Crisis Management Arrangements
As described on the Financial Institutions crisis management arrangements page, the CFR has a role to coordinate responses to potential threats to financial stability. A Memorandum of Understanding details this role, including objectives of financial distress management and the principles that will guide decisions and actions during times of financial distress.
As co-supervisors of clearing and settlement (CS) facilities, effective communication and cooperation between Australian Securities and Investments Commission (ASIC) and the Reserve Bank of Australia (RBA) in the event of a crisis occurring at a CS facility will be vital. The Memorandum of Understanding in place between those agencies for the sharing of information in the normal course would also provide the basis for information sharing in a crisis event.
The Council of Financial Regulators' (CFR's) 2011 consultation on the Review of Financial Market Infrastructure Regulation discussed resolution powers in relation to financial market infrastructures (FMIs), including the power to “step in” and take control via appointment of a statutory manager. Following the consultation, the CFR recommended that step in powers be introduced.
Since then, CFR agencies have been working on the design of a resolution regime, intended to provide legislative powers to resolve a distressed FMI. The high level design of the regime was consulted on in 2015. Further details were provided in a second consultation in 2019, alongside a number of other FMI regulatory reforms. Following this, the CFR provided advice to the Government recommending a package of reforms.
In June 2021, the Treasurer announced that the Government will introduce regulatory reforms (see the Treasurer's media release).