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 1 - Requirement to be licensed  

SECTION 820A   NEED FOR A LICENCE  

820A(1)    
A person must only operate, or hold out that the person operates, a clearing and settlement facility in this jurisdiction if:

(a)    the person has an Australian CS facility licence that authorises the person to operate the facility in this jurisdiction; or

(b)    the facility is exempt from the operation of this Part; or

(c)    

the person is exempt from the operation of this Part.

Note 1: A CS facility licensee may also provide financial services incidental to the operation of the facility: see paragraph 911A(2)(d) .

Note 2: Failure to comply with this subsection is an offence: see subsection 1311(1) .

820A(2)    
For the purposes of an offence based on subsection (1) , strict liability applies to paragraph (1)(b) .

Note: For strict liability , see section 6.1 of the Criminal Code .

820A(3)    

A person contravenes this subsection if the person contravenes subsection (1) .

Note: This subsection is a civil penalty provision (see section 1317E ).

SECTION 820B  

820B   OTHER PROHIBITIONS ON HOLDING OUT  

A person must not hold out:

(a)    that the person has an Australian CS facility licence; or

(b)    that the operation of a clearing and settlement facility by the person in this jurisdiction is authorised by an Australian CS facility licence; or

(c)    that a clearing and settlement facility is exempt from the operation of this Part; or

(d)    

that the person is exempt from the operation of this Part;

if that is not the case.

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

SECTION 820C   EXEMPTIONS BY ASIC  

Exemption of particular clearing and settlement facility or person

820C(1)    
ASIC may, in writing, exempt:

(a)    a particular clearing and settlement facility; or

(b)    a particular person;

from all or specified provisions of this Part.

Note: The provisions of this Part include regulations and other instruments made for the purposes of this Part: see section 761H .

820C(2)    
An exemption given under subsection (1) may apply:

(a)    unconditionally or subject to specified conditions; and

(b)    for a specified period or indefinitely (the exemption duration ).

820C(3)    
ASIC may, at any time, in writing:

(a)    vary an exemption given under subsection (1) to:

(i) impose conditions, or additional conditions, on the exemption; or

(ii) vary or revoke any of the conditions on the exemption; or

(iii) extend or shorten the exemption duration (including as affected by any variation from a previous operation of this subparagraph); or

(b)    revoke an exemption given under subsection (1) .

820C(4)    
However, ASIC may only take action under subsection (3) after giving notice, and an opportunity to make submissions on the proposed action, to:

(a)    if paragraph (1)(a) applies to the exemption - the operator of the clearing and settlement facility covered by the exemption; or

(b)    if paragraph (1)(b) applies to the exemption - the person covered by the exemption.

820C(5)    
An exemption given under subsection (1) , or a variation or revocation made under subsection (3) , is not a legislative instrument.

820C(6)    
If ASIC gives an exemption under subsection (1) , or varies or revokes an exemption under subsection (3) , ASIC must publish notice of the exemption, variation or revocation on ASIC ' s website.

Exemption of classes of clearing and settlement facilities and persons

820C(7)    
ASIC may, by legislative instrument, exempt:

(a)    a class of clearing and settlement facilities; or

(b)    a class of persons;

from all or specified provisions of this Part.

Note: The provisions of this Part include regulations and other instruments made for the purposes of this Part: see section 761H .

820C(8)    
An exemption given under subsection (7) may apply:

(a)    unconditionally or subject to specified conditions; and

(b)    for a specified period or indefinitely (the exemption duration ).

820C(9)    
ASIC may, at any time, by legislative instrument:

(a)    vary an exemption given under subsection (7) to:

(i) impose conditions, or additional conditions, on the exemption; or

(ii) vary or revoke any of the conditions on the exemption; or

(iii) extend or shorten the exemption duration (including as affected by any variation from a previous operation of this subparagraph); or

(b)    revoke an exemption given under subsection (7) .

820C(10)    
However, ASIC may only take action under subsection (9) after:

(a)    giving notice, and an opportunity to make submissions on the proposed action, to:

(i) if paragraph (7)(a) applies - the operator of each clearing and settlement facility known by ASIC to be covered by the exemption; or

(ii) if paragraph (7)(b) applies - each person known by ASIC to be covered by the exemption; and

(b)    both:

(i) a notice has been published on ASIC ' s website allowing a reasonable period within which the operator of each clearing and settlement facility covered by the exemption, or each person covered by the exemption, (as applicable) may make submissions on the proposed action; and

(ii) that period has ended.

Provisions of this Part to which this section does not apply

820C(11)    
Subsection (1) or (7) does not apply to the following provisions of this Part:

(a)    paragraph 821A(1)(aa) or (ab) ;

(b)    a standard determined under section 827D or 827DA .

Note: For exemptions from paragraph 821A(1)(aa) or (ab) or a standard determined under section 827D or 827DA , see section 820CA .

SECTION 820CA   EXEMPTIONS BY RESERVE BANK  

Exemption of a particular clearing and settlement facility or person

820CA(1)    
The Reserve Bank may, in writing, exempt:

(a)    a particular clearing and settlement facility; or

(b)    a particular person;

from:

(c)    paragraph 821A(1)(aa) or (ab); or

(d)    a provision of a standard determined under section 827D or 827DA .

820CA(2)    
The exemption may apply:

(a)    unconditionally or subject to specified conditions; and

(b)    for a specified period or indefinitely (the exemption duration ).

820CA(3)    
The Reserve Bank may, at any time, in writing:

(a)    vary an exemption given under subsection (1) to:

(i) impose conditions, or additional conditions, on the exemption; or

(ii) vary or revoke any of the conditions on the exemption; or

(iii) extend or shorten the exemption duration (including as affected by any variation from a previous operation of this subparagraph); or

(b)    revoke an exemption given under subsection (1) .

820CA(4)    
However, the Reserve Bank may only take action under subsection (3) after giving notice, and an opportunity to make submissions on the proposed action, to:

(a)    if paragraph (1)(a) applies to the exemption - the operator of the clearing and settlement facility covered by the exemption; or

(b)    if paragraph (1)(b) applies to the exemption - the person covered by the exemption.

820CA(5)    
An exemption given under subsection (1) , or a variation or revocation made under subsection (3) , is not a legislative instrument.

820CA(6)    
If the Reserve Bank gives an exemption under subsection (1) , or varies or revokes an exemption under subsection (3) , the Reserve Bank must publish notice of the exemption, variation or revocation on the Reserve Bank ' s website.

Exemption of classes of clearing and settlement facilities and persons

820CA(7)    
The Reserve Bank may, by legislative instrument, exempt:

(a)    a class of clearing and settlement facilities; or

(b)    a class of persons;

from:

(c)    paragraph 821A(1)(aa) or (ab) ; or

(d)    a provision of a standard determined under section 827D or 827DA .

820CA(8)    
The exemption may apply:

(a)    unconditionally or subject to specified conditions; and

(b)    for a specified period or indefinitely (the exemption duration ).

820CA(9)    
The Reserve Bank may, at any time, by legislative instrument:

(a)    vary an exemption given under subsection (7) to:

(i) impose conditions, or additional conditions, on the exemption; or

(ii) vary or revoke any of the conditions on the exemption; or

(iii) extend or shorten the exemption duration (including as affected by any variation from a previous operation of this subparagraph); or

(b)    revoke an exemption given under subsection (7) .

820CA(10)    
However, the Reserve Bank may only take action under subsection (9) after:

(a)    giving notice, and an opportunity to make submissions on the proposed action, to:

(i)if paragraph (7)(a) applies to the exemption - the operator of each clearing and settlement facility known by the Reserve Bank to be covered by the exemption; or

(ii) if paragraph (7)(b) applies to the exemption - each person known by the Reserve Bank to be covered by the exemption; and

(b)    both:

(i) a notice has been published on the Reserve Bank ' s website allowing a reasonable period within which the operator of each clearing and settlement facility covered by the exemption, or each person covered by the exemption, (as applicable) may make submissions on the proposed action; and

(ii) that period has ended.

SECTION 820D   WHEN A CLEARING AND SETTLEMENT FACILITY IS OPERATED IN THIS JURISDICTION  

820D(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) .

820D(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

820D(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.

820D(4)    
The Minister may, if the Minister considers it appropriate after being referred the declaration, direct ASIC to vary or revoke the declaration.

820D(5)    
ASIC must comply with the direction given under subsection (4) immediately.

820D(6)    
A direction given under subsection (4) is not a legislative instrument.

SECTION 820E   CRITERIA FOR DECLARATIONS THAT CLEARING AND SETTLEMENT FACILITIES HAVE A MATERIAL CONNECTION WITH THIS JURISDICTION  

820E(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?

820E(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?

820E(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

820E(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.

SECTION 820F   RELEVANT DETERMINATIONS  

Reserve Bank determination

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

820F(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

820F(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) .

820F(4)    
In making a determination under subsection (3) , ASIC must have regard to any relevant advice received from the Reserve Bank.

SECTION 820G   MINISTERIAL CONSENT TO RESERVE BANK OR ASIC DETERMINATION REQUIRED  

820G(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.

820G(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.

820G(3)    
A consent given under subsection (1) or (2) is not a legislative instrument.

SECTION 820H  

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.

Division 2 - Regulation of CS facility licensees  

Subdivision A - Licensee ' s obligations  

SECTION 821A   GENERAL OBLIGATIONS  

821A(1)    
A CS facility licensee must:

(aa)    

comply with standards in force under section 827D or 827DA ; and

(ab)    

do all other things necessary to reduce systemic risk to the extent that it is reasonablypracticable to do so; and

(a)    to the extent that it is reasonably practicable to do so, do all things necessary to ensure that the facility ' s services are provided in a fair and effective way; and

(b)    comply with the conditions on the licence; and

(c)    have adequate arrangements (whether they involve a self-regulatory structure or the appointment of an independent person or related entity) for supervising the facility, including arrangements for:

(i) handling conflicts between the commercial interests of the licensee and the need for the licensee to ensure that the facility ' s services are provided in a fair and effective way; and

(ii) enforcing compliance with the facility ' s operating rules; and

(d)    have sufficient resources (including financial, technological and human resources) to operate the facility properly and for the required supervisory arrangements to be provided; and

(e)    if the licensee is a foreign body corporate - be registered under Division 2 of Part 5B.2 ; and

(ea)    

if the licence was granted under subsection 824B(1) (domestic clearing and settlement facilities) - be registered under Chapter 2A ; and

(f)    

if the licence was granted under subsection 824B(2) (overseas clearing and settlement facilities) - both:

(i) remain authorised to operate a clearing and settlement facility in the foreign country in which the licensee ' s principal place of business is located; and

(ii) get ASIC ' s approval under section 821F before that principal place of business becomes located in any other foreign country; and

(g)    

if the licensee, or a holding company of the licensee, is a widely held market body - take all reasonable steps to ensure that an unacceptable control situation does not exist in relation to the body; and

(h)    take all reasonable steps to ensure that no disqualified individual becomes, or remains, involved in the licensee (see Division 2 of Part 7.4 ).

