Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
Payment Systems and Netting Bill 1998

Part 1 P reliminary

   

1   Short title

                   This Act may be cited as the Payment Systems and Netting Act 1998 .

2   Commencement

                   This Act commences on the day on which it receives the Royal Assent.

3   Crown bound by this Act

                   This Act binds the Crown in all its capacities, but does not make the Crown liable to be prosecuted for an offence.

4   Application of Criminal Code

                   The Criminal Code applies to all offences against this Act.

5   Definitions

                   In this Act, unless the contrary intention appears:

approved futures clearing house means a clearing house approved under section 1131 of the Corporations Law.

approved netting arrangement means a netting arrangement approved under section 12.

approved RTGS system means a payment or settlement system approved under section 9.

approved special stock market means a stock market approved under section 770A of the Corporations Law.

close-out netting contract means:

                     (a)  a contract under which, if a particular event happens:

                              (i)  particular obligations of the parties terminate or may be terminated; and

                             (ii)  the termination values of the obligations are calculated or may be calculated; and

                            (iii)  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

                     (b)  a contract declared by the regulations to be a close-out netting contract for the purposes of this Act;

but does not include:

                     (c)  a contract that constitutes, or is part of, an approved netting arrangement; or

                     (d)  a contract in relation to which a declaration under section 15 is in force; or

                     (e)  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)  a constitutional corporation is a party to the contract or arrangement; or

                     (b)  the contract or agreement has a significant effect on the business affairs, or an activity, of a constitutional corporation; or

                     (c)  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:

                              (i)  dealings in currency, bills of exchange or promissory notes;

                             (ii)  money borrowed on the public credit of the Commonwealth;

                            (iii)  trade and commerce between Australia and places outside Australia or between places outside Australia;

                            (iv)  trade or commerce among the States;

                             (v)  trade or commerce within a Territory, between a State and a Territory or between 2 Territories;

                            (vi)  banking (other than State banking);

                           (vii)  insurance (other than State insurance); or

                     (d)  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)  a foreign corporation; or

                     (b)  a trading or financial corporation formed within the limits of the Commonwealth.

external administration : a person goes into external administration if:

                     (a)  they become a body corporate that is an externally administered body corporate within the meaning of the Corporations Law; or

                     (b)  they become an individual who is an insolvent under administration within the meaning of the Corporations Law; or

                     (c)  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.

external administrator for a person who goes into external administration is the person who takes control of the person’s property under the administration.

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.

market netting contract means:

                     (a)  a contract:

                              (i)  entered into in accordance with the rules that govern the operation of a netting market; and

                             (ii)  under which obligations between parties to the contract are netted; or

                     (b)  a contract declared by the regulations to be a market netting contract for the purposes of this Act;

but does not include:

                     (c)  a contract that constitutes, or is part of, an approved netting arrangement; or

                     (d)  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:

                     (a)  an arrangement that is:

                              (i)  a stock exchange, approved special stock market, exempt stock market, securities clearing house, futures exchange, exempt futures market or approved futures clearing house under the Corporations Law; and

                             (ii)  approved by the Minister for the purposes of this definition; or

                     (b)  an arrangement declared by the regulations to be a netting market for the purposes of this Act.

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:

                     (a)  for an external administration that is a winding up under the Corporations Law—the obligation is a debt or claim that is admissible to proof against the body being wound up; or

                     (b)  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

                     (c)  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.

Reserve Bank means the Reserve Bank of Australia.

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 provisions means:

                     (a)  section 11F and subsection 13A(3) of the Banking Act 1959 ; and

                     (b)  section 187 of the Life Insurance Act 1995 ; and

                     (c)  section 86 of the Reserve Bank Act 1959 ; and

                     (d)  sections 437D and 468 and Division 2 of Part 5.7B of the Corporations Law; and

                     (e)  sections 120, 121 and 122 of the Bankruptcy Act 1966 ; and

                      (f)  section 142 of the Superannuation Industry (Supervision) Act 1993 ; and

                     (g)  a law prescribed by the regulations for the purposes of this definition.

voidable : a payment is voidable in an external administration if it is:

                     (a)  for an external administration that is a winding up under the Corporations Law—voidable under Division 2 of Part 5.7B of the Corporations Law; or

                     (b)  for an external administration that is a bankruptcy under the Bankruptcy Act 1966 —void as against the trustee in bankruptcy; or

                     (c)  in any other case—void as against the external administrator or voidable under the law governing the external administration.