Financial System Resilience Bill 2016 Introduced
Thursday 17 March 2016 @ 10.26 a.m. | Corporate & Regulatory | Trade & Commerce
Yesterday, on 16 March 2016, the Minister for Small Business and Assistant Treasurer Kelly O'Dwyer introduced the Financial System Legislation Amendment (Resilience and Collateral Protection) Bill 2016 (the Bill) into the Commonwealth House of Representatives.
The Bill proposes amendments to numerous financially-related Acts, principally in regard to their regulation of over-the-counter (OTC) derivatives, including the Banking Act 1959 (Cth), the Financial Sector (Business Transfer and Group Restructure) Act 1999 (Cth) and particularly the Payment Systems and Netting Act 1998 (Cth).
Background
As reported previously on TimeBase on 1 February 2016, the introduction of the draft legislation and the resulting Bill is principally in response to the Financial System Inquiry. The Inquiry, formed in late 2013 to ‘establish a direction for the future of Australia’s financial system’, released its final report on 7 December 2014. The Federal Government responded to the report in 20 October 2015, proposing several changes to be made in response to the findings of the Inquiry. Prior to the Bill’s introduction yesterday, the draft had been open for submissions since 21 December 2015 until submissions closed on 29 January 2016.
Some of the changes proposed by the Bill include amendments to the Payment Systems and Netting Act 1998 (Cth) and other associated Acts to assist in bringing Australian financial institutions more into line with international standards of OTC derivative margin requirements, particularly regarding rights given and enforced in respect of margin provided by way of security. Another effect of the Bill is to solidify existing Australian law regarding termination (or close out) rights under particular financial market transactions.
Reactions and Comments
In summarizing the proposed effects of the Bill during its second reading speech, Minister O’Dwyer stated that the Bill:
"advances the Australian government's reform agenda for financial systems, by enhancing the integrity and safety of the derivatives markets in particular, and the financial system as a whole."
The Bill seems uncontroversial, and is expected to pass in due course.
TimeBase is an independent, privately owned Australian legal publisher specialising in the online delivery of accurate, comprehensive and innovative legislation research tools including LawOne and unique Point-in-Time Products.
Sources:
Financial System Legislation Amendment (Resilience and Collateral Protection) Bill 2016, Bill and Explanatory Note as published On TimeBase LawOne