821A(2)    

A person contravenes this subsection if the person contravenes a paragraph of subsection (1) other than paragraph (b) .

Note: This subsection is a civil penalty provision (see section 1317E ).

SECTION 821B   OBLIGATION TO NOTIFY ASIC OF CERTAIN MATTERS  

821B(1)    

A CS facility licensee must give written notice to ASIC, as soon as practicable, if it becomes aware that it may no longer be able to meet, or has breached, an obligation under section 821A .

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

821B(2)    
A CS facility licensee must give written notice to ASIC, as soon as practicable, as required by the following paragraphs:

(a)    if the licensee provides a new class of financial service incidental to the operation of the facility, the licensee must give notice that includes details of the new class;

(b)    if the licensee takes any kind of disciplinary action against a participant in the facility, the licensee must give notice that includes:

(i) the participant ' s name; and

(ii) the reason for and nature of the action taken;

(c)    if the licensee has reason to suspect that a person has committed, is committing, or is about to commit a significant contravention of the facility ' s operating rules or this Act, the licensee must give notice that includes:

(i) the person ' s name; and

(ii) details of the contravention or impending contravention; and

(iii) the licensee ' s reasons for that belief.

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

821B(3)    
A CS facility licensee whose licence was granted under subsection 824B(2) (overseas clearing and settlement facilities) must, as soon as practicable, give written notice to ASIC if:

(a)    the licensee ceases to be authorised to operate a clearing and settlement facility in the foreign country in which the licensee ' s principal place of business is located; or

(b)    there is a significant change to the regulatory regime applying in relation to the facility in the foreign country in which the licensee ' s principal place of business is located.

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

821B(4)    
As soon as practicable after:

(a)    

a person becomes or ceases to be a director, secretary or senior manager of a CS facility licensee or of a holding company of a CS facility licensee (including when a person changes from one of those positions to another); or

(b)    

a CS facility licensee becomes aware that a person has come to have, or has ceased to have, more than 20% of the voting power in the licensee or in a holding company of the licensee;

the licensee must give written notice of this to ASIC. The notice must include such other information about the matter as is prescribed by regulations made for the purposes of this subsection.

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

Note 2: To the extent that the licensee is required to give the notice andinformation under any other provision of this Act, the licensee may comply with this subsection by doing so. It need not provide the same information twice.

821B(6)    

A person contravenes this subsection if the person contravenes subsection (1) , (2) , (3) or (4) .

Note: This subsection is a civil penalty provision (see section 1317E ).

Changes already notified to Reserve Bank

821B(7)    

A CS facility licensee is not required to notify ASIC of a matter under subsection (1) , (2) , (3) or (4) if the licensee has already notified the Reserve Bank of that matter under section 821BA .

SECTION 821BA  

821BA   OBLIGATION TO NOTIFY RESERVE BANK OF CERTAIN MATTERS  

A CS facility licensee must give written notice to the Reserve Bank, immediately after becoming aware that:

(a)    the licensee has failed to comply with one or more standards in force under section 827D or 827DA , or is likely to fail to comply with such standards; or

(b)    the licensee may no longer be able to meet, or has breached, its obligation under paragraph 821A(1)(ab) ; or

(c)    the licensee has ceased, intends to cease or is likely to cease providing one or more clearing and settlement facility services that are critical to the functioning of the financial system in Australia; or

(d)    in the absence of external support, the licensee is likely to be unable to continue to provide one or more clearing and settlement facility services that are critical to the functioning of the financial system in Australia; or

(e)    the licensee ' s financial viability is at risk or is likely to be at risk; or

(f)    in the absence of external support, the licensee ' s financial viability is likely to be at risk; or

(g)    an event treated, under the facility ' s operating rules, as a default event occurs, or is likely to occur, in relation to a participant in the CS facility.

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

SECTION 821C   OBLIGATION TO ASSIST  

ASIC

821C(1)    
A CS facility licensee must give such assistance to ASIC, or a person authorised by ASIC, as ASIC or the authorised person reasonably requests in relation to the performance of ASIC ' s functions.

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

821C(2)    
Such assistance may include showing ASIC the licensee ' s books or giving ASIC other information.

Reserve Bank

821C(3)    

A CS facility licensee must give such assistance to the Reserve Bank, or a person authorised by the Reserve Bank, as the Reserve Bank or the authorised person reasonably requests in relation to the performance of the Reserve Bank ' s functions under this Part or Part 7.3B .

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

821C(4)    
Such assistance may include showing the Reserve Bank the licensee ' s books or giving the Reserve Bank other information.

SECTION 821D   OBLIGATION TO GIVE ACCESS TO THE FACILITY  

821D(1)    
A CS facility licensee must give a person authorised by ASIC such reasonable access to the facility as the person requests for any of the purposes of this Chapter.

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

821D(2)    

A CS facility licensee must give a person authorised by the Reserve Bank such reasonable access to the facility as the person requests for any of the purposes of this Part or Part 7.3B .

SECTION 821E   ANNUAL REPORT  

821E(1)    
A CS facility licensee must, within 3 months after the end of its financial year, give ASIC an annual report on the extent to which the licensee complied with its obligations as a CS facility licensee under this Chapter.

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

821E(2)    
The licensee must ensure that the annual report is accompanied by any information and statements prescribed by regulations made for the purposes of this subsection.

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

821E(3)    

The licensee must also ensure that the annual report is accompanied by any audit report that ASIC requires under subsection (4) .

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

821E(4)    

ASIC may, by giving written notice to a CS facility licensee, require the licensee to obtain from ASIC, or a suitably qualified person or body nominated by ASIC, an audit report on the annual report and on any information or statements accompanying it.

821E(5)    
(Repealed by No 87 of 2024, s 3, Sch 3[72] (effective 24 September 2024).)

SECTION 821F   CHANGE OF COUNTRY BY FOREIGN LICENSEE  

821F(1)    

In the case of a licence granted under subsection 824B(2) , ASIC may approve the location of the licensee ' s principal place of business in a new country only if:

(a)    the new country is not Australia; and

(b)    the operation of the facility in that country will be subject to requirements and supervision that are sufficiently equivalent, in relation to the degree of protection from systemic risk and the level of effectiveness and fairness of services they achieve, to the requirements and supervision to which clearing and settlement facilities are subject under this Act in relation to those matters.

821F(2)    
If, in relation to a licence granted under subsection 824B(2) , the licensee ' s principal place of business changes to become a place in Australia:

(a)    the licence ceases to be in force from the time of the change; and

(b)    if the licensee wishes the facility to continue to be licensed, the licensee may apply for the grant of a new licence under subsection 824B(1) ; and

(c)    the application must be assessed in accordance with Subdivision A of Division 3 , subject to such modifications (if any) of that Subdivision as are set out in regulations made for the purposes of this paragraph.

821F(3)    
An application referred to in paragraph (2)(b) may be made in advance of the change of location of the principal place of business, and a decision on the application may be made before that time. However, any licence granted pursuant to the application does not come into force until the change occurs.

Subdivision AA - Obligations on licensees and certain related bodies and persons  

SECTION 821H   NOTIFICATION OF RECAPITALISATION OR RESTRUCTURING  

821H(1)    
A body corporate that:

(a)    is a CS facility licensee; or

(b)    is a related body corporate of a CS facility licensee and is incorporated in Australia;

must give written notice to the Reserve Bank immediately after:

(c)    the body corporate forms an intention to enter into a transaction to recapitalise; or

(d)    the board of the body corporate agrees to a plan to restructure the body corporate.

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

821H(2)    
Subsection (1) does not apply if the transaction or restructure is minor or insignificant.

Note: A defendant bears an evidential burden in relation to the matter in this subsection: see subsection 13.3(3) of the Criminal Code .

Invalid acts

821H(3)    
Subject to subsection (6) , if a body corporate:

(a)    is incorporated in Australia; and

(b)    purports to do either of the following acts:

(i) enter into a transaction to which paragraph (1)(c) applies;

(ii) an act that is part of implementing a plan to which paragraph (1)(d) applies; and

(c)    contravenes subsection (1) in relation to that transaction or plan;

the act is invalid and of no effect.

821H(4)    
The body corporate may apply in writing to the Reserve Bank to have the contravention disregarded.

821H(5)    
The Reserve Bank may, by notice in writing given to the body corporate that made the application, agree to the contravention being disregarded for the purposes of subsection (3) if the Reserve Bank is satisfied that it would be appropriate for the contravention to be disregarded.

821H(6)    
For the purposes of subsection (3) , the contravention must be disregarded if the Reserve Bank so agrees under subsection (5) .

SECTION 821J   NOTICE OF ANY OTHER MATERIAL CHANGES IN CIRCUMSTANCES  

821J(1)    
A body corporate that:

(a)    is a CS facility licensee; or

(b)    is a related body corporate of a CS facility licensee and is incorporated in Australia;

must give written notice to the Reserve Bank immediately after becoming aware of a material change in circumstances of the body corporate that:

(c)    relate to:

(i) risk management; or

(ii) the licensee ' s ability to continue to provide one or more clearing and settlement facility services; and

(d)    are circumstances to which subsection (2) applies.

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

821J(2)    
For the purposes of paragraph (1)(d) , this subsection applies to circumstances that affect any of the following:

(a)    the solvency of the body corporate;

(b)    voting power in the body corporate (but see subsections (3) and (4) );

(c)    the structure of the body corporate;

(d)    the structure of the group (if any) consisting of:

(i) the body corporate; and

(ii) each related body corporate of the body corporate;

(e)    the provision of one or more clearing and settlement facility services that are critical to the functioning of the financial system in Australia.

Change in voting power in listed related body corporate

821J(3)    
Subsection (4) applies to a body corporate that is:

(a)    a related body corporate of a CS facility licensee; and

(b)    a listed entity.

821J(4)    
For the purpose of this section, a change in voting power in the body corporate is a material change in circumstances of the body corporate if, and only if:

(a)    before the change, a particular person held:

(i) no voting power in the body corporate; or

(ii) less than 20% of the voting power in the body corporate; and

(b)    after the change, the person holds at least 20% of that voting power.

Changes already notified to Reserve Bank

821J(5)    
A body corporate is not required to notify the Reserve Bank of a material change in circumstances of the body corporate under subsection (1) if the body corporate has already notified the Reserve Bank of that change under another provision of this Part.

SECTION 821K   NOTIFICATION OF APPOINTMENT OF EXTERNAL ADMINISTRATOR  

821K(1)    
If a person is considering appointing an external administrator of a body corporate that:

(a)    is a CS facility licensee; or

(b)    is a related body corporate of a CS facility licensee and is incorporated in Australia;

the person must give written notice to the Reserve Bank. The notice must be given at least 7 days before an external administrator of the body corporate is appointed.

