Policy Statement on the Supervision and Oversight of Systemically Important Payment Systems

Issued: 21 June 2019

A key element of the Payments System Board's responsibility for the safety and stability of payment systems in Australia is the supervision or oversight of systemically important payment systems (SIPS). The Payments System Board establishes the Bank's policy for supervision and oversight of financial market infrastructures (FMIs), including SIPS. The Payments System Board's policy is that SIPS are expected to observe the Principles for Financial Market Infrastructures (Principles) issued by the Committee on Payments and Market Infrastructures (CPMI) and International Organization of Securities Commissions (IOSCO).[1]

The Bank's FMI Review Committee has been given formal responsibility for reviewing and approving annual assessment reports for each FMI operating in Australia subject to the Bank's supervision or oversight, except in the case of the Reserve Bank Information and Transfer System (RITS). The Payments System Board retains the primary responsibility for approving periodic assessments of RITS since the Bank both operates and oversees this facility.

Criteria for supervision or oversight of SIPS

Consistent with the Principles and the Payment Systems (Regulation) Act 1998 (PSRA), the Bank considers that a payment system can be defined as a funds transfer system that facilitates the circulation of money, and includes any instruments and procedures that relate to the system. A payment system includes arrangements for the exchange of payment instructions and calculation of any net obligations to be settled (payments clearing) and the settlement of obligations. Depending on the operational structure of the payment system, the Bank's arrangements for supervision or oversight may involve engagement with a management committee representing the system's participants and/or a separate legal entity that operates the system's clearing arrangements, settlement arrangements or both.

The Bank considers that a payment system is systemically important if it has the potential to trigger or transmit systemic disruptions. Only a payment system that processes Australian dollar payments has the potential to trigger or transmit systemic disruptions in Australia, since there is not widespread use of other currencies in the Australian financial system. In assessing whether such a payment system is systemically important in Australia, the Bank will take into account five considerations that build on those expressed in the Principles:

  • whether the aggregate value of Australian dollar payments processed through the system is high relative to other payment systems
  • whether the system mainly handles time-critical payments
  • whether the system mainly handles high-value payments
  • whether the system is used to settle payments that effect settlement in other systemically important FMIs
  • whether there are any other factors indicating that the system has the potential to trigger or transmit systemic disruption.

These criteria are neither determinative nor exhaustive. While a payment system that meets all of the first four criteria is highly likely to be systemically important, the systemic importance of a payment system that meets a subset of the criteria will be considered by the Bank on a case-by-case basis.

To date, the Bank considers that RITS is the only domestically focused payment system that is systemically important, while CLS is the only international payment system that is systemically important in Australia. The Bank will continue to monitor developments in other payment systems and perform an annual review of whether other payment systems should be considered systemically important.

The Bank's approach to supervision or oversight of domestically focused SIPS

Ongoing supervision or oversight

The Bank considers a SIPS to be domestically focused if it meets one or more of the following criteria:

  • is operated by an entity that is incorporated in Australia, or has its principal place of business in Australia (or in the case of a SIPS with more than one operator, at least one operator is incorporated in Australia or has its principal place of business in Australia)
  • solely or primarily effects payments denominated in AUD
  • provides payment services primarily to Australian participants.

At the time that a domestically focused payment system is first determined to be systemically important, the Bank will seek sufficient information to be able to assess whether the system observes the Principles.

Thereafter, on an ongoing basis, the SIPS will be required to provide the Bank with timely information on any material developments relevant to its operation as a SIPS and its compliance with the Principles. As far as practicable, the SIPS will be expected to notify the Bank of these developments sufficiently in advance of their implementation – or as soon as practicable after the relevant change has occurred – to allow the Bank to seek further information and/or discuss the impact of the changes with the SIPS, as appropriate.

Consideration of information on material developments will be supplemented by periodic regulatory reporting, and regular activity and operational data. The Bank will discuss precise requirements, and the form and frequency of data provision with individual SIPS.

The Bank will expect to gather information through an open and ongoing dialogue with the SIPS, including through scheduled periodic meetings and ad hoc targeted meetings on specific topics. Scheduled meetings would be expected to include:[2]

  • at least annual engagement with the board and, separately, the Chair of the board to discuss strategic issues and observance of the Principles
  • at least semi-annual high-level review meetings to discuss strategy and relevant market developments, involving the Chief Executive Officer and other relevant executives
  • regular meetings to discuss with the relevant members of the C-suite (or equivalent) and their respective teams:
    • developments relevant to observance of the Principles
    • implementation of operational strategy, management of operational risk or business continuity planning
    • audit reports, findings and observations.

