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This Act may be cited as the Payment Systems and Netting Act 1998.
This Act commences on the day on which it receives the Royal Assent.
This Act binds the Crown in all its capacities, but does not make the Crown liable to be prosecuted for an offence.
The Criminal Code applies to all offences against this Act.
In this Act, unless the contrary intention appears:
ADI means an authorised deposit‑taking institution within the meaning of the Banking Act 1959.
approved netting arrangement means a netting arrangement approved under section 12.
approved RTGS system means a payment or settlement system approved under section 9.
APRA means the Australian Prudential Regulation Authority.
Banking Act statutory manager has the same meaning as in the Banking Act 1959.
Business Transfer Act means the Financial Sector (Transfer and Restructure) Act 1999.
close‑out netting contract means:
a contract under which, if a particular event happens:
particular obligations of the parties terminate or may be terminated; and
the termination values of the obligations are calculated or may be calculated; and
the termination values are netted, or may be netted, so that only a net cash amount (whether in Australian currency or some other currency) is payable; or
a contract declared by the regulations to be a close‑out netting contract for the purposes of this Act;
but does not include:
a contract that constitutes, or is part of, an approved netting arrangement; or
a contract in relation to which a declaration under section 15 is in force; or
a contract declared by the regulations to not be a close‑out netting contract for the purposes of this Act.
Commonwealth constitutional reach: a contract or arrangement is entered into in circumstances that are within Commonwealth constitutional reach if:
a constitutional corporation is a party to the contract or arrangement; or
the contract or agreement has a significant effect on the business affairs, or an activity, of a constitutional corporation; or
the contract or arrangement is entered into in the course of, for the purposes of or in relation to one or more of the following:
dealings in currency, bills of exchange or promissory notes;
money borrowed on the public credit of the Commonwealth;
trade and commerce between Australia and places outside Australia or between places outside Australia;
trade or commerce among the States;
trade or commerce within a Territory, between a State and a Territory or between 2 Territories;
banking (other than State banking);
insurance (other than State insurance); or
the contract or arrangement is entered into by means of or in relation to, postal, telegraphic, telephonic or other like services.
constitutional corporation means:
a foreign corporation; or
a trading or financial corporation formed within the limits of the Commonwealth.
derivative has the same meaning as in Chapter 7 of the Corporations Act 2001.
direction stay provision means any of the following:
subsection 11CAC(2) of the Banking Act 1959;
subsection 11CD(1A) of the Banking Act 1959;
subsection 13N(2) of the Banking Act 1959;
subsection 77(2) of the Financial Accountability Regime Act 2023;
subsection 36C(2) of the Insurance Act 1973;
subsection 103K(2) of the Insurance Act 1973;
subsection 105(1A) of the Insurance Act 1973;
subsection 230AAD(2) of the Life Insurance Act 1995;
subsection 230AJ(2) of the Life Insurance Act 1995;
subsection 230C(1A) of the Life Insurance Act 1995;
subsection 101(2) of the Private Health Insurance (Prudential Supervision) Act 2015.
eligible obligation has the meaning given by section 14A.
external administration: a person goes into external administration if:
they become a body corporate that is a Chapter 5 body corporate within the meaning of the Corporations Act 2001; or
they become an individual who is an insolvent under administration; or
someone takes control of the person’s property for the benefit of the person’s creditors because the person is, or is likely to become, insolvent; or
a Banking Act statutory manager takes control of the person’s business under the Banking Act 1959; or
a statutory manager takes control of the person’s business under the Corporations Act 2001; or
a statutory manager takes control of the person’s business under the Cash Distribution Framework Act 2026; or
an Insurance Act statutory manager takes control of the person’s business under the Insurance Act 1973; or
a Life Insurance Act statutory manager takes control of the person’s business under the Life Insurance Act 1995; or
the person comes under judicial management under the Insurance Act 1973; or
the person, or a part of the person’s business, comes under judicial management under the Life Insurance Act 1995.