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

821K(2)    
An offence based on subsection (1) is an offence of strict liability.

Note: For strict liability, see section 6.1 of the Criminal Code .

821K(3)    
An external administrator of the body corporate must not be appointed before that time, unless the Reserve Bank approves the appointment.

Invalid acts

821K(4)    
If:

(a)    the body corporate is incorporated in Australia; and

(b)    a purported external administrator of the body corporate, appointed in contravention of subsection (3) , purports to act in relation to the body corporate ' s business;

those acts are invalid and of no effect.

Safe harbour

821K(5)    
Subsection 588G(2) does not apply in relation to a person and a debt incurred by a body corporate if the debt is incurred:

(a)    at a time while this section prevents the appointment of an external administrator; and

(b)    in the ordinary course of the body corporate ' s business, or with the written consent of the Reserve Bank or by order of the Court.

SECTION 821L   NOTIFICATION FROM LIQUIDATOR AND REQUEST FOR INFORMATION ABOUT WINDING UP  

Notification of applications relating to winding up

821L(1)    
A liquidator, or a provisional liquidator, of a body corporate that:

(a)    is a CS facility licensee; or

(b)    is a related body corporate of a CS facility licensee and is incorporated in Australia;

must give written notice to the Reserve Bank, at least 7 days before making an application to the Court in relation to a matter arising under the winding-up of the body corporate.

821L(2)    
The notice must include details of the proposed application.

821L(3)    
The Reserve Bank is entitled to be heard on the application to the Court.

Information request

821L(4)    
The Reserve Bank may request the liquidator or provisional liquidator to give, within a reasonable time specified in the request, specified information in writing about:

(a)    the application; or

(b)    other matters relating to the winding-up, or proposed winding up, of the body corporate; or

(c)    the affairs of the body corporate.

821L(5)    
The liquidator or provisional liquidator must comply with the request.

Subdivision B - The facility ' s operating rules and procedures  

SECTION 822A   CONTENT OF THE OPERATING RULES AND PROCEDURES  

822A(1)    

The operating rules of a licensed CS facility must deal with the matters prescribed by regulations made for the purposes of this subsection, and the matters specified in the CS services rules for the purposes of this subsection.

822A(2)    
The regulations may also prescribe matters in respect of which a licensed CS facility must have written procedures.

822A(3)    
However, subsections (1) and (2) do not apply if the licensee is also authorised to operate the facility in the foreign country in which its principal place of business is located and the licence was granted under subsection 824B(2) (overseas clearing and settlement facilities).

822A(4)    
In a subsection (3) case, ASIC may determine, by giving written notice to the licensee, matters in respect of which the licensed CS facility must have written procedures.

SECTION 822B   LEGAL EFFECT OF OPERATING RULES  

822B(1)    
The operating rules of a licensed CS facility have effect as a contractunder seal:

(a)    between the licensee and each issuer of financial products in respect of which the facility provides its services; and

(b)    between the licensee and each participant in the facility; and

(c)    between each issuer of financial products in respect of which the facility provides its services and each participant in the facility; and

(d)    between a participant in the facility and each other participant in the facility;

under which each of those persons agrees to observe the operating rules to the extent that they apply to the person and to engage in conduct that the person is required by the operating rules to engage in.

822B(2)    

However, if there is an inconsistency between the operating rules of a licensed CS facility and any of the following other rules:

(a)    the derivative transaction rules;

(aa)    

the CS facility rules;

(b)    the derivative trade repository rules;

(c)    

the client money reporting rules;

(d)    

the CS services rules;

those other rules prevail over the operating rules to the extent of the inconsistency.

Note 1: If there is an inconsistency between the derivative transaction rules and the derivative trade repository rules, the derivative transaction rules prevail: see subsection 901E(2) .

Note 2: If there is an inconsistency between the derivative transaction rules or the derivative trade repository rules and the client money reporting rules, the derivative transaction rules or the derivative trade repository rules prevail: see subsection 981M(2) .

SECTION 822C   ENFORCEMENT OF OPERATING RULES  

822C(1)    

If a person who is under an obligation to comply with or enforce any of a licensed CS facility ' s operating rules fails to meet that obligation, an application to the Court may be made by one or more of the following:

(a)    

ASIC or the Reserve Bank;

(b)    

the licensee;

(c)    

the operator of a financial market with which the facility has arrangements to provide services for transactions effected through the market;

(d)    a person aggrieved by the failure.

822C(2)    
After giving an opportunity to be heard to the applicant and the person against whom the order is sought, the Court may make an order giving directions to:

(a)    the person against whom the order is sought; or

(b)    if that person is a body corporate - the directors of the body corporate;

about compliance with, or enforcement of, the operating rules.

SECTION 822D   CHANGING THE OPERATING RULES  

Licensed CS facilities other than subsection 824B(2) facilities

822D(1)    

As soon as practicable after a change is made to the operating rules of a licensed CS facility, other than a facility licensed under subsection 824B(2) (overseas clearing and settlement facilities), the licensee must lodge with ASIC in a prescribed form written notice of the change. The notice must:

(a)    set out the text of the change; and

(b)    specify the date on which the changewas made; and

(c)    contain an explanation of the purpose of the change.

822D(2)    
If no notice is lodged with ASIC, as required by subsection (1) , within 21 days after the change is made, the change ceases to have effect at the end of that period.

Subsection 824B(2) facilities

822D(3)    

As soon as practicable after a change is made to the operating rules of a clearing and settlement facility the operation of which is licensed under subsection 824B(2) (overseas clearing and settlement facilities), the licensee must lodge with ASIC in a prescribed form written notice of the change. The notice must:

(a)    set out the text of the change; and

(b)    specify the date on which the change was made; and

(c)    contain an explanation of the purpose of the change.

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

SECTION 822E   DISALLOWANCE OF CHANGES TO OPERATING RULES  

822E(1)    
This section does not apply in respect of an Australian CS facility licence granted under subsection 824B(2) (overseas clearing and settlement facilities).

822E(2)    

Within 28 days after ASIC receives a notice under section 822D from a CS facility licensee, ASIC may disallow all or a specified part of the change to the operating rules.

822E(3)    
(Repealed by No 87 of 2024, s 3, Sch 3[74] (effective 24 September 2024).)

822E(4)    

In deciding whether to disallow all or a specified part of the change to the operating rules, ASIC must have regard to the consistency of the change with the licensee's obligations under this Part (including in particular the obligations mentioned in paragraphs 821A(1)(aa) and (a)), and the matters specified in the CS services rules for the purposes of this subsection.

Note: ASIC must also have regard to the matters in section 827A .

822E(5)    
As soon as practicable after all or a part of a change is disallowed, ASIC must give notice of the disallowance to the licensee. The change ceases to have effect, to the extent of the disallowance, when the licensee receives the notice.

Subdivision C - Powers of ASIC and the Reserve Bank in relation to licensees  

SECTION 823A   ASIC ' S POWER TO GIVE DIRECTIONS  

823A(1)    

If ASIC considers that a CS facility licensee is not complying or is not likely to comply with its obligations as a CS facility licensee under this Chapter (other than its obligations under paragraph 821A(1)(aa) , section 821BA or subsection 821C(3) ), ASIC may give the licensee a written direction:

(a)    to do specified things that ASIC believes will promote compliance by the licensee with those obligations; or

(b)    to refrain from doing specified things, if ASIC believes that refraining from doing those things will promote compliance by the licensee with those obligations.

823A(2)    
The licensee must comply with the direction.

823A(3)    
If the licensee fails to comply with the direction, ASIC may apply to the Court for, and the Court may make, an order that the licensee comply with the direction.

823A(4)    

ASIC may vary or revoke a direction at any time by giving written notice to the licensee.

823A(5)    

If, at any time after the licensee receives a direction, the licensee requests in writing that ASIC refer the matter to the Minister, ASIC must do so immediately.

823A(6)    

The Minister may, if the Minister considers it appropriate after being referred the matter, direct ASIC to vary or revoke the direction.

823A(7)    

ASIC must immediately comply with the direction under subsection (6) .

823A(8)    

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

SECTION 823B   ASIC ' S POWER TO REQUIRE SPECIAL REPORT  

823B(1)    
ASIC may give a CS facility licensee a written notice requiring the licensee to give ASIC a special report on specified matters.

823B(2)    
The licensee must give the special report to ASIC within the time required by the notice.

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

SECTION 823BA   RESERVE BANK ' S POWER TO REQUIRE SPECIAL REPORT  

823BA(1)    
The Reserve Bank may give a CS facility licensee a written notice requiring the licensee to give the Reserve Bank a special report on specified matters.

823BA(2)    
The licensee must give the special report to the Reserve Bank within the time required by the notice.

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

SECTION 823BB   ASIC ' S POWER TO REQUIRE EXPERT REPORT  

Expert appointed by ASIC

823BB(1)    
ASIC may, by written notice given to a CS facility licensee and a person (the expert ), appoint the expert to provide ASIC with an expert report on specified matters relating to the licensee ' s compliance with its obligations as a CS facility licensee under this Chapter.

823BB(2)    
ASIC may, by written notice given to the licensee, direct the licensee to reimburse ASIC for ASIC ' s expenses that:

(a)    are incurred in appointing and paying the expert to provide the report; and

(b)    are specified in the notice.

823BB(3)    
If, under subsection (2) , ASIC directs the licensee to reimburse ASIC for ASIC ' s expenses, an amount equal to those expenses:

(a)    is a debt due and payable to ASIC; and

(b)    is recoverable by ASIC in:

(i) the Federal Court; or

(ii) the Federal Circuit and Family Court of Australia (Division 2); or

(iii) a court of a State or Territory that has jurisdiction in relation to the matter.

Expert appointed by licensee

823BB(4)    
ASIC may, by written notice given to a CS facility licensee, direct the licensee to appoint a person to provide ASIC with an expert report on specified matters relating to the licensee ' s compliance with its obligations as a CS facility licensee under this Part.

823BB(5)    
The licensee must comply with any direction given under subsection (4) to the licensee.

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

Qualifications for appointment

823BB(6)    
A person cannot be appointed under subsection (1) , or as directed under subsection (4) , unless ASIC:

(a)    is satisfied that the person has the necessary skills or experience to provide the expert report; and

(b)    if subsection (4) applies - has approved the proposed appointment of the person.

Licensee must assist expert

823BB(7)    
The licensee must give all information, explanation and assistance to a person appointed under subsection (1) , or as directed under subsection (4) , as the person reasonably requests for the preparation and provision of the expert report.

823BB(8)    
If a person requests the licensee to give the person information, explanation or assistance under subsection (7) , ASIC may, by written notice given to the licensee, direct the licensee to comply with the request by a specified day.

823BB(9)    
The licensee must comply with any direction given under subsection (8) to the licensee.

