Australia’s financial system and capital markets are governed and overseen by 3 separate regulatory agencies, and a central government agency:
- The Australian Securities and Investments Commission (ASIC)
- The Reserve Bank of Australia (RBA)
- The Australian Prudential Regulatory Authority (APRA)
- The Australian Treasury (Treasury)
The co-ordinating body for this group is the Council of Financial Regulators.
The Treasury plus the “3 peaks” of Australian financial regulation, work to ensure the fidelity and stability of the Australian financial system and markets. From a capital markets perspective, ASIC and RBA are the key regulators overseeing conduct through the prism of the Australian Corporations Act, 2001.
ASIC administers and enforces a range of legislative provisions relating to financial markets, financial sector intermediaries and financial products, including investments, insurance, superannuation and deposit-taking activities (not lending). ASIC’s aim is to protect markets and consumers from manipulation, deception and unfair practices and, more generally, to promote confident participation in the financial system by investors and consumers. With this in mind, ASIC seeks to promote honesty and fairness in company affairs and securities and futures markets through adequate and timely disclosure of market information. In addition, ASIC licenses and monitors compliance by participants in the financial system.
ASIC is responsible for the oversight of licensed market operators (Australian Market Licensees) and licensed clearing and settlement operators (Clearing and Settlement Facility Licensees). ASIC is also responsible for the supervision of real-time trading on Australia’s domestic licensed markets, for enforcing the laws against misconduct on Australia’s financial markets, and also supervising Australian Financial Services Licence holders. More information about ASIC can be found at www.asic.gov.au.
RBA is responsible for the stability of the Australian financial system. In fulfilling this mandate, RBA has a role both in mitigating the risk of financial disturbances with potentially systemic consequences, and in responding in the event that a financial system disturbance does occur.
RBA also works to ensure that the payments system is safe and robust. The Payments System Board within RBA has explicit authority for payments system safety and stability, and has the backing of strong regulatory powers.
In its oversight of the financial stability of the Australian financial system, RBA is responsible for ensuring that licensed clearing and settlement facilities have complied with RBA’s Financial Stability Standards and have done all other things necessary to reduce systemic risk. This includes ensuring the capital adequacy of Clearing and Settlement Facilities Licensees. More information about RBA can be found at www.rba.gov.au.
From a holistic and co-ordination perspective, ASIC, RBA, APRA and Treasury are members of the Council of Financial Regulators; the Council being the co-ordinating body for these financial regulatory agencies.
General information about the regulatory framework for Australia’s financial system, including for the Council of Financial Regulators, can be found here.