Consultation on Variation of the Financial Stability Standard for Central Counterparties: Oversight of Overseas Facilities 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 Reserve Bank is proposing a modification to the Financial Stability Standard for Central Counterparties to clarify that, subject to certain conditions, the Standard will not apply to an overseas facility that is subject to an overseas regulatory regime deemed to be sufficiently equivalent to that in Australia (i.e. a facility licensed under Section 824B(2) of the Corporations Act). This consultation document seeks views from interested parties on the Reserve Bank's proposed modification.

This document is structured as follows. Section 2 provides an overview of the current scope of the Standard and the rationale for the proposed variation. Section 3 then discusses in more detail the conditions that would apply if an overseas facility is to be exempt from the requirements of the Standard. Section 4 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