Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act 2024 (87 of 2024)

Schedule 2   Financial market infrastructure: new and enhanced regulatory powers

Part 12   Arrangements under which certain foreign operators need to be licensed or exempt

Corporations Act 2001

139   Section 820D

Repeal the section, substitute:

820D When a clearing and settlement facility is operated in this jurisdiction

(1) A clearing and settlement facility is taken to be operated in this jurisdiction if it:

(a) is operated by a body corporate that is registered under Chapter 2A; or

(b) is covered by a declaration in force under subsection (2).

(2) ASIC may, by written notice given to a body corporate, declare that a clearing and settlement facility operated by the body corporate has a material connection with this jurisdiction.

Referrals to the Minister

(3) If, at any time after a body corporate receives a declaration under subsection (2), the body corporate requests in writing that ASIC refer the declaration to the Minister, ASIC must do so immediately.

(4) The Minister may, if the Minister considers it appropriate after being referred the declaration, direct ASIC to vary or revoke the declaration.

(5) ASIC must comply with the direction given under subsection (4) immediately.

(6) A direction given under subsection (4) is not a legislative instrument.

820E Criteria for declarations that clearing and settlement facilities have a material connection with this jurisdiction

(1) When ASIC is deciding under subsection 820D(2) whether to declare that a clearing and settlement facility has a material connection with this jurisdiction:

(a) the facility must have a connection with this jurisdiction (see subsection (2) of this section); and

(b) ASIC must consider, under subsection (3) of this section, whether the connection is material.

Does the facility have a connection with this jurisdiction?

(2) The clearing and settlement facility has a connection with this jurisdiction if one or more of the following paragraphs apply to the facility:

(a) the facility has operations located in this jurisdiction;

(b) the facility provides services for financial products:

(i) denominated in Australian currency; or

(ii) issued by a domestic corporation or by the Commonwealth, a State or a Territory;

(c) the facility provides services for financial products based on something else (of any nature whatsoever and whether or not deliverable) located or issued in this jurisdiction, including, for example, one or more of the following:

(i) an asset;

(ii) a rate (including an interest rate or exchange rate);

(iii) an index;

(iv) a commodity;

(d) one or more current or expected participants in the facility are resident or based in this jurisdiction;

(e) the operator of the facility has entered into an arrangement:

(i) with the holder of an Australian market licence granted under subsection 795B(1); or

(ii) (either directly or indirectly through one or more interposed entities) with the holder of an Australian CS facility licence granted under subsection 824B(1); or

(iii) with the operator of a payments system determined under subsection 820F(1);

(f) circumstances determined under paragraph 820F(3)(a) exist in relation to the facility.

If such a connection exists, is it material?

(3) The clearing and settlement facility's connection with this jurisdiction is material if ASIC considers that, after applying any principles in force under paragraph 820F(3)(c), one or more of the following paragraphs apply to the facility:

(a) the current or expected number of participants in the facility who are resident or based in this jurisdiction is material;

(b) the size and extent of current or expected aggregate activity with the facility of those participants is material to:

(i) the risk management activities of those participants; or

(ii) the efficient allocation of capital or liquidity to the Australian economy;

(c) the size and extent of current or expected activity in a relevant financial product class offered by the facility is material to:

(i) risk management activities in the Australian financial system; or

(ii) the efficient allocation of capital or liquidity to the Australian economy;

(d) the operator of the facility has an arrangement covered by paragraph (2)(e) of this section that is material;

(e) circumstances determined under paragraph 820F(3)(b) exist in relation to the facility.

ASIC may request related information

(4) ASIC may, by written notice given to a body corporate, request the body to give ASIC, within a period specified in the notice, information about a clearing and settlement facility operated by the body.

820F Relevant determinations

Reserve Bank determination

(1) For the purposes of subparagraph 820E(2)(e)(iii), the Reserve Bank may, by legislative instrument, determine a payment system.

(2) In making a determination under subsection (1), the Reserve Bank must have regard to matters that include the following:

(a) whether the aggregate value of Australian dollar payments processed through the system is high relative to other payment systems;

(b) whether the system mainly handles time-critical payments;

(c) whether the system mainly handles high-value payments;

(d) whether the system is used to settle payments that effect settlement in other clearing and settlement facilities;

(e) whether the system is located in Australia;

(f) any matter prescribed by the regulations for the purposes of this paragraph.

ASIC determinations

(3) ASIC may, by legislative instrument:

(a) determine circumstances for the purposes of paragraph 820E(2)(f); or

(b) determine circumstances for the purposes of paragraph 820E(3)(e); or

(c) determine, for each paragraph of subsection 820E(3), principles for working out if that paragraph applies to a clearing and settlement facility.

Note: A single document could cover any or all of the things mentioned in paragraphs (a) to (c).

(4) In making a determination under subsection (3), ASIC must have regard to any relevant advice received from the Reserve Bank.

820G Ministerial consent to Reserve Bank or ASIC determination required

(1) The Reserve Bank must not make a determination under subsection 820F(1) unless the Minister has consented, in writing, to the making of the determination.

(2) ASIC must not make a determination under paragraph 820F(3)(b) unless the Minister has consented, in writing, to the making of the determination.

(3) A consent given under subsection (1) or (2) is not a legislative instrument.

820H Revoking declarations that clearing and settlement facilities have a material connection with this jurisdiction

ASIC may, by written notice given to a body corporate, revoke a declaration made under subsection 820D(2) about a clearing and settlement facility operated by the body corporate if:

(a) after having regard to subsection 820E(2), ASIC considers that the facility does not have a connection with this jurisdiction; or

(b) after having regard to subsection 820E(3), ASIC no longer considers that the facility's connection with this jurisdiction is material.