The government will soon introduce a regulatory reform package on Financial Market Infrastructure (FMI) following a review by Australia's financial regulators.
The Council of Financial Regulators (CFR) consisting of APRA, ASIC, Treasury and the Reserve Bank of Australia (RBA) previously handed a report to government with recommendations to increase their powers to intervene to manage a crisis and pre-emptively identify and manage risks.
FMIs are the entities that enable and facilitate trading in capital markets.
"FMIs including financial markets, clearing and settlement facilities, benchmark administrators and derivative trade repositories play a critical role in the operation of financial markets and the financial system more broadly, supporting $18 trillion in securities transactions and $185 trillion in notional value of derivatives transactions every year," treasurer Josh Frydenberg said.
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The reform package will introduce a crisis management regime that will allow the RBA to manage a failure at a domestic clearing and settlement facility.
This power will be supported by a $5 billion standing appropriation, with ministerial agreement, to provide temporary funding to a CS facility if that were necessary to ensure continuity of services.
Further to this, the reform will improve the supervisory and licensing powers of both the RBA and ASIC in respect of FMIs and streamline and clarify certain regulatory powers.
The reforms follow the 2021/22 budget which outlined an FMI regulatory reform package and further work undertaken in 2019 by the CFR who had consulted on measures to strengthen FMIs and recommended reforms to the government.