Consultation on Assessing Sufficient Equivalence – May 2009 1. Introduction

In February 2009, the Reserve Bank announced a variation to the Financial Stability Standard for Central Counterparties to give effect to an oversight regime for overseas central counterparties. Under this regime, any central counterparty licensed under the alternate licensing regime for overseas facilities will be exempt from full assessment against the Standard, on the condition that it is able to provide documentary evidence from its overseas regulator that it meets all relevant requirements. A licence may be granted under this alternate regime where the applicant is deemed to operate under a ‘sufficiently equivalent’ regulatory regime in its home jurisdiction.

The Reserve Bank commited to working with the Australian Securities and Investments Commission (ASIC) to establish guidance on how ‘sufficient equivalence’ would be assessed, noting that this process would involve consultation with the industry.[1] This Consultation Document sets out the Reserve Bank's preliminary views on this matter, covering only the aspects of sufficient equivalence that relate to the Reserve Bank's regulatory responsibilities; that is, sufficient equivalence in relation to the degree of protection from systemic risk.

The document is structured as follows. Section 2 provides some background to the relevant legislation and related regulatory guidance produced by ASIC. Section 3 then articulates the key elements of the Reserve Bank's proposed approach to assessing sufficient equivalence. Section 4 closes with some key issues for respondents.

Interested parties are invited to make submissions by 19 June 2009. Submissions will be placed on the Reserve Bank's website and those making submissions will be offered the opportunity to discuss their views with Reserve Bank staff. Submissions should be sent to:

Head of Payments Policy Department    or
Reserve Bank of Australia
GPO Box 3947