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

SECTION 823BC   RESERVE BANK ' S POWER TO REQUIRE EXPERT REPORT  

Expert appointed by Reserve Bank

823BC(1)    
The Reserve Bank may, by written notice given to a CS facility licensee and a person (the expert ), appoint the expert to provide the Reserve Bank with an expert report on specified matters relating to the licensee ' s compliance with its obligations as a CS facility licensee under this Part.

823BC(2)    
The Reserve Bank may, by written notice given to the licensee, direct the licensee to reimburse the Reserve Bank for the Reserve Bank ' s expenses that:

(a)    are incurred in appointing and paying the expert to provide the report; and

(b)    are specified in the notice.

823BC(3)    
If, under subsection (2) , the Reserve Bank directs the licensee to reimburse the Reserve Bank for the Reserve Bank ' s expenses, an amount equal to those expenses:

(a)    is a debt due and payable to the Reserve Bank; and

(b)    is recoverable by the Reserve Bank in:

(i) the Federal Court; or

(ii) the Federal Circuit and Family Court of Australia (Division 2); or

(iii) a court of a State or Territory that has jurisdiction in relation to the matter.

Expert appointed by licensee

823BC(4)    
The Reserve Bank may, by written notice given to a CS facility licensee, direct the licensee to appoint a person to provide the Reserve Bank with an expert report on specified matters relating to the licensee ' s compliance with its obligations as a CS facility licensee under this Part.

823BC(5)    
The licensee must comply with any direction given under subsection (4) to the licensee.

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

Qualifications for appointment

823BC(6)    
A person cannot be appointed under subsection (1) , or as directed under subsection (4) , unless the Reserve Bank:

(a)    is satisfied that the person has the necessary skills or experience to provide the expert report; and

(b)    if subsection (4) applies - has approved the proposed appointment of the person.

Licensee must assist expert

823BC(7)    
The licensee must give all information, explanation and assistance to a person appointed under subsection (1) , or as directed under subsection (4) , as the person reasonably requests for the preparation and provision of the expert report.

823BC(8)    
If a person requests the licensee to give the person information, explanation or assistance under subsection (7) , the Reserve Bank may, by written notice given to the licensee, direct the licensee to comply with the request by a specified day.

823BC(9)    
The licensee must comply with any direction given under subsection (8) to the licensee.

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

SECTION 823C   ASIC ASSESSMENT OF LICENSEE ' S COMPLIANCE  

823C(1)    

ASIC may do an assessment of how well a CS facility licensee is complying with its obligations as a CS facility licensee under this Chapter (other than its obligation under paragraph 821A(1)(aa) ). In doing the assessment, ASIC may take account of any information and reports that it thinks appropriate, including information and reports from an overseas regulatory authority.

823C(2)    

If the CS facility licensee is prescribed by the regulations for the purpose of this subsection, ASIC must, in respect of the obligation in paragraph 821A(1)(c) , do such an assessment at least once a year.

823C(3)    

As soon as practicable after doing an assessment under this section, ASIC must give a written report on the assessment to the Reserve Bank.

823C(4)    
If an assessment, or part of an assessment, relates to any other person ' s affairs to a material extent, ASIC may, at the person ' s request or of its own motion, give the person a copy of the written report on the assessment or the relevant part of the report.

823C(5)    
If an assessment, or part of an assessment, relates to a serious contravention of a law of the Commonwealth or of a State or Territory, ASIC may give a copy of the written report on the assessment, or the relevant part of the report, to:

(a)    the Australian Federal Police; or

(b)    

the Chief Executive Officer of the Australian Crime Commission or a member of the staff of the ACC (within the meaning of the Australian Crime Commission Act 2002 ); or

(c)    the Director of Public Prosecutions; or

(d)    an agency prescribed by regulations made for the purposes of this paragraph.

823C(6)    

ASIC may cause the written report on an assessment, or part of the report on an assessment, to be published.

SECTION 823CA   RESERVE BANK ASSESSMENT OF COMPLIANCE  

823CA(1)    

The Reserve Bank may do an assessment of:

(a)    how well a CS facility licensee is complying with standards determined under section 827D or 827DA ; or

(b)    how well a related body corporate of a CS facility licensee is complying with standards determined under section 827DA .

In doing the assessment, the Reserve Bank may take account of any information and reports that it thinks appropriate, including information and reports from an overseas regulatory authority.

823CA(1A)    

If the CS facility licensee is prescribed by the regulations for the purpose of this subsection, the Reserve Bank must do such an assessment at least once a year.

823CA(2)    

As soon as practicable after doing an assessment under this section, the Reserve Bank must give a written report on the assessment to ASIC.

823CA(3)    
If an assessment, or part of an assessment, relates to any other person ' s affairs to a material extent, the Reserve Bank may, at the person ' s request or of its own motion, give the person a copy of the written report on the assessment or the relevant part of the report.

823CA(4)    
If an assessment, or part of an assessment, relates to a serious contravention of a law of the Commonwealth or of a State or Territory, the Reserve Bank may give a copy of the written report on the assessment, or the relevant part of the report, to:

(a)    the Australian Federal Police; or

(b)    

the Chief Executive Officer of the Australian Crime Commission or a member of the staff of the ACC (within the meaning of the Australian Crime Commission Act 2002 ); or

(c)    the Director of Public Prosecutions; or

(d)    an agency prescribed by regulations made for the purposes of this paragraph.

823CA(5)    

The Reserve Bank may cause the written report on an assessment, or part of the report on an assessment, to be published.

SECTION 823D   ASIC ' S DIRECTIONS POWER - PROTECTING DEALINGS IN FINANCIAL PRODUCTS AND ENSURING FAIR AND EFFECTIVE PROVISION OF SERVICES BY CS FACILITIES  

823D(1)    
ASIC may, by written notice given to a CS facility licensee, direct the licensee:

(a)    not to provide the licensee ' s services in relation to any transactions that:

(i) the licensee receives notice of after the direction is given; and

(ii) relate to a specified financial product or class of financial products; or

(b)    to take, or refrain from taking:

(i) any actions; or

(ii) one or more specified actions;

relating to dealings with transactions relating to a specified financial product or class of financial products;

if subsection (2) applies.

823D(2)    
This subsection applies if ASIC considers that:

(a)    the direction is necessary, or in the public interest, to protect people dealing in a financial product or class of financial products; or

(b)    the licensee has not done all things reasonably practicable to ensure the facility ' s services are provided in a fair and effective way.

823D(3)    
The direction:

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

(b)    must include the reasons for the direction; and

(c)    may deal with either or both of the matters in paragraphs (1)(a) and (b) .

823D(4)    
The licensee must comply with the direction (even if, under subsection 823DA(1) , the licensee has requested ASIC to refer the direction to the Minister).

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

823D(5)    
If the licensee fails to comply with the direction, ASIC may apply to the Court for, and the Court may make, an order that the licensee comply with the direction.

SECTION 823DA   MATTERS RELATING TO ASIC DIRECTIONS - PROTECTING DEALINGS IN FINANCIAL PRODUCTS AND ENSURING FAIR AND EFFECTIVE PROVISION OF SERVICES BY CS FACILITIES  

Referrals to the Minister

823DA(1)    
If, at any time after a CS facility licensee receives a direction under subsection 823D(1) , the licensee requests in writing that ASIC refer the direction to the Minister, ASIC must do so immediately.

823DA(2)    
The Minister may, if the Minister considers it appropriate after being referred the direction, direct ASIC to vary or revoke the direction.

823DA(3)    
ASIC must comply with the direction given under subsection (2) immediately.

823DA(4)    
A direction given under subsection (2) is not a legislative instrument.

Variations and revocations

823DA(5)    
ASIC may vary or revoke a direction given under subsection 823D(1) :

(a)    in like manner; and

(b)    subject to like conditions, except if a condition is contrary to a direction given under subsection (2) of this section;

(see subsection 33(3) of the Acts Interpretation Act 1901 ).

Notifying other affected persons

823DA(6)    
As soon as practicable after:

(a)    giving a direction under subsection 823D(1) to a CS facility licensee; or

(b)    varying or revoking such a direction;

ASIC must give written notice of the direction, variation or revocation to:

(c)    the operator of each financial market with which the facility has arrangements to provide services for transactions effected through the market; and

(d)    if the direction relates to one or more specified financial products - each issuer of those products; and

(e)    the Reserve Bank.

Directions are not legislative instruments

823DA(7)    
A direction given under subsection 823D(1) is not a legislative instrument.

Subdivision D - Reserve Bank ' s directions powers  

SECTION 823E   RESERVE BANK ' S DIRECTIONS POWER - DIRECTIONS TO INCREASE COMPLIANCE OR REDUCE SYSTEMIC RISK  

823E(1)    
The Reserve Bank may, by written notice given to a CS facility licensee, direct the licensee to take:

(a)    specified action that the Reserve Bank reasonably believes will promote compliance by the licensee with its obligations as a CS facility licensee under:

(i) paragraph 821A(1)(aa) or (ab) ; or

(ii) section 821BA ; or

(iii) subsection 821C(3) ;

if the Reserve Bank reasonably believes that the licensee is not complying or is not likely to comply with those obligations; or

(b)    specified action to comply with all or part of one or more standards in force under section 827D that applies to the licensee, if the Reserve Bank reasonably believes that the licensee is not complying with those standards or parts; or

(c)    specified action to reduce systemic risk in the provision of the facility ' s services, if the Reserve Bank reasonably believes that the licensee:

(i) has not done; or

(ii) is unlikely to do;

all things reasonably practicable to reduce systemic risk in the provision of the facility ' s services.

823E(2)    
The direction must specify a reasonable time by which, or a reasonable period during which, it is to be complied with.

823E(3)    
The licensee must comply with the direction (even if, under subsection (4) , the licensee has requested the Reserve Bank to refer the direction to the Minister).

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

Referrals to the Minister

823E(4)    
If, at any time after a CS facility licensee receives a direction under subsection (1) , the licensee requests in writing that the Reserve Bank refer the direction to the Minister, the Reserve Bank must do so immediately.

823E(5)    
The Minister may, if the Minister considers it appropriate after being referred the direction, direct the Reserve Bank to vary or revoke the direction.

823E(6)    
The Reserve Bank must comply with the direction given under subsection (5) .

Note: The Reserve Bank will need to do so immediately: see paragraph 823K(1)(b) .

823E(7)    
A direction given under subsection (5) is not a legislative instrument.

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) .

SECTION 823G   RESERVE BANK ' S DIRECTIONS POWER - DIRECTIONS TO ENHANCE RESOLVABILITY  

823G(1)    
The Reserve Bank may, by written notice given to:

(a)    a body corporate that is a CS facility licensee; or

(b)    a body corporate that:

(i) is a related body corporate of a CS facility licensee; and

(ii) is incorporated in Australia;

direct the body corporate to take:

(c)    specified measures to comply with all or part of one or more standards in force under section 827DA that applies to the body corporate, if the Reserve Bank reasonably believes that the body corporate is not complying with those standards or parts; or

(d)    specified action to manage or resolve an impediment to the effective management of or response to a condition in section 831A being satisfied in relation to the CS facility licensee, if the Reserve Bank reasonably believes that the body corporate:

(i) has not done; or

(ii) is unlikely to do;

all things reasonably practicable to manage or resolve the impediment.

