Corporations Act 2001

CHAPTER 7 - FINANCIAL SERVICES AND MARKETS  

Note: This Chapter applies to a CCIV in a modified form: see Division 4 of Part 8B.7 .

PART 7.3 - LICENSING OF CLEARING AND SETTLEMENT FACILITIES  

Division 2 - Regulation of CS facility licensees  

Subdivision D - Reserve Bank ' s directions powers  

SECTION 823F   RESERVE BANK ' S DIRECTIONS POWER - DIRECTIONS TO PRESERVE STABILITY IN THE AUSTRALIAN FINANCIAL SYSTEM  

823F(1)    
The Reserve Bank may, by written notice given to a CS facility licensee holding a licence granted under subsection 824B(1) (domestic clearing and settlement facilities), direct the licensee to:

(a)    do, or refrain from doing, anything under either or both of the following instruments (the operating instruments ):

(i) the facility ' s operating rules;

(ii) the written procedures the facility must have under regulations made for the purposes of subsection 822A(2) ; or

(b)    change one or more of those operating instruments; or

(c)    subject to sections 823M and 823P :

(i) increase the licensee ' s level of share capital to a specified level; or

(ii) issue one or more specified classes of shares, or one or more specified classes of rights to acquire shares, in the licensee; or

(iii) issue one or more specified classes of capital instruments that are prescribed by the regulations; or

(d)    refrain from paying a dividend on any shares; or

(e)    refrain from repaying any amount paid on shares; or

(f)    exercise rights under an agreement (including termination rights);

if subsection (2) of this section applies to the licensee.

Note 1: The direction is a recapitalisation direction to the extent that it deals with a matter in paragraph (c) .

Note 2: The procedures referred to in subparagraph (a)(ii) could relate to matters such as:

(a) the licensee ' s operations; or

(b) the conduct of participants in the facility; or

(c) the structure and operation of electronic communications with those participants; or

(d) default management or recovery.

823F(2)    
This subsection applies to the licensee if:

(a)    the licensee informs the Reserve Bank that the licensee considers that the licensee is likely to become unable to meet one or more of its obligations under paragraphs 821A(1)(aa) , (ab) and (d) (its critical obligations ); or

(b)    the Reserve Bank reasonably believes that, in the absence of external support:

(i) the licensee may become unable to meet one or more of its critical obligations; or

(ii) it is likely that the licensee will be unable to operate the facility in Australia consistently with the stability of the Australian financial system; or

(c)    the licensee becomes unable to meet one or more of its critical obligations; or

(d)    the Reserve Bank reasonably believes that the licensee is conducting, or is likely to conduct its affairs in a way that may cause or promote instability in the Australian financial system.

823F(3)    
For the purposes of paragraph (2)(b) , the regulations may specify that a particular form of support:

(a)    is external support; or

(b)    is not external support.

823F(4)    
The direction:

(a)    must specify a reasonable time by which, or a reasonable period during which, it is to be complied with; and

(b)    may deal with one or more of the matters in the paragraphs or subparagraphs of subsection (1) .

823F(5)    
The licensee must comply with the direction.

Note: Failure to comply with this subsection is an offence: see subsection 1311(1) .