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On February 9, ISDA and FIA submitted a joint response to the Australian Treasury consultation on financial market infrastructure regulatory reforms. In the response, the associations considered the proposed crisis resolution regime, which would provide the Reserve Bank of Australia (RBA) with powers to step in and resolve a crisis affecting a domestic central counterparty (CCP), with the aim of ensuring the continuity of critical clearing functions and maintaining financial stability in Australia.
The associations also express concern over some of the provisions contemplated in the draft regime and ask if the issues highlighted in the response (such as the ability of the RBA or statutory manager to direct and make changes to the operating rules, the lack of explicit definitions of and safeguards around the resolution powers and the interaction with close-out netting) could be addressed. If not, there is a risk that the willingness of market participants to clear trades with a CCP subject to this regime could be adversely affected.
