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Thursday, 23 August 2001
Page: 30095


Mr ABBOTT (Minister for Employment, Workplace Relations and Small Business) (10:06 AM) —I move:

That the bill be now read a second time.

Today I introduce a bill to modernise the conduct of the Commonwealth government securities market.

The bill will remove regulatory barriers to the electronic issue and transfer of Commonwealth government securities, including treasury bonds and treasury notes.

The bill will put in place reforms to the Commonwealth Inscribed Stock Act 1911 to enable Commonwealth government securities to be cleared and settled electronically alongside a range of financial products under the Corporations Act 2001, as amended by the proposed Financial Services Reform Act 2001.

The Commonwealth Inscribed Stock Amendment Bill will provide a legal framework for the electronic transfer of Commonwealth government securities that is flexible and that promotes an efficient and innovative market.

The bill will create a more efficient business environment for market participants by opening up the conduct of the Commonwealth government securities market to clearing and settlement facilities involved in the broader operation of the financial markets.

The bill will make clear that non-government clearing and settlement facilities regulated under the Corporations Act may be appointed as registrars under the Commonwealth Inscribed Stock Act in addition to, or instead of, the Reserve Bank.

However, the bill will not preclude the Reserve Bank from continuing to have a role as a registrar, in providing for the electronic recording and transfer of the ownership of Commonwealth government securities, in addition to its role in the recording of transfers of ownership of Commonwealth government securities in paper form.

The bill will enable the Commonwealth to create equitable interests in Commonwealth government securities. The Treasurer will be able to enter into contracts or arrangements or execute deeds of trust for the purpose of issuing Commonwealth government securities to a person, including to a clearing and settlement facility, on trust for other persons. This will include where the clearing and settlement facility is acting in the capacity of a registrar under the Commonwealth Inscribed Stock Act.

The bill will also provide for regulations to be made under the Commonwealth Inscribed Stock Act providing for the transfer of legal or equitable interests in Commonwealth government securities in accordance with the provisions of the Commonwealth Inscribed Stock Act, or by applying provisions of the Corporations Act, with or without modifications, to the transfer of interests in Commonwealth government securities under the Commonwealth Inscribed Stock Act.

These reforms will increase business confidence in the effectiveness and reliability of electronic transfers of Commonwealth government securities by providing a certain and secure framework for electronic transactions in the Commonwealth government securities market.

By underpinning electronic transfers of Commonwealth government securities, the bill will increase community confidence in the effectiveness and reliability of such transactions.

In particular, the bill will encourage international confidence in the effectiveness of the legislative framework supporting the Commonwealth government securities market.

I present the explanatory memorandum to the bill and I commend the bill to the House.

Debate (on motion by Mr Fitzgibbon) adjourned.