Commonwealth Consolidated Acts

PAYMENT SYSTEMS AND NETTING ACT 1998 - SECT 9

  (1)   The Reserve Bank may, by legislative instrument, approve the system if it is satisfied that:

  (a)   systemic disruption in the financial system could result if a participant went into external administration and the system were not approved under this section; and

  (b)   the system is supported by a legally enforceable arrangement between participants in the system for the irrevocable settlement of transactions in real time; and

  (c)   the rules governing the system establish a system administrator for the arrangement; and

  (d)   the system administrator has the resources, competency and integrity needed to administer the system; and

  (e)   the system rules provide that if a settling participant goes into external administration, the system administrator may suspend from the system:

  (i)   the participant; and

  (ii)   any general participant for whom that participant is the sole sponsor; and

  (f)   the system rules provide that if a general participant goes into external administration, the system administrator may suspend that participant from the system; and

  (g)   the system rules require a settling participant to assume the obligations of any participant whose transactions they settle through the system if the participant fails to fulfil those obligations;

and of any other matters specified in the regulations.

  (2)   In deciding whether to approve a system, the Reserve Bank must have regard to the following:

  (a)   whether the system rules:

  (i)   allow all participants to settle transactions on their own account; or

  (ii)   provide both for participants who can settle transactions on their own account and for other participants ( settling participants ) and for participants who cannot settle transactions on their own account ( general participants );

  (b)   whether the system rules provide for different obligations for settling participants and general participants and, if they do, whether they:

  (i)   require a general participant to have a settling participant to settle their transactions through the system; and

  (ii)   require a participant who goes into external administration to notify its settling participant (if any) of the external administration as soon as practicable; and

  (iii)   require a settling participant to notify the system administrator as soon as practicable if it becomes aware that a participant whose transactions it settles through the system has gone into external administration;

  (c)   whether the system rules require participants to notify the system administrator as soon as practicable if they go into external administration;

  (d)   any other matters specified in the regulations;

  (e)   any other matters the Reserve Bank considers relevant.

  (3)   An approval may be given subject to the terms and conditions specified in the approval.