Financial System Legislation Amendment (Resilience and Collateral Protection) Regulation 2016 (F2016L00724)

Schedule 2   Amendments relating to payment systems and netting

Payment Systems and Netting Regulations 2001

1   At the end of the Regulations

Add:

5 Financial property

(1) This regulation is made for paragraph (g) of the definition of financial property in section 5 of the Act.

(2) The following property is declared to be financial property for the purposes of the Act:

(a) a document evidencing ownership of gold, silver or platinum;

(b) cash collateral (including cash, certificates of deposit and bank bills);

(c) property described in paragraph 5(b), (c) or (e), or paragraph 25, of Attachment H to Prudential Standard APS 112 - Capital Adequacy: Standardised Approach to Credit Risk, made by APRA under section 11AF of the Banking Act 1959 and as in force from time to time, as property that may be recognised as eligible collateral (ignoring any conditions set out in the Attachment);

(d) property described in paragraph 5(d) of Attachment H to that prudential standard, ignoring:

(i) the words "and the ADI holding the security has no information suggesting that the security justifies a rating below this level"; and

(ii) any conditions set out in the Attachment;

(e) a covered bond (within the meaning of the Banking Act 1959).

6 Eligible obligations

Obligations that may be eligible obligations

(1) An obligation that relates to an arrangement that is a forward, swap or option, or any combination of those things, in relation to one or more commodities, is prescribed for the purposes of paragraph 14A(8)(a) of the Act.

Obligations that are not eligible obligations

(2) None of the following are eligible obligations in relation to a close-out netting contract:

(a) an obligation under a credit facility (as defined in regulations made for the purposes of subparagraph 765A(1)(h)(i) of the Corporations Act 2001), including:

(i) a margin lending facility (within the meaning of Chapter 7 of the Corporations Act 2001); and

(ii) an obligation under a financial product that is declared by the Australian Securities and Investments Commission under subsection 761EA(9) of the Corporations Act 2001 not to be a margin lending facility;

(b) an obligation under a deposit-taking facility;

(c) an obligation under a reciprocal purchase agreement (otherwise known as a repurchase agreement), a sell-buyback arrangement or securities loan arrangement;

(d) an obligation under a contract of insurance, including a life policy or a sinking fund policy within the meaning of the Life Insurance Act 1995;

(e) an obligation under a managed investment scheme (within the meaning of the Corporations Act 2001);

(f) an obligation under a lease or licence;

(g) an obligation under a guarantee;

(h) an obligation to pay money under:

(i) a cheque; or

(ii) an order for the payment of money; or

(iii) a bill of exchange.

Authority for subregulation (2)

(3) Subregulation (2) is made under subsection 14A(9) of the Act.

7 Obligations to which section 15A of the Act applies

For the purposes of paragraphs 15A(1)(a) and (2)(a) of the Act, an obligation of a party to a close-out netting contract to which a regulated body is a party is prescribed, if the obligation is created under one of the following:

(a) a reciprocal purchase agreement (otherwise known as a repurchase agreement);

(b) a sell-buyback arrangement;

(c) a securities loan arrangement.