Explanatory Memorandum
(Circulated by authority of the Minister for Small Business and Assistant Treasurer, the Hon Kelly O'Dwyer MP)Chapter 3 - Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Financial System Legislation Amendment (Resilience and Collateral Protection) Bill 2016
3.1 This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Bill
3.2 The Financial System Legislation Amendment (Resilience and Collateral Protection) Bill 2016 (the Bill) amends the Payment Systems and Netting Act 1998 and associated provisions in other Acts so that financial institutions in Australia can comply with internationally-agreed margining requirements when dealing in OTC derivatives. More specifically, it ensures that they can give, and enforce rights in respect of, margin provided by way of security.
3.3 The Bill also provides legal certainty about the operation of Australian law in relation to termination rights (also known as close out rights) under certain financial market transactions; and approved Real Time Gross Settlement (RTGS) systems, approved netting arrangements and netting markets (more specifically, market netting contracts) in all market conditions.
3.4 The Bill also makes consequential amendments to the Banking Act; Business Transfer Act; Insurance Act; Life Insurance Act; and PHI Act.
Human rights implications
3.5 This Bill does not engage any of the applicable rights or freedoms.
Conclusion
3.6 This Bill is compatible with human rights as it does not raise any human rights issues.