Tuesday, 28 May 2013

Speech in Parliament - Corporations and Financial Sector Legislation Amendment Bill 2013 - 28 May 2013

Mr TONY SMITH (Casey) (16:38): I rise on behalf of the shadow Treasurer and the coalition to speak on this Corporations and Financial Sector Legislation Amendment Bill 2013. Let me say at the outset that the coalition will not be opposing this bill. As was made clear in the introductory speech and in the explanatory memorandum it deals with a number of issues that largely flow from the global financial crisis, where the G20 endorsed a global transition of over-the-counter derivatives and products that are currently traded through bilateral agreements towards recognised exchanges or trading platforms, where appropriate, in order to boost market transparency. The G20 also agreed that certain trading activities should be cleared through a central counter-party to reduce systemic risk and should be reported to trade repositories in order to enhance market information.

The key measures are intended to:

assist central counterparties (CCPs) in managing defaults of clearing participants;

improve the allocation of resources by the Australian Securities and Investments Commission (ASIC) and the Reserve Bank of Australia (RBA) in assessing the compliance of Australian market licence (AML) and clearing and settlement facility licence (CFSL) holders with their legal obligations;

allow certain Australian regulators including the RBA to exchange protected information with other entities in Australia and overseas in the execution of their duties subject to appropriate safeguards; and

allow ASIC to gather and share protected information with regulatory entities overseas for supervision and enforcement purposes; and require ASIC to report on the use of those powers.

The bill is divided into seven parts. Part 1 deals with the payments system and netting, and seeks to amend the Payments System and Netting Act 1998, the PSN Act, in order to provide a range of protections and carve-outs for certain retail payment systems. The amendments within this bill to the PSN Act allow client positions and associated collateral of a defaulting participant in a clearing facility to be ported to another, solvent participant regardless of obstacles presented by other legislation, including the insolvency provisions in the Corporations Act. The amendments will also ensure that central counterparties can enforce they security they hold over all types of assets, including dematerialised securities.

Part 2 of the bill deals with a review of licences. The amendments will enable ASIC to focus on reviewing some aspects of a licensee's operations each year, with a full review taking place over a number of years. Reviewing licences in this way may allow for a more comprehensive examination of their operations. These amendments seek to reduce the misallocation of resources that results from the requirement to conduct annual assessments on all licences and will allow ASIC to allocate resources to assessments in which they will be more effective.

Part 3 deals with international business regulators. In this section, the bill will amend the Mutual Assistance in Business Regulation Act 1992 and the Australian Securities and Investments Commission Act 2001. The proposed amendments to both acts will bring pan-European regulators such as the European Securities and Markets Authority, and the European Systemic Risk Board into the definition of 'foreign regulator', and thereby put beyond doubt ASIC's ability to render assistance in their administration and enforcement of foreign business laws.

Part 4 deals with reporting on ASIC's information-gathering powers. The amendments address concerns raised back in 2010 in the Senate economics committee about the lack of reporting by ASIC in relation to its use of information-gathering powers. So these amendments seek to formalise ASIC's reporting commitments by imposing a statutory obligation on ASIC to report annually, and insert a provision for Treasury ministers—such as the parliamentary secretary opposite—with notice given to ASIC, to request that ASIC report additional information if required.

Part 5 of the bill deals with the disclosure of information by the Reserve Bank. The amendments relate to section 79A of the Reserve Bank Act 1959 and contain a number of provisions relating to the sharing of information by RBA officers. The intention of these amendments is to provide permission for the RBA to share protected information and documents to a person approved by the RBA governor or prescribed delegates in writing. A similar provision was previously in the Reserve Bank Act but was automatically repealed under a sunset provision; it is now proposed to reinstate it. A further amendment allows the RBA to impose confidentiality restrictions on persons to whom protected information is provided.

Part 6 of the bill deals with consequential amendments relating to derivative trade repositories and arises from the passage of the Corporations Legislation Amendment (Derivative Transactions) Act 2012—that is, the act that provided the legislative framework for implementing Australia's G20 commitments in relation to over-the-counter derivative reforms. It contains a number of consequential amendments to the Carbon Credits (Carbon Farming Initiative) Act 2011 and the Clean Energy Regulator Act 2011 that have become necessary, according to the government.

As members in this chamber are aware, the coalition remain opposed to the government's carbon tax. In government we will repeal the carbon tax. Whilst these measures are linked to this government, the passage of this legislation does improve the framework in which these products are traded. So we will repeal the carbon tax and, given the overriding importance of this legislation, we will not be opposing these amendments. The last section seeks to rewrite section 1317E(1) of the Corporations Act, which lists those provisions in the act which are the subject of the civil penalty provisions of part 9.4B, in order to simplify the legislation without changing its substance.

In conclusion I point out that the parliamentary secretary, on introduction, pointed out that ministerial council approval—that is, MINCO approval—had occurred with respect to the ASIC changes in the bill.

Read 2643 times