823G(2)    
The direction must specify a reasonable time by which, or a reasonable period during which, it is to be complied with.

823G(3)    
The body corporate must comply with the direction.

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

SECTION 823H   RESERVE BANK ' S DIRECTIONS POWER - DIRECTIONS TO GIVE INFORMATION TO ASSIST THE RESERVE BANK PERFORM ITS FUNCTIONS  

823H(1)    
The Reserve Bank may, by written notice given to a body corporate to which subsection (2) or (3) applies, direct the body corporate to give:

(a)    specified information; or

(b)    documents containing specified information;

to the Reserve Bank or a Reserve Bank staff member.

823H(2)    
This subsection applies to a body corporate if:

(a)    the body corporate is a CS facility licensee; and

(b)    the Reserve Bank reasonably believes that the licensee possesses the information or documents; and

(c)    the Reserve Bank reasonably believes that the information or documents could assist the Reserve Bank to perform its functions, or exercise its powers, under this Part.

823H(3)    
This subsection applies to a body corporate if:

(a)    the body corporate:

(i) is a related body corporate of a CS facility licensee; and

(ii) is incorporated in Australia; and

(b)    the Reserve Bank reasonably believes that the body corporate possesses the information or documents; and

(c)    the Reserve Bank reasonably believes that the information or documents could assist the Reserve Bank to perform its functions, or exercise its powers:

(i) under section 823CA in relation to the body corporate or the licensee; or

(ii) under section 827DB (resolution planning) in relation to the licensee.

823H(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 specify the form and manner in which the information or documents must be given.

823H(5)    
The body corporate must comply with the direction.

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

SECTION 823J  

823J   MATTERS RELATING TO ALL RESERVE BANK DIRECTIONS - ORDER FOR BODY CORPORATE TO COMPLY WITH DIRECTION  

If a body corporate fails to comply with a direction given under this Subdivision to the body corporate, the Reserve Bank may apply to the Court for, and the Court may make, an order that the body corporate comply with the direction.

SECTION 823K   MATTERS RELATING TO ALL RESERVE BANK DIRECTIONS - VARIATION OR REVOCATION  

823K(1)    
The Reserve Bank:

(a)    may, by written notice given to a body corporate:

(i) vary a direction given under this Subdivision to the body corporate if, at the time of variation, the Reserve Bank reasonably believes the variation is necessary or appropriate; or

(ii) revoke such a direction if, at the time of revocation, the Reserve Bank reasonably believes the direction is no longer necessary or appropriate; and

(b)    for a direction given under subsection 823E(1) - must immediately do so if required under subsection 823E(6) .

823K(2)    
A direction given under this Subdivision has effect until the Reserve Bank revokes it under subsection (1) .

Subdivision E - Matters relating to Reserve Bank recapitalisation directions  

SECTION 823L   RECAPITALISATION DIRECTIONS - MATTERS RELATING TO COMPLIANCE  

Giving members of the licensee notice of share issue etc.

823L(1)    
As soon as practicable after a CS facility licensee issues shares, rights to acquire shares, or other capital instruments in compliance with a recapitalisation direction, the licensee must give a written notice:

(a)    to the persons who were members of the licensee just before the issue; and

(b)    that:

(i) identifies the issue; and

(ii) explains the effect of the issue of the shares, rights to acquire shares, or other capital instruments on the members ' interests.

823L(2)    
If the licensee fails to comply with subsection (1) , the Reserve Bank may apply to the Court for, and the Court may make, an order that the licensee comply with that subsection.

Issue of shares etc. despite other laws etc.

823L(3)    
A CS facility licensee may issue shares, rights to acquire shares, or other capital instruments in compliance with a recapitalisation direction despite all of the following:

(a)    this Act;

(b)    the licensee ' s constitution;

(c)    the facility ' s operating instruments referred to in paragraph 823F(1)(a) ;

(d)    any arrangement to which the licensee is a party;

(e)    any listing rules of a financial market in whose official list the licensee is included.

SECTION 823M   RECAPITALISATION DIRECTIONS - RESERVE BANK MUST OBTAIN EXPERT ' S REPORT ON THE FAIR VALUE OF SHARES ETC.  

823M(1)    
Before giving a recapitalisation direction directing a CS facility licensee to issue one or more specified classes of:

(a)    shares in the licensee; or

(b)    rights to acquire shares in the licensee;

the Reserve Bank must:

(c)    obtain a report on the fair value of those shares, or those rights, from an expert who is not an associate of the licensee; and

(d)    consider the report.

Note: The report may not always be required: see subsection (4) .

823M(2)    
The report must set out:

(a)    the amount that is, in the expert ' s opinion, the fair value for each of those shares or rights; and

(b)    the reasons for forming the opinion; and

(c)    any relationship between the expert and:

(i) the licensee; or

(ii) a person who is an associate of the licensee;

including any circumstances in which the expert gives the licensee or person advice, or acts on behalf of the licensee or person, in the proper performance of the functions attaching to the expert ' s professional capacity or business relationship with the licensee or person; and

(d)    any financial or other interest of the expert that could reasonably be regarded as being capable of affecting the expert ' s ability to give an unbiased opinion in relation to the matter being reported on.

823M(3)    
The Reserve Bank may publish details of, or relating to the report.

823M(4)    
Despite subsection (1) , the Reserve Bank need not obtain the report if it is satisfied that doing so would detrimentally affect:

(a)    participants, or proposed participants, in the CS facility; or

(b)    the continuity of one or more clearing and settlement facility services that are critical to the functioning of the financial system in Australia; or

(c)    the stability of the financial system in Australia.

SECTION 823N   RECAPITALISATION DIRECTIONS - DETERMINATION OF THE FAIR VALUE OF SHARES OR RIGHTS BY AN EXPERT  

Determining the fair value of shares

823N(1)    
In determining the fair value for each share in a CS facility licensee for the purposes of paragraph 823M(2)(a) , the expert must:

(a)    first, assess the value of the licensee as a whole in accordance with the assumptions (if any) notified to the expert under subsection (3) of this section for the valuation of the licensee; and

(b)    second, allocate that value among the classes of shares in the licensee that:

(i) have been issued; or

(ii) the Reserve Bank proposes to direct be issued (taking into account the relative financial risk, and voting and distribution rights, of the classes); and

(c)    third, allocate the value of each class pro rata among the shares in that class that:

(i) have been issued; or

(ii) the Reserve Bank proposes to direct be issued (without allowing a premium or applying a discount for particular shares in that class).

Determining the fair value of rights

823N(2)    
In determining the fair value for each right to acquire shares in a CS facility licensee for the purposes of paragraph 823M(2)(a) , the expert must act in accordance with the assumptions (if any) notified to the expert under subsection (3) of this section for the valuation of that right.

Ministerial or Reserve Bank assumptions

823N(3)    
The Minister or the Reserve Bank may give written notice of the following to the expert:

(a)    assumptions for the valuation of the CS facility licensee;

(b)    assumptions for the valuation of rights to acquire shares in the CS facility licensee.

823N(4)    
An entity who gave assumptions under subsection (3) may, by further written notice given to the expert, revoke, but not vary, those assumptions.

823N(5)    
Ministerial assumptions prevail over Reserve Bank assumptions to the extent of any inconsistency.

823N(6)    
A notice given under subsection (3) or (4) is not a legislative instrument.

SECTION 823P   RECAPITALISATION DIRECTIONS - WORKING OUT THE FAIR VALUE OF OTHER CAPITAL INSTRUMENTS  

823P(1)    
Before giving a recapitalisation direction directing a CS facility licensee to issue one or more specified classes of capital instruments (see subparagraph 823F(1)(c)(iii) ), the Reserve Bank must comply with any requirements prescribed by the regulations for ascertaining the fair value of the capital instruments.

823P(2)    
Regulations made for the purposes of this section may specify different requirements for different classes of capital instruments.

SECTION 823Q  

823Q   RECAPITALISATION DIRECTIONS - CONTRAVENING CERTAIN PROVISIONS DOES NOT AFFECT THE VALIDITY OF THE DIRECTION ETC.  

A contravention of section 823M , 823N or 823P does not affect the validity of a recapitalisation direction or anything done in compliance with the direction.

SECTION 823R  

823R   RECAPITALISATION DIRECTIONS - EXCEPTIONS TO PART IV OF THE COMPETITION AND CONSUMER ACT 2010  

For the purposes of subsection 51(1) of the Competition and Consumer Act 2010 , the following things are specified and specifically authorised:

(a)    the acquisition of shares in a CS facility licensee as a direct result of:

(i) the issue of the shares in compliance with a recapitalisation direction given to the licensee; or

(ii) the exercise of a right to acquire the shares that was issued in compliance with such a recapitalisation direction;

(b)    the acquisition of other capital instruments as a direct result of the issue of those capital instruments in compliance with a recapitalisation direction given to a CS facility licensee.

Subdivision F - Other matters relating to Reserve Bank directions  

SECTION 823S  

823S   DIRECTIONS TO PRESERVE STABILITY IN THE AUSTRALIAN FINANCIAL SYSTEM - RELATIONSHIP WITH OTHER PROVISIONS  

If a direction under subsection 823F(1) directs a CS facility licensee to change any of the facility ' s operating rules or procedures (see subparagraph 823F(1)(a)(ii) ), neither of the following provisions apply in relation to the change:

(a)    subsection 822D(2) (about change ceasing to have effect if ASIC not notified);

(b)    section 822E (about disallowance).

Note: The licensee would still need to notify ASIC of the change: see subsection 822D(1) .

SECTION 823T  

823T   ALL RESERVE BANK DIRECTIONS - PUBLISHING DETAILS ABOUT DIRECTIONS  

The Reserve Bank may publish details of, or relating to:

(a)    a direction given under Subdivision D ; or

(b)    a variation or revocation of such a direction.

SECTION 823U   ALL RESERVE BANK DIRECTIONS - INJUNCTIONS  

823U(1)    
The Reserve Bank has the same powers as ASIC to apply for an injunction under section 1324 in relation to a provision of this Part.

823U(2)    
The Reserve Bank may so apply itself or jointly with ASIC.

Subdivision G - Other matters relating to ASIC or Reserve Bank powers  

SECTION 823V   EXERCISE OF RESERVE BANK POWERS TO GIVE DIRECTIONS UNDER SECTION 823F NOT GROUNDS FOR DENIAL OF OBLIGATIONS  

823V(1)    
This section applies if a body corporate is party to an agreement, whether the proper law of the agreement is:

(a)    Australian law; or

(b)    foreign law, including the law of part of a foreign country.