external administrator, for a person who goes into external administration, is:
if, within the meaning of the Corporations Act 2001, the person is a company that is under restructuring or that has made a restructuring plan that has not yet terminated—the restructuring practitioner (within the meaning of that Act) for the company or for the plan; and
otherwise—the person who takes control of the property, part of the property, the business, or part of the business, of the person under the administration.
financial property means any of the following property, regardless of whether the property (or, for paragraph (h), the intermediary or the account) is in Australia or elsewhere:
a security (within the meaning of subsections 92(1) and (2) of the Corporations Act 2001);
a derivative;
a financial product (within the meaning of the Corporations Act 2001) that is traded on a financial market (within the meaning of Division 3 of Part 7.1 of that Act) that is:
operated in accordance with an Australian market licence (within the meaning of that Act); or
exempt from the operation of Part 7.2 of that Act;
a negotiable instrument (within the meaning of the Personal Property Securities Act 2009);
currency (whether of Australia or of any other country);
gold, silver or platinum;
property declared by the regulations to be financial property for the purposes of this Act;
if a person (an intermediary) maintains an account to which interests in property or rights to payment or delivery of property of a kind mentioned in any of paragraphs (a) to (g) may be credited or debited—the rights of a person in whose name the intermediary maintains the account, to the extent that those rights relate to the interests in that property or the rights to payment or delivery of that property;
proceeds (including rights and property) of property that is financial property;
but does not include any property declared by the regulations to not be financial property for the purposes of this Act.
foreign exchange contract has the same meaning as in the Corporations Act 2001.
general insurer has the same meaning as in the Insurance Act 1973.
general participant in a payment or settlement system means a participant who cannot, under the operating rules for the system, settle transactions on their own account through the system.
give security has a meaning affected by section 5A.
Insurance Act statutory manager has the same meaning as in the Insurance Act 1973.
intermediated financial property means the rights mentioned in paragraph (h) of the definition of financial property.
life company has the same meaning as in the Life Insurance Act 1995.
Life Insurance Act statutory manager has the same meaning as in the Life Insurance Act 1995.
market netting contract means:
a contract:
entered into in accordance with the rules that govern the operation of a netting market; and
under which obligations between parties to the contract are netted; or
the rules governing the operation of a netting market, if those rules have effect as a contract between a participant in the netting market and one or more other persons; or
a contract declared by the regulations to be a market netting contract for the purposes of this Act;
but does not include:
a contract that constitutes, or is part of, an approved netting arrangement; or
a contract declared by the regulations not to be a market netting contract for the purposes of this Act.
multilateral netting arrangement means an arrangement that has more than 2 parties and under which the obligations owed by the parties to each other are netted.
netting market means:
an arrangement that is:
a licensed market or a licensed CS facility (both within the meaning of the Corporations Act 2001); and
approved by the Minister for the purposes of this definition; or
an arrangement declared by the regulations to be a netting market for the purposes of this Act.
non‑terminal administration: a person goes into non‑terminal administration if:
the person goes into external administration; and
if the person is a body corporate—the external administration is not a winding up under the Corporations Act 2001 or a corresponding process under a law of a foreign country; and
if the person is an individual—the external administration is not the result of the person becoming a bankrupt under the Bankruptcy Act 1966, or the person having a corresponding status under a law of a foreign country.
operating rules for a payment or settlement system means the rules governing the operation of the system.
participant in an approved RTGS system means a person who is a participant in the system in accordance with the rules governing the operations of the system.
party to an approved netting arrangement is a person who is a party to the arrangement in accordance with the rules governing the arrangement.
provable: an obligation is provable in an external administration if:
for an external administration that is a winding up under the Corporations Act 2001—the obligation is a debt or claim that is admissible to proof against the body being wound up; or
for an external administration that is a bankruptcy under the Bankruptcy Act 1966—the obligation is a debt or liability provable in the bankruptcy; or
in any other case—the person to whom the obligation is owed is entitled to share in any distribution of property to creditors under the administration on the basis of the obligation if the obligation is properly established.
