Financial market infrastructure changes

The Government has introduced into Parliament the Treasury Laws Amendment (Financial Markets Infrastructure and Other Measures) Bill 2024 which is designed to strengthen Australia’s financial market infrastructure.

If passed the Bill will:
• introduce a crisis management and resolution regime;
• enhance ASIC and the Reserve Bank of Australia’s licensing, supervisory and enforcement powers; and
• streamline and adjust roles and responsibilities between the Minister, ASIC and the RBA.

The changes will enable the RBA to step in and ensure the continuity of clearing and settlement facility services in the face of a crisis.

The changes in Schedule 2 to the Bill:
• clarify the circumstances where a licence can be suspended or cancelled;
• amend the arrangements under which an overseas market operator or overseas CS facility operator is required to be licensed or exempt;
• provide ASIC with the power to impose limits on the scope and level of activity that a market licensee or CS facility licensee is permitted to undertake as an overseas licensee;
• require a domestic CS facility licensee to be domestically incorporated;
• provide ASIC with declaration powers with respect to declared financial markets (previously known as prescribed financial markets) and widely held market bodies;
• harmonise the arrangements for approving increases in voting power in widely held market bodies and in ASX Limited;
• implement a fit, proper and competent person standard for those involved in licensed FMIs;
• require ASIC approval for a person to hold more than 20 per cent voting power in domestically-incorporated FMI licensees that are not widely held market bodies;
• provide ASIC with the powers to make rules for the purpose of promoting the fair and effective provision of CS facility services;
• provide ASIC and the RBA with a power to obtain a report from an expert on specified matters;
• provide the RBA with directions powers that are aligned with its mandate;
• remove the qualification on the obligation of CS facility licensees to comply with Financial Stability Standards; and
• streamline ASIC’s existing directions powers and remove the time limit on the period a direction may remain in place.

Some of the changes in the Bill are subject to the passing of the Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Act 2024 and the Treasury Laws Amendment (Reserve Bank Reforms) Act 2024.

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David Jacobson

Author: David Jacobson
Principal, Bright Corporate Law
About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.

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