At its meeting today, the Payments System Board discussed a number of issues, including:
- New technology in the clearing and settlement of securities and its implications for supervision. The Board considered the potential effects of the adoption of technologies on clearing and settlement processes, and the Bank’s supervision of market infrastructures. Members considered the probable emergence of new, technologically innovative securities settlement facilities. The Board agreed that some adjustments to the Bank’s supervisory regime could achieve a better balance between the risks posed by small firms to the financial system and the regulatory burden imposed on them. The Bank will consult on a proposal to increase the threshold at which the Financial Stability Standards apply to securities settlement facilities.
Members acknowledged ASX’s announcement on a solution design to replace CHESS, ASX’s cash equities clearing and settlement system. They noted the important role the newly created ASX Cash Equities Clearing and Settlement Advisory Group played in bringing the interests of the market as a whole into the decision process. For example, the Advisory Group recommended that ASX make clear statements on its commitment to build a system that is interoperable. Members considered it important for ASX to now focus on engaging the broader market and on ensuring the issues that various external reviews have identified from the past program are being addressed.
- Developments in the ATM industry and review of the ATM access framework. Members discussed the effect that the structural decline in transactional cash and ATM use was having on ATM deployment and market structure, and future challenges the industry was expected to have. The Board discussed industry views from a recent consultation on the future of the Bank’s ATM Access Regime and the industry-administered ATM Access Code. While the policy case for retaining the Access Regime is not as strong as when it was introduced, members agreed that it can still play a useful role in protecting fair access and promoting competition in the industry. The Board agreed to retain the Access Regime. The staff will also engage with AusPayNet to ensure that the Access Code remains fit for purpose and appropriately governed.
- The annual review of compliance with card payments regulation. Members reviewed the compliance of card issuers and acquirers, and the designated card schemes, with the Bank’s interchange and surcharging standards and access regimes in 2022/23. The Bank found that there was a high level of compliance with the Bank’s regulations.
- Payments regulatory reform. The Board discussed progress on the Government’s reform of the regulatory architecture for Australia’s payments system. Members noted the importance of the proposed changes to the Payment Systems (Regulation) Act 1998, which will help modernise the regulatory regime and ensure that all entities involved in the payments value chain can be appropriately regulated.
- Enhancing cross-border payments. Members discussed various initiatives to make cross-border payments cheaper, faster and more transparent. These include the adoption of globally harmonised payments messaging requirements and the migration of cross-border payments to fast payment system infrastructure. The Board expects New Payments Platform (NPP) participants to deliver their NPP international payments business service by the industry agreed deadline of December 2023. This new service will help speed up cross-border payments coming into Australia by enabling the final Australian dollar leg to be processed via the NPP.
- Amendment to the policy on conflicts of interest to support collaboration on winding down the cheques system. The Board approved an amendment to the Bank’s policy on Managing Potential Conflicts of Interest Arising from the Bank’s Commercial Activities to allow staff from Payments Policy Department and Banking Department to collaborate on work related to the winding down of the cheques system. Collaboration would be confined to this issue. This will allow the Bank to better support the government in its objective of achieving an orderly closure of the cheques system in the public interest.