Detailed assessments against the Principles will be guided by the CPMI-IOSCO Assessment Methodology for the Principles for FMIs and the Responsibilities of Authorities (Assessment Methodology), which provides a framework for assessing and monitoring observance of the Principles and the responsibilities of authorities.[3] Within the parameters of the Assessment Methodology, the Bank's detailed assessments of a SIPS observance of the Principles would be expected to comprise:

  • a summary of regulatory priorities that covers:
    • progress in addressing recommendations and areas of supervisory/oversight focus identified in previous assessments
    • ratings of how well the SIPS observes each Principle
    • recommendations and the areas of supervisory/oversight focus for the next assessment period.
  • a discussion of material changes, and their implications for observance of the Principles, over the assessment period
  • a periodic more detailed ‘deep dive’ assessment against a subset of the Principles. The scope of any deep dive will be selected according to matters such as:
    • recommendations and stated regulatory priorities identified in previous assessments
    • material developments over the preceding period
    • a risk-based assessment of potential implications for financial stability
    • length of time since the last deep dive
  • an updated detailed assessment against each Principle.

Information gathering to support assessment of progress in addressing previous recommendations and stated regulatory priorities, as well as special topics and material developments, will occur on an ongoing basis throughout the assessment period. The Bank may submit a supplementary information request towards the end of the assessment period.

The Bank will carry out a detailed assessment against the full set of applicable Principles every two years.[4] The Bank will communicate to the SIPS its intentions as to the effective dates of its regulatory assessments.

If the Bank is not satisfied that a SIPS is taking adequate action to address its regulatory priorities, then the Bank will consider the use of powers available to it under the PSRA, including the power to designate a SIPS and determine a standard to be met by the operator of, and/or participants in, the SIPS. The Bank may also consider using these powers in other circumstances where there is a public interest in doing so.

Transitional arrangements

As part of its annual review of the systemic importance of payment systems, the Bank will identify payment systems that have the potential to become systemically important in the future. The Bank will discuss its policy on the supervision and oversight of SIPS with such a payment system, and will engage with the system periodically while it retained the potential to become systemically important.

If the Bank's annual review identifies that a payment system has become systemically important, the Bank will discuss with the SIPS its plans to achieve observance of the Principles, including any identified gaps in observance that the SIPS should prioritise.


The Bank will publish its assessments of domestically focused SIPS against the Principles, as it has for RITS since 2013. The Bank's practice is consistent with the CPMI-IOSCO Disclosure Framework for Financial Market Infrastructures, which encourages greater transparency regarding the activities of FMIs.[5]

The Bank's assessment reports discuss how well the SIPS has observed each Principle. These assessments refer to evidence gathered at the level of the Key Considerations that sit beneath each Principle. However, the published assessment will not separately classify the level of observance of each Key Consideration.

These assessments of SIPS may be subject to external scrutiny, including by CPMI and IOSCO and through the assessment programs of international institutions, such as the International Monetary Fund. It is expected that such reviews will also use the Assessment Methodology to assess the observance by FMIs and authorities of the Principles, including the associated responsibilities of authorities.

The Bank's approach to oversight of international SIPS

In its supervision of payment systems that are systemically important in Australia but are based overseas, and which are primarily used to effect cross-border payments (including in Australian dollars), the Bank will place reliance on reports and information from the regulator in the international SIPS's principal place of business (the overseas regulator) if each of the following conditions is met:

  • The international SIPS provides the Bank with evidence that demonstrates, to the satisfaction of the Bank, that it is required by the overseas regulator to observe the Principles or is held to a materially equivalent standard in its principal place of business. The evidence should be updated in the event of material changes to the applicable laws or regulations in the international SIPS's principal place of business.
  • The Bank receives documentary evidence on an agreed basis from the international SIPS's overseas regulator that the SIPS has complied in all material respects with the materially equivalent requirements to which it is held by the overseas regulator, and the Bank is satisfied with the information received.
  • The overseas regulator has established effective cooperation and information sharing arrangements with the Bank. This includes:
    • representation on any multilateral cooperative oversight arrangements (such as a supervisory college or oversight committee). The frequency of contact with the SIPS through cooperative oversight arrangements will be determined by the relevant lead regulator, but should be at least annual. These arrangements will be expected to cover information on the international SIPS's strategy, relevant market developments, and material changes to its business, including risk management, collateral, technology and operational arrangements
    • arrangements (whether as part of a multilateral cooperative oversight arrangement or otherwise) to share the outcomes of supervisory reviews and assessments against the Principles or equivalent standards.

If these conditions are not met, the Bank will directly assess the international SIPS against the Principles, based on information gathered through whatever cooperative oversight arrangements are available and supplemented with other multilateral and bilateral interactions with the SIPS. Precise expectations on information gathering and more general cooperation arrangements will be determined in consultation with the international SIPS and documented accordingly.


CPMI-IOSCO, Principlesfor financial market infrastructures, April 2012. Available at <https://www.bis.org/cpmi/publ/d101.htm>. [1]

Meetings with board members and the Chief Executive Officer are not necessary in the context of a central bank-owned SIPS. [2]

CPMI-IOSCO, Principles for financial market infrastructures: Disclosure framework and assessment methodology, December 2012. Available at <https://www.bis.org/cpmi/publ/d106.htm>. [3]

Assessments of RITS will continue to be carried out on an annual basis. [4]

CPMI-IOSCO, Principles for financial market infrastructures: Disclosure framework and assessment methodology, December 2012. Available at <https://www.bis.org/cpmi/publ/d106.htm>. [5]