Sydney Futures Exchange Clearing House Implements An Exchange Settlement Account

Today, Monday 28 February 2000, the Sydney Futures Exchange Clearing House (SFECH) successfully implemented an Exchange Settlement Account (ESA) with the Reserve Bank of Australia (RBA). SFECH has received the first such approval under the RBA's new access arrangements. The opening of an ESA means that SFECH ceases to have a bank sponsoring its participation in the clearing process. Instead of funds flowing through an account with a bank, all funds will flow directly into and out of SFECH's own account with the RBA. Eliminating the bank intermediary may lead to a reduction in operating costs and improved clearing efficiency. SFECH met the RBA's eligibility requirements for the award of an ESA by maintaining satisfactory operational capacity and demonstrating access to sufficient intraday liquidity. Formerly, only banks and special service providers for building societies and credit unions held an ESA. The RBA issued formal approval to SFECH on 11 November 1999. The implementation of an ESA continues SFECH's enhancement of Member services. In September 1999, SFECH expanded the range of collateral acceptable for initial margin obligations to include US and Hong Kong dollars, euro, yen, US treasury bills and a select range of Australian and New Zealand equities. Established in 1991, SFECH is a fully owned subsidiary of the Sydney Futures Exchange, with responsibility for clearing and guaranteeing all contracts traded by SFE and the New Zealand Futures and Options Exchange. It is backed by a guarantee fund of A$150 million.