823V(2)    
None of the matters mentioned in subsection (3) allows the agreement, or a party to the agreement (other than the body corporate), to do any of the following:

(a)    deny any obligation under the agreement;

(b)    accelerate any debt under the agreement;

(c)    terminate or close out the agreement, or any transaction relating to the agreement;

(d)    enforce any security under the agreement.

823V(3)    
The matters are as follows:

(a)    the body corporate being subject to the exercise of a power under section 823F by the Reserve Bank;

(b)    if the body corporate is a member of a group of bodies corporate - another member of the group being subject to the exercise of such a power.

Payment Systems and Netting Act 1998 prevails over this section

823V(4)    
If there is any inconsistency between:

(a)    subsections (1) to (3) of this section; and

(b)    the Payment Systems and Netting Act 1998 ;

that Act prevails to the extent of the inconsistency.

Agreements to which this section does not apply

823V(5)    
This section does not apply to a kind of agreement prescribed by the regulations for the purposes of this subsection.

SECTION 823W   ALL ASIC AND RESERVE BANK DIRECTIONS ETC. UNDER THIS PART - FAILURE BY OFFICERS TO TAKE REASONABLE STEPS TO ENSURE COMPLIANCE  

823W(1)    
An officer of a CS facility licensee contravenes this subsection if:

(a)    the officer fails to take reasonable steps to ensure that the licensee complies with a direction given under this Part by ASIC, or the Reserve Bank, to the licensee; and

(b)    it would be reasonable to expect that the officer ' s duties include ensuring that the licensee complies with that direction.

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

823W(2)    
If an officer of a CS facility licensee contravenes subsection (1) , the officer contravenes that subsection in respect of:

(a)    the first day the contravention happens; and

(b)    each later day (if any) the circumstances that gave rise to the contravention continue (including the day of conviction for any such offence or any later day).

Note: This subsection does not imply that section 4K of the Crimes Act 1914 does not apply to offences against this Act or the regulations.

823W(3)    
For the purposes of subsection (2) , a contravention of subsection (1) by an officer of a CS facility licensee in respect of a direction given to the licensee under subsection 823BB(8) or 823BC(8) is taken to begin on the later of:

(a)    the day by which the licensee was required to comply with the direction; and

(b)    the first day on which paragraph (1)(b) applied in relation to the officer and the direction.

SECTION 823X   ALL ASIC AND RESERVE BANK DIRECTIONS UNDER THIS PART - PROTECTION FROM LIABILITY FOR COMPLIANCE IN GOOD FAITH  

823X(1)    
An action or other proceeding (whether criminal or civil) does not lie against a person in relation to anything done, or omitted to be done, in good faith by the person if:

(a)    the person does the thing, or omits to do the thing, for the purpose of any of the following:

(i) complying with a direction given under this Part by ASIC, or the Reserve Bank, to a body corporate;

(ii) taking a measure, or an action, specified in such a direction;

(iii) doing, or refraining from doing, anything in accordance with such a direction; and

(b)    it is reasonable for the person to do the thing, or to omit to do the thing, in order to achieve that purpose; and

(c)    the person is any of the following:

(i) an officer or senior manager of the body corporate, or of a related body corporate;

(ii) an employee or agent of the body corporate, or of a related body corporate;

(iii) the body corporate or a related body corporate;

(iv) a person engaged to provide services (including advice) to the body corporate or a related body corporate.

Note: In a prosecution for an offence, a defendant bears an evidential burden in relation to the matters in this subsection: see subsection 13.3(3) of the Criminal Code .

823X(2)    
For the purposes of paragraph (1)(b) , treat it as reasonable for a person to do a thing, or to omit to do a thing, in order to achieve a purpose unless no reasonable person in that person ' s position would do the thing, or omit to do the thing, in order to achieve that purpose.

Division 3 - The Australian CS facility licence  

Subdivision A - How to get a licence  

SECTION 824A  

824A   HOW TO APPLY FOR A LICENCE  

A body corporate may apply for an Australian CS facility licence by lodging with ASIC in a prescribed form an application that:

(a)    includes the information required by regulations made for the purposes of this paragraph; and

(b)    is accompanied by the documents (if any) required by regulations made for the purposes of this paragraph.

Note: For fees in respect of lodging applications, see Part 9.10 .

SECTION 824B   WHEN A LICENCE MAY BE GRANTED  

General

824B(1)    

ASIC may grant an applicant an Australian CS facility licence if ASIC is satisfied that:

(a)    the application was made in accordance with section 824A ; and

(b)    the applicant will comply with the obligations that will apply if the licence is granted; and

(c)    the applicant has adequate operating rules, and procedures, (see Subdivision B of Division 2 ) for the facility to ensure, as far as is reasonably practicable, that systemic risk is reduced and the facility is operated in a fair and effective way; and

(d)    the applicant has adequate arrangements (whether they involve a self-regulatory structure or the appointment of an independent person or related entity) for supervising the facility, including arrangements for:

(i) handling conflicts between the commercial interests of the licensee and the need for the licensee to reduce systemic risk and ensure that the facility's services are provided in a fair and effective way; and

(ii) enforcing compliance with the facility's operating rules; and

(e)    no unacceptable control situation (see Division 1 of Part 7.4 ) is likely to result if the licence is granted; and

(f)    no disqualified individual appears to be involved in the applicant (see Division 2 of Part 7.4 ).

Note: ASIC must also have regard to the matters in section 827A in deciding whether to grant a licence.

Alternative criteria for granting licence to overseas clearing and settlement facility

824B(2)    

If an applicant is authorised to operate a clearing and settlement facility in the foreign country in which its principal place of business is located, ASIC may grant the applicant an Australian CS facility licence authorising the applicant to operate the same facility in this jurisdiction. ASIC must be satisfied that:

(a)    the application was made in accordance with section 824A ; and

(b)    the applicant will comply with the obligations that will apply if the licence is granted; and

(c)    the operation of the facility in that country is subject to requirements and supervision that are sufficiently equivalent, in relation to the degree of protection from systemic risk and the level of effectiveness and fairness of services they achieve, to the requirements and supervision to which clearing and settlement facilities are subject under this Act in relation to those matters; and

(d)    

the applicant undertakes to cooperate with ASIC and the Reserve Bank by sharing information and in other ways; and

(e)    no unacceptable control situation (see Division 1 of Part 7.4 ) is likely to result if the licence is granted; and

(f)    no disqualified individual appears to be involved in the applicant (see Division 2 of Part 7.4 ); and

(g)    any other requirements that are prescribed by regulations made for the purposes of this subsection are satisfied.

Note: ASIC must also have regard to the matters in section 827A in deciding whether to grant a licence.

Grant to receiving body

824B(3)    

If:

(a)    the Minister consents under paragraph 837A(1)(b) or 837B(1)(b) to a transfer in relation to a CS facility licensee; and

(b)    the Reserve Bank issues a certificate under subsection 838A(1) that the transfer is to take effect;

the Minister may grant an Australian CS facility licence to a body corporate that, as a result of the transfer, becomes, or will become, the successor in law of the CS facility licensee.

824B(4)    

A licence granted to a body corporate under subsection (3) is taken to be:

(a)    unless paragraph (b) of this subsection applies - a licence granted under subsection (1) ; or

(b)    if the licence states that it is to be taken to have been granted under subsection (2) - a licence granted under subsection (2) authorising the body corporate to operate a specified clearing and settlement facility in this jurisdiction.

SECTION 824C  

824C   PUBLICATION OF NOTICE OF LICENCE GRANT  

If ASIC grants an Australian CS facility licence, ASIC must publish a notice on ASIC ' s website that includes:

(a)    the name of the licensee; and

(b)    

when the licence was granted; and

(c)    the conditions on the licence.

SECTION 824D  

824D   MORE THAN ONE LICENCE IN THE SAME DOCUMENT  

If ASIC grants a person 2 or more of the following:

(a)    an Australian CS facility licence;

(b)    an Australian market licence;

they may be included in the same document.

SECTION 824E   MORE THAN ONE CS FACILITY COVERED BY THE SAME LICENCE  

824E(1)    
The same Australian CS facility licence may authorise the licensee to operate 2 or more clearing and settlement facilities.

824E(2)    

In that case, a reference to the clearing and settlement facility to which an Australian CS facility licence relates is taken instead to be a reference to each of those facilities severally.

824E(3)    

Before varying the conditions on an Australian CS facility licence so as to add another facility that the licensee is authorised to operate, ASIC must be satisfied of the matters listed in subsection 824B(1) or (2) (as appropriate) in relation to the facility.

824E(4)    
An Australian CS facility licence that authorises the licensee to operate 2 or more clearing and settlement facilities may be suspended or cancelled under Subdivision C in respect of one or some of those facilities only, as if the licensee held a separate licence for each of the facilities.

Subdivision B - The conditions on the licence  

SECTION 825A   THE CONDITIONS ON THE LICENCE  

825A(1)    

ASIC may, at any time:

(a)    impose conditions, or additional conditions, on an Australian CS facility licence; or

(b)    vary or revoke conditions imposed on such a licence;

by giving written notice to the licensee. ASIC must also publish a notice on ASIC ' s website with details of the action and when it took effect.

Note: As well as the requirements in this section, ASIC must also have regard to the matters in section 827A .

825A(2)    

ASIC may do so:

(a)    

on its own initiative, subject to subsection (3) ; or

(b)    

if the licensee lodges with ASIC in a prescribed form an application for ASIC to do so, which is accompanied by the documents, if any, required by regulations made for the purposes of this paragraph.

Note: For fees in respect of lodging applications, see Part 9.10 .

825A(3)    

ASIC may only impose conditions or additional conditions, or vary the conditions, on the licence on ASIC ' s own initiative if:

(a)    

ASIC considers it appropriate to do so having regard to:

(i) the licensee ' s obligations as a CS facility licensee under this Chapter; and

(ii) any change in the facility ' s operations or the conditions in which the facility is operating; and

(b)    

ASIC gives the licensee written notice of the proposed action and an opportunity to make a submission before it takes effect.

This subsection does not apply to ASIC imposing conditions when a licence is granted.

825A(4)    

ASIC must ensure that each Australian CS facility licence is subject to conditions that specify:

(a)    the particular facility that the licensee is authorised to operate; and

(b)    the class or classes of financial products in respect of which the facility can provide services.

825A(5)    
(Repealed by No 87 of 2024, s 3, Sch 2[60] (effective 24 September 2024).)

Subdivision C - When a licence can be varied, suspended or cancelled  

SECTION 826A   VARYING LICENCES  

826A(1)    

ASIC may vary an Australian CS facility licence to take account of a change in the licensee's name if the licensee lodges with ASIC in a prescribed form an application for the variation, accompanied by the documents, if any, required by regulations made for the purposes of this subsection.

Note 1: The conditionson the licence can be varied under section 825A .

Note 2: For fees in respect of lodging applications, see Part 9.10 .

826A(2)    

ASIC must give written notice of the variation to the licensee.