receiving body has the same meaning as in the Business Transfer Act.
regulated body means a body corporate that is any of the following:
an ADI;
a general insurer;
a life company;
an authorised NOHC (within the meaning of the Banking Act 1959);
an authorised NOHC (within the meaning of the Insurance Act 1973);
a registered NOHC (within the meaning of the Life Insurance Act 1995);
a subsidiary of a body corporate mentioned in paragraph (a), (b), (c), (d), (e) or (f);
a private health insurer within the meaning of the Private Health Insurance (Prudential Supervision) Act 2015.
regulated business:
in relation to an ADI—means the ADI’s banking business (within the meaning of the Banking Act 1959); and
in relation to a general insurer—means the general insurer’s insurance business (within the meaning of the Insurance Act 1973); and
in relation to a life company—means the life company’s life insurance business (within the meaning of the Life Insurance Act 1995).
related body corporate, in relation to a body corporate, means a body corporate that is related to the first‑mentioned body, as determined in accordance with section 5AA.
Reserve Bank means the Reserve Bank of Australia.
resolution period has the meaning given by section 15A.
settling participant in a payment or settlement system means a participant who, under the operating rules for the system, can settle transactions through the system on their own behalf and for other participants.
specified moratorium provision: each of the following is a specified moratorium provision:
section 15BA of the Banking Act 1959;
section 15BB of the Banking Act 1959;
section 15BC of the Banking Act 1959;
section 62PA of the Insurance Act 1973;
section 62PB of the Insurance Act 1973;
section 62PC of the Insurance Act 1973;
section 62ZOS of the Insurance Act 1973;
section 62ZOT of the Insurance Act 1973;
section 62ZOU of the Insurance Act 1973;
section 161A of the Life Insurance Act 1995;
section 161B of the Life Insurance Act 1995;
section 161C of the Life Insurance Act 1995;
section 179AS of the Life Insurance Act 1995;
section 179AT of the Life Insurance Act 1995;
section 179AU of the Life Insurance Act 1995.
specified provisions means:
subsections 11CD(2) and (3), section 11F and subsection 13A(3) of the Banking Act 1959; and
subsections 105(2) and (3) of the Insurance Act 1973; and
section 187 and subsections 230C(2) and (3) of the Life Insurance Act 1995; and
section 86 of the Reserve Bank Act 1959; and
sections 415D to 415FA, 434J to 434LA, 437D, 440B, 451E to 451GA, 453R, 454N to 454R, 468, 556 and 588FL, Division 2 of Part 5.7B and sections 823V, 843A to 843D, 844B, 849BB and 849CC of the Corporations Act 2001; and
sections 88, 141 to 146 and 154 of the Cash Distribution Framework Act 2026; and
sections 120, 121, 122, 128B and 128C of the Bankruptcy Act 1966; and
section 142 of the Superannuation Industry (Supervision) Act 1993; and
subsections 101(3) and (4) of the Private Health Insurance (Prudential Supervision) Act 2015; and
sections 267 and 267A of the Personal Property Securities Act 2009; and
subsections 77(3) and (4) of the Financial Accountability Regime Act 2023;
the specified moratorium provisions; and
a law prescribed by the regulations for the purposes of this definition.
