Media Release Financial Stability Standards

Following a decision by the Payments System Board, the Reserve Bank of Australia has today determined financial stability standards under Part 7.3 of the Corporations Act 2001. The standards will apply to licensees of clearing and settlement facilities in Australia.

Clearing and settlement facilities are systems that clear and settle transactions in securities such as bonds and equities, and in derivative instruments such as options and futures. The Reserve Bank has formal responsibility for ensuring that clearing and settlement facility licensees conduct their affairs in a way that promotes overall stability in the Australian financial system. Currently, clearing and settlement licences are held by entities owned by the Australian Stock Exchange and the Sydney Futures Exchange.

The objective of the standards is to ensure that licensees of clearing and settlement facilities identify and properly control the risks associated with their operations. There are two separate standards: one for central counterparties and another for securities settlement facilities. Each standard is supplemented by a series of measures that the Reserve Bank considers are relevant for meeting the standard. The Reserve Bank has also issued guidance notes, which provide further information on each measure.

The standards, measures and associated guidance notes are available on the web site of the Reserve Bank of Australia (www.rba.gov.au). The Reserve Bank's role in this area is discussed in the Payments System Board's 2002 Annual Report, available on the same web site.