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Clearing & settlement facilities

Prior to the commencement of the Financial Services Reform Act 2001, there were two types of approved clearing houses. The Financial Services Reform (Consequential Provisions) Act 2001 has provided for the transition to a unified regulatory regime for clearing and settlement facilities.

Last updated 11 March 2003. Note transition ended on 10 March 2004.

Clearing and settlement facility Transition provisions
The securities clearing house1 and approved futures clearing houses2 (s1425).

Includes proposed clearing and settlement facilities (see s1424 for conditions upon which such facilities will be regarded as being operated immediately before the commencement of FSR)

Have been issued with an Australian CS facility licence (ACSFL) which covers only:

  • futures contracts and securities as defined under s72 and s92, respectively, of the pre-FSR Corporations Act provisions (the Old Corporations Act); and
  • in respect of a futures clearing house under s1131 of the Old Corporations Act, will only covers services for those futures markets covered by the s1131 approval.

The ACSFL is effective from 11 March 2002, which means that these licensees are subject to almost all the FSR requirements from that date. 

The exception is the provisions relating to the contents of operating rules and written procedures (s822A3), in relation to which the Old Corporations Act continues to apply until the earliest of: 

  • the end of the two year transition period; or
  • the licensee applies to have their ACSFL varied, revoked or to have additional conditions added.

(The current rules governing the transition period may at some stage be modified by the Regulations, which may provide that s822A (and any associated provisions) will apply during some or all of the transition period or will apply with specified modifications (s1427).) 

This type of holder of an ACSFL is required to include in their Annual Reports information about the steps they are taking to ensure they comply with the s822A by the end of the transition period (s1426).
Unregulated services under the pre-FSR framework provided by approved clearing houses (s1428)

The Old Corporations Act continues to apply to these facilities until:

  • the end of the two year transition period; or
  • the licensee applies to have their ACSFL varied, revoked or to have additional conditions added.

(The current rules governing the transition period may at some stage  be modified by the Regulations, which may provide that certain relevant provisions of the Corporations Act 2001 (the Corporations Act) will apply during some or all of the transition period or will apply with specified modifications (s1428(3).)
Operators of clearing and settlement facilities not required to be approved under the pre-FSR framework (s1429)

The Old Corporations Act continues to apply to these facilities until:

  • the end of the two year transition period; or
  • the operator is granted an ACSFL; or
  • the operator is exempted from the requirement to obtain a licence; or 
  • the facility starts to provide services of a type that it did not provide immediately prior to the commencement of FSR.

(The current rules governing the transition period may at some stage be modified by the Regulations, which may provide that certain relevant provisions of the Corporations Act will apply during some or all of the transition period or will apply with specified modifications (s1429(3).)
References
  1. under s779B of the Old Corporations Act.
  2. under s1131 of the Old Corporations Act.
  3. of the Corporations Act.
  4. under s820C of the the Corporations Act.