specified stay provision: each of the following is a specified stay provision:
subsection 11CAC(2) of the Banking Act 1959;
subsection 11CD(1A) of the Banking Act 1959;
subsection 13N(2) of the Banking Act 1959;
subsection 14AC(2) of the Banking Act 1959;
subsection 15C(2) of the Banking Act 1959;
subsection 36AA(2) of the Business Transfer Act;
subsection 77(2) of the Financial Accountability Regime Act 2023;
subsection 36C(2) of the Insurance Act 1973;
subsection 62V(2) of the Insurance Act 1973;
subsection 62ZB(2) of the Insurance Act 1973;
subsection 62ZOH(2) of the Insurance Act 1973;
subsection 62ZOX(2) of the Insurance Act 1973;
subsection 103K(2) of the Insurance Act 1973;
subsection 105(1A) of the Insurance Act 1973;
subsection 165B(2) of the Life Insurance Act 1995;
subsection 168C(2) of the Life Insurance Act 1995;
subsection 179AH(2) of the Life Insurance Act 1995;
subsection 179AX(2) of the Life Insurance Act 1995;
subsection 230AAD(2) of the Life Insurance Act 1995;
subsection 230AJ(2) of the Life Insurance Act 1995;
subsection 230C(1A) of the Life Insurance Act 1995;
subsection 101(2) of the Private Health Insurance (Prudential Supervision) Act 2015.
statutory/judicial management: a person is under statutory/judicial management if:
a Banking Act statutory manager, Insurance Act statutory manager or Life Insurance Act statutory manager has control of the person’s business; or
the person is under judicial management under the Insurance Act 1973; or
the person, or a part of the person’s business, is under judicial management under the Life Insurance Act 1995.
trigger event, for a close‑out netting contract, means an event of a kind mentioned in paragraph (a) of the definition of close‑out netting contract.
voidable: an action or thing is voidable in an external administration if it is:
for an external administration that is a winding up under the Corporations Act 2001—voidable under Division 2 of Part 5.7B of the Corporations Act 2001; or
for an external administration that is a bankruptcy under the Bankruptcy Act 1966—void as against the trustee in bankruptcy; or
in any other case—void as against the external administrator or any other person, or voidable under the law governing the external administration.
For the purposes of this Act, the question whether a body corporate is related to another body corporate is to be determined in the same way as that question is determined for the purposes of the Corporations Act 2001.
For the purposes of this Act, the question whether a body corporate is a subsidiary of another body corporate is to be determined in the same way as that question is determined for the purposes of the Corporations Act 2001.
If a person owes payment or performance of an obligation to another person (an account holder):
the account holder may give security over the account holder’s right to require the payment or performance of the obligation; and
the persons to whom security may be given include the person who owes the payment or the performance of the obligation to the account holder.
A person holds an account with a bank. The person may give security to the bank over the person’s right to require the bank to pay the person money from the account.
If:
a participant in an approved RTGS system goes into external administration (other than non‑terminal administration); and
a payment or settlement transaction is executed through the system at any time on the day on which the external administrator is appointed; and
the transaction involves the payment of money, or the transfer of an asset, by the participant;
the payment or transfer has the same effect it would have had if the participant had gone into external administration on the next day.
This section has effect despite any other law (including the specified provisions and the specified stay provisions).
Section 5 defines specified provisions and specified stay provision.
If:
a participant in an approved RTGS system goes into non‑terminal administration; and
a payment or settlement transaction is executed through the system at any time before the participant goes into, or while the participant is in, non‑terminal administration; and
the transaction involves the payment of money, or the transfer of an asset, by the participant;
the payment or transfer has the same effect it would have had if the participant had not gone into non‑terminal administration.
This section has effect despite any other law (including the specified provisions and the specified stay provisions).
Section 5 defines specified provisions and specified stay provision.
A participant in an approved RTGS system must notify the system administrator if:
the participant; or
another participant whose transactions the participant settles through the system;
goes into external administration. The participant must give the notice as soon as practicable after the participant becomes aware of the external administration.
A person does not contravene subsection (1) if:
they took reasonable steps to comply with that subsection; or
the system administrator was already aware of the external administration by the time the person was required to notify the administrator under subsection (1).
A person must not contravene subsection (1).
Penalty: Imprisonment for 5 years.
A person may apply to the Reserve Bank for approval of a payment or settlement system.
The application must:
be in the form approved in an instrument under subsection (3); and
be accompanied by the documents:
required by the Reserve Bank.
The Reserve Bank may, by notifiable instrument, approve a form for the purposes of paragraph (2)(a).