Payment Systems and Netting Act 1998

Subsection (3) applies if:

a trigger event to which a specified stay provision (other than a direction stay provision) applies:

is an event that involves a regulated body (the trigger body); and

happens in relation to one or more close‑out netting contracts (each of which is a trigger contract) to which a related body corporate of the trigger body (the contracting body) is a party; and

APRA is satisfied that all the matters in subsection (5) will be satisfied in relation to each entity covered under subsection (2):

unless subparagraph (ii) applies—at the time the declaration will be made; or

if a certificate of transfer will come into force under the Business Transfer Act for a transfer of business from the trigger body to a receiving body—just after that coming into force; and

each entity covered under subsection (2) is not in external administration (disregarding paragraphs (d), (daa), (da), (db), (e) and (f) of the definition of external administration in section 5); and

APRA has not already made a declaration under section 15B in relation to the trigger event happening in relation to the trigger contract.

For the purposes of paragraphs (1)(b) and (c), an entity is covered under this subsection if it is:

if section 15E does not apply—the trigger body; or

if section 15E applies because of a transfer of business under the Business Transfer Act from the trigger body to a receiving body:

in the case of a total transfer of business—the receiving body; or

in the case of a partial transfer of business—an entity specified in a determination under subsection 15E(3).

APRA may, before the end of the resolution period for the trigger event, make a declaration that the specified stay provision is to continue to apply to:

each trigger contract specified in the declaration; and

all securities given over financial property, in respect of obligations under each trigger contract specified in the declaration.

APRA may specify either or both of the following in a declaration under subsection (3):

one or more trigger contracts;

one or more classes of trigger contracts.

See subsection 15E(2) for a restriction on when APRA may make a declaration under subsection (2) of this section in the case of a transfer of business from the trigger body to a receiving body.

For the purposes of paragraph (1)(b), the matters are as follows:

that the entity covered under subsection (2) is able to meet all its liabilities under:

close‑out netting contracts to which it is a party; and

securities given over financial property in respect of obligations of the entity under those contracts;

that the entity covered under subsection (2) is solvent (within the meaning of the Corporations Act 2001);

if the entity covered under subsection (2) is an ADI, a general insurer or a life company—that the entity has each material authorisation (however described) necessary for its regulated business;

if minimum capital requirements under the Banking Act 1959, the Insurance Act 1973 or the Life Insurance Act 1995 apply to the entity covered under subsection (2)—that either subsection (6) or subsection (7) is satisfied in respect of the entity covered under subsection (2).

This subsection is satisfied if the entity’s level of capital complies with the minimum capital requirements that apply to it under:

the Banking Act 1959, the Insurance Act 1973 or the Life Insurance Act 1995 (as the case requires); and

the applicable prudential standards made under that Act.

This subsection is satisfied if:

arrangements are in place to ensure that the entity performs all its obligations under:

close‑out netting contracts to which it is a party; and

securities given over financial property in respect of obligations of the entity under those contracts;

those arrangements will remain in place until at least the earliest day on which one or more of the following occurs:

subsection (6) is satisfied;

if a Banking Act statutory manager is in control of the entity’s business—APRA makes an ultimate termination of control under subsection 13C(3) of the Banking Act 1959;

if an Insurance Act statutory manager is in control of the entity’s business—APRA makes an ultimate termination of control under subsection 62ZOC(3) of the Insurance Act 1973;

if a Life Insurance Act statutory manager is in control of the entity’s business—APRA makes an ultimate termination of control under subsection 179AC(3) of the Life Insurance Act 1995;

if the entity is under judicial management under the Insurance Act 1973—an order under section 62ZF of that Act cancelling the judicial management comes into force;

if the entity is under judicial management under the Life Insurance Act 1995—an order under section 172 of that Act cancelling the judicial management comes into force.

A declaration under subsection (3) cannot be varied or revoked.

A declaration under this section is not a legislative instrument.

The regulations may do any of the following:

prescribe requirements relating to how declarations under subsection (3) are to be made (including requirements relating to the content or form of declarations);

prescribe requirements relating to the notification or publication of declarations under subsection (3);

include provisions that apply to determining, either generally or for a particular purpose, the time when declarations under subsection (3) are taken to be made.

Regulations under paragraph (c) may (for example) provide that, for the purpose of this section, a declaration is taken not to have been made until certain requirements of regulations under paragraph (b) have been complied with.