826A(3)    
(Repealed by No 87 of 2024, s 3, Sch 3[107] (effective 24 September 2024).)

SECTION 826B  

826B   IMMEDIATE SUSPENSION OR CANCELLATION  

ASIC may, by giving written notice to a CS facility licensee, suspend the licence for a specified period, or cancel it, if:

(a)    

the licensee ceases to carry on the business of operating the facility to which the licence relates; or

(aa)    

both of the following subparagraphs apply:

(i) it has been at least 12 months since ASIC granted the licence;

(ii) during the last 12 months, the licensee has not provided the facility ' s services; or

(ab)    

all of the following subparagraphs apply:

(i) it has been at least 12 months since ASIC granted the licence;

(ii) the licence is subject to a condition specifying that the licensee is authorised to engage in specified conduct or activity that constitutes operating the facility;

(iii) during the last 12 months, the licensee hasnot engaged in any such specified conduct or activity; or

(b)    the licensee becomes a Chapter 5 body corporate; or

(c)    the licensee asks ASIC to do so; or

(ca)    

in the case of a licence granted under subsection 824B(2) (overseas clearing and settlement facilities) - the licensee ceases to be registered under Division 2 of Part 5B.2 ; or

(cb)    

an application has been made under section 601AA to deregister the licensee as a company; or

(cc)    

ASIC has decided under section 601AB to deregister the licensee as a company; or

(d)    

in the case of a licence granted under subsection 824B(2) (overseas clearing and settlement facilities):

(i) the licensee ceases to be authorised to operate a clearing and settlement facility in the foreign country in which the licensee ' s principal place of business is located; or

(ii) there is a change to the regulatory regime applying in relation to the facility to which the licence relates in that country and, because of that change, ASIC is no longer satisfied of the matters in paragraph 824B(2)(c) ; or

(iii) the cooperation (including information sharing) between ASIC or the Reserve Bank and the authority or authorities responsible for supervising the operation of that facility in that country has materially deteriorated or is otherwise inadequate; or

(e)    

in the case of a licensee that is a leviable entity (within the meaning of the ASIC Supervisory Cost Recovery Levy Act 2017 ) - the following have not been paid in full at least 12 months after the due date for payment:

(i) an amount of levy (if any) payable in respect of the licensee;

(ii) the amount of late payment penalty payable (if any) in relation to the levy;

(iii) the amount of shortfall penalty payable (if any) in relation to the levy.

SECTION 826C   SUSPENSION OR CANCELLATION FOLLOWING HEARING AND REPORT  

826C(1)    

If ASIC considers that a CS facility licensee has breached one or more of its obligations as a CS facility licensee under this Chapter,ASIC may give the licensee a written notice that requires the licensee to show cause, at a hearing before a specified person, why the licence should not be suspended or cancelled.

826C(2)    
The notice must specify:

(a)    the grounds on which it is proposed to suspend or cancel the licence; and

(b)    a reasonable time and place at which the hearing is to be held.

However, if the licensee consents, the person conducting the hearing may fix a different time or place.

826C(3)    
The person conducting the hearing must:

(a)    give the licensee an opportunity to be heard at the hearing; and

(b)    

give ASIC:

(i) a report about the hearing; and

(ii) a recommendation about the grounds in the notice on which it is proposed to suspend or cancel the licence.

826C(4)    

After considering the report and recommendation, ASIC may:

(a)    decide to take no further action in relation to the matter and give written advice of that decision to the licensee; or

(b)    suspend the licence for a specified period, or cancel the licence, by giving written notice to the licensee.

Note: ASIC must have regard to the matters in section 827A .

SECTION 826D   EFFECT OF SUSPENSION  

826D(1)    
A person whose Australian CS facility licence is suspended is taken not to hold that licence while it is suspended.

826D(2)    

However, ASIC may specify in the written notice to the licensee that subsection (1) does not apply for specified purposes.

SECTION 826E  

826E   VARIATION OR REVOCATION OF SUSPENSION  

ASIC may at any time vary or revoke a suspension of an Australian CS facility licence by giving written notice to the licensee.

SECTION 826F   PUBLICATION OF NOTICE OF LICENCE SUSPENSION OR CANCELLATION  

826F(1)    

If ASIC:

(a)    suspends, or varies or revokes a suspension of, an Australian CS facility licence; or

(b)    cancels an Australian CS facility licence;

ASIC must publish a notice on ASIC ' s website to that effect.

826F(2)    
The notice must state when the action took effect.

SECTION 826G  

826G   SUSPENSION AND CANCELLATION ONLY IN ACCORDANCE WITH THIS SUBDIVISION  

An Australian CS facility licence cannot be varied, suspended or cancelled otherwise than in accordance with this Subdivision.

Note: The conditions on the licence can be varied under section 825A .

Division 3A - CS facility rules  

Subdivision A - Power to make CS facility rules  

SECTION 826H  

826H   CS FACILITY RULES  

ASIC may, by legislative instrument, make rules (the CS facility rules ) for the purposes of promoting the provision of fair and effective services by licensed CS facilities.

Subdivision B - Compliance with CS facility rules  

SECTION 826J   COMPLYING WITH CS FACILITY RULES  

826J(1)    
The following entities must comply with the CS facility rules:

(a)    operators of licensed CS facilities;

(b)    participants in licensed CS facilities;

(c)    entities prescribed by the regulations for the purposes of this paragraph.

Note: This subsection is a civil penalty provision: see section 1317E . For relief from liability to a civil penalty relating to this subsection, see section 1317S .

826J(2)    
Subsection (1) does not apply in relation to a clearing and settlement facility the operator of which is licensed under subsection 824B(2) (overseas clearing and settlement facilities).

SECTION 826K   INCONSISTENCY WITH OTHER INSTRUMENTS  

Inconsistency with other rules

826K(1)    
If there is an inconsistency between the CS facility rules and any of the following rules:

(a)    the CS services rules;

(b)    the derivative transaction rules;

(c)    the derivative trade repository rules;

the CS facility rules prevail to the extent of the inconsistency.

Inconsistency with the financial stability standards

826K(2)    
If the Reserve Bank considers there is an inconsistency between a CS facility rule and one or more standards determined under section 827D , the Reserve Bank must refer the matter to the Minister.

Note: If there is an inconsistency between the CS facility rules and standards determined under section 827D , the standards prevail: see subsection 827D(2A) .

826K(3)    
The Minister may, if the Minister considers it appropriate after being referred the matter, direct ASIC to vary or revoke the CS facility rule.

826K(4)    
ASIC must comply with the direction given under subsection (3) immediately.

826K(5)    
A direction given under subsection (3) is not a legislative instrument.

SECTION 826L   ALTERNATIVES TO CIVIL PROCEEDINGS  

826L(1)    
The regulations may provide for a person who is alleged to have contravened subsection 826J(1) (complying with CS facility rules) to be not liable to civil proceedings in relation to that alleged contravention if the person instead does one or more of the following in relation to that alleged contravention:

(a)    pay a penalty to the Commonwealth;

(b)    undertake or institute remedial measures (including education programs);

(c)    accept sanctions other than the payment of a penalty to the Commonwealth;

(d)    enter into a legally enforceable undertaking.

826L(2)    
The penalty payable under regulations made for the purposes of paragraph (1)(a) in relation to an alleged contravention of a CS facility rule must not exceed:

(a)    for an individual - 3,000 penalty units; and

(b)    for a body corporate - 15,000 penalty units.

826L(3)    
Without limiting regulations that may be made for the purposes of paragraph (1)(d) , those regulations may provide for one or more of the following kinds of undertakings:

(a)    an undertaking to take specified action within a specified period;

(b)    an undertaking to refrain from taking specified action;

(c)    an undertaking to pay a specified amount within a specified period to the Commonwealth or to some other specified person.

Subdivision C - The process of making CS facility rules  

SECTION 826M   ASIC TO CONSULT BEFORE MAKING RULES  

826M(1)    
ASIC must not make a CS facility rule unless ASIC:

(a)    has consulted the public about the proposed rule; and

(b)    has also consulted the following about the proposed rule:

(i) the Reserve Bank;

(ii) any other person or body prescribed by the regulations for the purposes of this subparagraph.

Note: In some situations, consultation is not required: see sections 826P and 826Q .

826M(2)    
Without limiting the ways in which ASIC may comply with the obligation in paragraph (1)(a) to consult the public about a proposed rule, ASIC is taken to comply with that obligation if ASIC, on its website:

(a)    makes the proposed rule, or a description of the content of the proposed rule, available; and

(b)    invites the public to comment on the proposed rule.

826M(3)    
A failure to consult as required by subsection (1) does not invalidate a CS facility rule.

SECTION 826N   MINISTERIAL CONSENT TO RULES REQUIRED  

826N(1)    
ASIC must not make a CS facility rule unless the Minister has consented, in writing, to the making of the rule.

Note: In some situations, consent is not required: see sections 826P and 826Q .

826N(2)    
A consent given under subsection (1) is not a legislative instrument.

SECTION 826P   EMERGENCY RULES - CONSULTATION AND CONSENT NOT REQUIRED  

826P(1)    
ASIC may, under section 826H , make a CS facility rule without consulting as required by section 826M , and without the consent of the Minister as required by subsection 826N(1) , if ASIC is of the opinion that it is necessary, or in the public interest, to do so in order to protect:

(a)    the Australian economy; or

(b)    the efficiency, integrity and stability of the Australian financial system; or

(c)    the provision of fair and effective services by licensed CS facilities.

826P(2)    
However, if ASIC does so, ASIC must, on the following day, provide the Minister and the Reserve Bank with a written explanation of the need for the rule.

826P(3)    
The Minister may, if the Minister considers it appropriate after being provided with the explanation, direct ASIC to vary or revoke the rule.

826P(4)    
ASIC must comply with the direction given under subsection (3) immediately.

826P(5)    
A direction given under subsection (3) is not a legislative instrument.

SECTION 826Q   CRISIS RESOLUTION - CONSULTATION AND CONSENT NOT REQUIRED  

826Q(1)    
ASIC may:

(a)    under section 826H , make a CS facility rule; or

(b)    under section 826R , vary a CS facility rule;

without consulting as required by section 826M , and without the consent of the Minister as required by subsection 826N(1) , if the Reserve Bank, under subsection 849AB(1) , requests ASIC to make the rule or variation.

826Q(2)    
However, if ASIC does so, ASIC must, on the following day, provide the Minister with a copy of the request.

826Q(3)    
The Minister may, if the Minister considers it appropriate after being provided with a copy of the request, direct ASIC to vary or revoke the rule.

826Q(4)    
ASIC must comply with the direction given under subsection (3) immediately.

826Q(5)    
A direction given under subsection (3) is not a legislative instrument.

SECTION 826R   VARIATION AND REVOCATION OF RULES  

826R(1)    
ASIC may vary or revoke a CS facility rule in like manner and subject to like conditions (see subsection 33(3) of the Acts Interpretation Act 1901 ).

