Consultation on Variation of the Financial Stability Standard for Securities Settlement Facilities: Disclosure of Equities Securities Lending 1. Introduction

Under powers set out in the Corporations Act 2001, the Reserve Bank has determined Financial Stability Standards for both central counterparties and securities settlement facilities which aim to ensure that licensed facilities conduct their affairs in a way that promotes overall stability in the Australian financial system. In accordance with the Corporations Act, the Reserve Bank assesses licensed facilities against these standards, reporting its findings annually to the Minister with portfolio responsibility for financial markets, and to the Australian Securities and Investments Commission (ASIC). These assessments are also released publicly.

The standards are supported by a set of minimum measures that the Reserve Bank considers relevant in determining whether a licensee has met the relevant standard. The Reserve Bank is proposing to modify one of the measures underpinning the Financial Stability Standard for Securities Settlement Facilities to clarify that, in assessing compliance with the Standard, the Reserve Bank will consider whether a facility that settles cash equity transactions collects and publishes data on equities securities-lending activity. This consultation document seeks views from interested parties on the Reserve Bank's proposed modification.

The document is structured as follows. Section 2 provides an overview of the Reserve Bank's objectives in seeking greater transparency and disclosure of securities-lending activity. Section 3 then details the specific proposed variation to the Standard, with Section 4 discussing some practical considerations. Section 5 concludes with some specific issues on which those making submissions might wish to focus.

Interested parties are invited to make submissions by 21 November 2008. 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
Sydney NSW 2001