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Law Council of Australia

Business Law Section

Financial market infrastructure regulatory reforms

This submission is made by the Financial Services Committee and Insolvency and Restructuring Committee of the Business Law Section of the Law Council of Australia (the Committees) with respect to the exposure draft legislation, regulations and accompany explanatory memorandum and explanatory statement relating to financial market infrastructure (FMI) regulatory reforms, which Treasury released for consultation on 15 December 2023 (the Proposed Reforms).

The Committees believe that the Proposed Reforms will play an important role in ensuring that Australia’s financial markets remain strong and resilient, and that the regulators have appropriate powers to provide appropriate oversight and supervision of FMI entities.

The Proposed Reforms are extensive and consist of three core elements:

  1. A framework for the exercise of powers by the Reserve Bank (the RBA) in a crisis situation;
  2. Further powers for regulators to issue directions and access a broader range of enforcement tools; and
  3. The transfer of existing ministerial powers to the Australian Securities and Investments Commission (ASIC) and the RBA relating to the licensing and supervision of FMI entities.

The Committees support these proposals and the principles which underpin them. The Committees note that a crisis resolution regime for central counterparties has been adopted in international jurisdictions in accordance with a comprehensive set of standards, and considers that it is therefore similarly appropriate for the RBA to have comprehensive powers to resolve a crisis in Australia.

The Committees wish to raise certain matters, with a view to:

  1. Ensuring that the legislative objective of the Proposed Reforms can be achieved; and
  2. Seeking greater clarity as to the scope and operation of new and amended provisions under the Proposed Reforms.

Read the full submission below.

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