826R(2)    
However, the requirements of sections 826M and 826N do not apply in relation to a variation or revocation in accordance with a direction by the Minister under subsection 826K(3) , 826P(3) or 826Q(3) .

Subdivision D - Limitations  

SECTION 826S  

826S   REGULATIONS MAY LIMIT HOW RULES MAY DEAL WITH CERTAIN MATTERS  

The regulations may prescribe limits on:

(a)    the extent to which, or the way in which, the CS facility rules may deal with matters permitted by Subdivision A; or

(b)    the classes of persons on whom those rules may impose requirements; or

(c)    the extent to which those rules may impose requirements (or certain kinds of requirements) on certain classes of persons.

Subdivision E - Exemptions  

SECTION 826T  

826T   PROVISIONS COVERED BY THIS SUBDIVISION  

In this Subdivision, the provisions covered by this Subdivision are:

(a)    the following provisions:

(i) the provisions of this Division;

(ii) the provisions of regulations made for the purposes of the provisions of this Division;

(iii) the provisions of the CS facility rules; and

(b)    definitions in this Act, or in the regulations, as they apply to references in provisions referred to in paragraph (a) .

SECTION 826U   EXEMPTIONS AND MODIFICATIONS BY REGULATIONS  

826U(1)    
The regulations may:

(a)    exempt a person or class of persons from all or specified provisions covered by this Subdivision; or

(b)    exempt a clearing and settlement facility or class of clearing and settlement facilities from all or specified provisions covered by this Subdivision; or

(c)    declare that provisions covered by this Subdivision apply in relation to:

(i) a person or a clearing and settlement facility; or

(ii) a class of persons or clearing and settlement facilities;

as if specified provisions were omitted, modified or varied as specified in the regulations.

826U(2)    
If there is an inconsistency between:

(a)    an exemption prescribed by regulations made for the purposes of subsection (1); and

(b)    an exemption by ASIC under section 820C ;

(including in relation to any conditions specified by ASIC), the regulations prevail to the extent of the inconsistency.

Division 4 - Other matters  

SECTION 827A   MATTERS TO BE TAKEN INTO ACCOUNT BY ASIC  

827A(1)    

ASIC must have regard to certain matters in deciding whether to:

(a)    grant an applicant an Australian CS facility licence under section 824B ; or

(b)    impose, vary or revoke conditions on such a licence under section 825A ; or

(c)    suspend or cancel such a licence under section 826C ; or

(d)    disallow a change to the operating rules of a licensed CS facility under section 822E .

827A(2)    

These are the matters ASIC must have regard to:

(a)    the structure, or proposed structure, of the facility;

(b)    the nature of the services provided, or proposed to be provided, by the facility;

(c)    the size, or proposed size, of the facility;

(d)    the nature of the financial products in respect of which the facility provides services or proposes to provide services;

(e)    the participants, or proposed participants, in the facility and whether those participants:

(i) in using the facility's services, are, or will be, providing financial services to other persons; or

(ii) use, or will use, the facility's services in respect of financial products they acquire or dispose of as retail clients or as wholesale clients; or

(iii) are, or will be, participants in a financial market, or other clearing and settlement facilities, as well;

(f)    the technology used, or proposed to be used, in the operation of the facility;

(g)    whether it would be in the public interest to take the action referred to in subsection (1) ;

(h)    

any relevant advice received from the ACCC or the Reserve Bank.

ASIC may also have regard to any other matter that ASIC considers relevant.

827A(3)    

If ASIC is deciding whether to take the action mentioned in paragraph (1)(a) , (b) or (c) in respect of an Australian CS facility licence granted under subsection 824B(2) (overseas clearing and settlement facilities), ASIC must also have regard to:

(a)    the criteria that the licensee or applicant satisfied to obtain an authorisation to operate the same facility in the foreign country in which their principal place of business is located; and

(b)    the obligations they must continue to satisfy to keep the authorisation; and

(c)    the level of supervision to which the facility is subject in that country; and

(d)    

whether adequate arrangements exist for cooperation between ASIC, the Reserve Bank and the authority, or authorities, that are responsible for that supervision; and

(e)    

the arrangements the licensee or applicant has in place relating to its governance and operations, including the adequacy of those arrangements for ensuring:

(i) the facility ' s services are provided in a fair and effective way in this jurisdiction; and

(ii) the integrity of, and public confidence in, the operation of the facility in this jurisdiction; and

(iii) the overall stability in the Australian financial system.

SECTION 827B   ASIC MAY GIVE ADVICE TO MINISTER AND RESERVE BANK  

827B(1)    
ASIC may give advice to the Minister in relation to:

(a)    any matter in respect of which the Minister has a discretion under this Part; or

(b)    any other matter concerning clearing and settlement facilities.

827B(2)    
ASIC may give advice to the Reserve Bank in relation to any matter concerning clearing and settlement facilities.

SECTION 827C   RESERVE BANK MAY GIVE ADVICE TO MINISTER AND ASIC  

827C(1)    
The Reserve Bank may give advice to the Minister in relation to:

(a)    any matter in respect of which the Minister has a discretion under this Part; or

(b)    any other matter concerning clearing and settlement facilities.

827C(2)    
The Reserve Bank may give advice to ASIC in relation to any matter concerning clearing and settlement facilities.

SECTION 827D   RESERVE BANK MAY DETERMINE FINANCIAL STABILITY STANDARDS  

827D(1)    

The Reserve Bank may, by legislative instrument, determine standards for the purposes of ensuring that CS facility licensees conduct their affairs in a way that causes or promotes overall stability in the Australian financial system.

827D(2)    
The standards are to be complied with by:

(a)    all CS facility licensees; or

(b)    a specified class of CS facility licensees, in the case of a standard that is expressed to apply only in relation to that class.

827D(2A)    

If there is an inconsistency between the standards and any of the following:

(a)    the CS facility rules;

(b)    the CS services rules;

(c)    the derivative transaction rules;

(d)    the derivative trade repository rules;

the standards prevail to the extent of the inconsistency.

827D(3)    
Before the Reserve Bank determines a standard, it must consult with:

(a)    the CS facility licensees that will be required to comply with the standard; and

(b)    ASIC.

827D(4)    
A standard may impose different requirements to be complied with in different situations or in respect of different activities.

827D(5)    
A standard:

(a)    comes into force:

(i) unless subparagraph (ii) applies - on the day on which the determination of the standard is made; or

(ii) if that determination specifies a later day as the day on which the standard comes into force - on the day so specified; and

(b)    continues in force until it is revoked.

827D(6)    

The Reserve Bank may vary a standard by legislative instrument. Before it does so, it must consult with:

(a)    the CS facility licensees that will be required to comply with the standard if it is varied as proposed; and

(b)    ASIC.

827D(7)    

If the Reserve Bank determines or varies a standard, it must, as soon as practicable, give a copy of the standard, or of the variation, to the following:

(a)    each CS facility licensee to which the standard applies;

(b)    

the Minister;

(c)    ASIC.

827D(8)    

The Reserve Bank may revoke a standard by legislative instrument.

827D(9)    

If the Reserve Bank revokes a standard, it must, as soon as practicable, give notice of the revocation of the standard to the following:

(a)    each CS facility licensee to which the standard applied;

(b)    

the Minister;

(c)    ASIC.

827D(10)    
(Repealed by No 87 of 2024, s 3, Sch 3[126] (effective 24 September 2024).)

SECTION 827DA   RESERVE BANK MAY DETERMINE RESOLVABILITY STANDARDS FOR CS FACILITY LICENSEES AND CERTAIN RELATED BODIES CORPORATE  

827DA(1)    
The Reserve Bank may, by legislative instrument, determine standards for the purposes of ensuring that:

(a)    CS facility licensees; and

(b)    related bodies corporate of CS facility licensees, being related bodies corporate that are incorporated in Australia;

conduct their affairs in a way that would assist the Reserve Bank to manage or respond to a condition in section 831A being satisfied in relation to a CS facility licensee.

827DA(2)    
The standards are to be complied with by:

(a)    both:

(i) all CS facility licensees; and

(ii) all related bodies corporate of those licensees, being related bodies corporate that are incorporated in Australia; or

(b)    a specified class of those bodies corporate in the case of a standard that is expressed to apply only in relation to that class.

827DA(3)    
Before the Reserve Bank determines a standard, it must consult with:

(a)    the bodies corporate that will be required to comply with the standard; and

(b)    ASIC.

827DA(4)    
A standard may impose different requirements to be complied with in different situations or in respect of different activities.

827DA(5)    
A standard:

(a)    comes into force:

(i) unless subparagraph (ii) applies - on the day on which the determination of the standard is made; or

(ii) if that determination specifies a later day as the day on which the standard comes into force - on the day so specified; and

(b)    continues in force until it is revoked.

827DA(6)    
The Reserve Bank may, by legislative instrument, vary a standard. Before it does so, it must consult with:

(a)    the CS facility licensees that will be required to comply with the standard if it is varied as proposed; and

(b)    ASIC.

827DA(7)    
The Reserve Bank may, by legislative instrument, revoke a standard. Before it does so, it must consult with ASIC.

Inconsistency with other rules

827DA(8)    
If there is an inconsistency between the standards made under this section and any of the following:

(a)    the standards made under section 827D ;

(b)    the derivative transaction rules;

(c)    the derivative trade repository rules;

(d)    the CS services rules;

(e)    the CS facility rules;

the standards made under this section prevail to the extent of the inconsistency.

Overseas clearing and settlement facilities

827DA(9)    
A reference in this section to a CS facility licensee does not include a reference to a CS facility licensee if the licensee ' s only Australian CS facility licence, or all of the licensee ' s Australian CS facility licences, are granted under subsection 824B(2) (overseas clearing and settlement facilities).

SECTION 827DB   RESOLUTION PLANNING  

827DB(1)    
The Reserve Bank may make a plan for the event that a condition in section 831A is satisfied in relation to a CS facility licensee.

827DB(2)    
If the Reserve Bank makes a plan under subsection (1) , the Reserve Bank may review, vary or revoke the plan.

827DB(3)    
In making, reviewing, varying or revoking a plan under this section, the Reserve Bank may take account of any information that the Reserve Bank considers appropriate in making the plan.

827DB(4)    
A plan made under this section is not a legislative instrument.

SECTION 827E   CERTAIN POWERS - CONSULTATION BETWEEN ASIC AND THE RESERVE BANK  

ASIC must consult Reserve Bank

827E(1)    
Before exercising a power under subsection 820C(1) or (7) , 822E(2) , 824B(1) or (2) , 825A(1) , 826A(1) or 826C(1) or section 826E , ASIC must consult the Reserve Bank.

Reserve Bank must consult ASIC

827E(2)    
Before exercising a power under subsection 820CA(1) , (3) , (7) or (9) , the Reserve Bank must consult ASIC.