or risk controls are affected, or are likely to be affected, by distress in financial markets;
  11. it has critical dependencies on utilities or service providers, including providing a description of the dependency and an update if the nature of this relationship changes;
  12. it proposes to grant a security interest over its assets (other than a lien, right of retention or statutory charge that arises in the ordinary course of business);
  13. it proposes to incur or permit to subsist any loans from participants or members unless such loans are subordinated to the claims of all other creditors of the securities settlement facility; or
  14. any other matter arises which has or is likely to have a significant impact on its risk control arrangements (see also SSF Standards 1.6, 14.10 and 17.3).

19.2 A securities settlement facility should also provide to the Reserve Bank, on a timely basis:

  1. audited annual accounts;
  2. management accounts on a regular basis, and at least quarterly;
  3. risk management reports on a regular basis, and at least quarterly;
  4. periodic activity, risk and operational data, as agreed with the Reserve Bank; and
  5. any other information as specified by the Reserve Bank from time to time.