Financial Services Snapshots

Financial Markets

ASIC releases discussion paper on the dynamics between public and private markets

On 26 February 2025, ASIC released Australia’s evolving capital markets: A discussion paper on the dynamics between public and private markets (Discussion Paper), in which ASIC sets out its preliminary views on the opportunities and risks arising as part of the shifts in public and private markets.

The Discussion Paper invites discussion on ASIC's regulatory approach, as well as actionable ideas to enhance the operation of Australia's capital markets.

Key risks of concern over the changes in capital markets noted in the Discussion Paper include:

• opacity;
• valuation uncertainty;
• conflicts of interest;
• illiquidity; and
• leverage in private markets, which includes private equity and private credit markets.

Feedback on the Discussion Paper is due on 28 April 2025.

See: Media Release; Discussion Paper

ASIC makes new clearing and settlement rules to promote competition

On 19 February 2025, ASIC made the ASIC CS Services Rules 2025 (CS Rules). The CS Rules require the ASX to provides its clearing and settlement services on a transparent and fair basis, as well as a requirement to publish a comparison of fees against international providers.

The recent making of the CS Rules is ASIC's first exercise of its powers under the Competition in Clearing and Settlement Services reforms passed in September 2023 and enlivened by the Minister in May 2024.

Under the CS Rules, the ASX must ensure that clearing and settlement services are offered in a transparent, non-discriminatory way, which requires the ASX to take all reasonable steps to:

• ensure that the pricing of its services is transparent, fair and reasonable;
• provide access to its covered services (including data) on commercial, transparent and non-discriminatory terms; and
• ensure that its core technology systems are designed and developed in a way that facilitates third-party access.

See: Media Release; CS Rules

Payments

RBA releases notes from March 2025 Payment Systems Board Update

On 6 March 2025, the RBA's Payment System Board (Board) met to discuss a number of key issues, including:

• developments in the account-to-account payments system. This centred around discussion of the Australian payments industry’s intended decommissioning of the Bulk Electronic Clearing System (BECS) by a target date of 2030. Members considered that the key next steps should include defining a vision for the future state with strategic objectives for account-to-account payments in Australia, and establishing appropriate mechanisms for coordination and stakeholder engagement.
• review of retail payments regulation. The Board looked at the arguments for and against various policy options on merchant card payment costs and surcharging. The meeting notes record that the Board is exploring options to promote the public interest by supporting safety, competition and efficiency in the payments system, an agreement was made to release a consultation paper in mid-2025 setting out the Board’s preferred policy options, as well as seeking further feedback.
• international and domestic work on central bank digital currencies. Members discussed the ongoing international research into central bank digital currencies (CBDCs). The members made reference to Australia's current CBDC work, Project Acacia, which is considering how wholesale digital money could support tokenised asset settlement.

See: Media Release

Banking

RBA renews Bilateral Currency Swap Arrangement with Bank Indonesia

On 4 March 2025, the RBA and Bank Indonesia renewed their Bilateral Currency Swap Arrangement (BCSA) on 4 March 2025, for a period of five years. This follows the initial agreement that was signed in December 2015.

The BCSA enables the exchange of local currencies between the two central banks with a value of up to AUD10 billion (equivalent to USD6.2 billion) and the corresponding IDR.

See: Media Release

Insurance

APRA confirms consultation on changes to capital requirements for annuity products

On 27 February 2025, APRA confirmed that public consultation will proceed on capital settings for annuity products.

The key change as part of the consultation is the approach to calculating the 'illiquidity premium' as set out in LPS 112 Capital Adequacy: Measurement of Capital. This change would lower life insurer capital requirements for annuity products, provided certain risk controls are in place.

The proposal will be released in the second quarter of 2025. APRA will then be inviting feedback from industry and other stakeholders.

See: Media Release

Other

APRA proposes changes to strengthen and streamline governance and fit and proper requirement

On 6 March 2025, APRA released eight proposals to strengthen its existing prudential governance framework for banks, insurers and superannuation trustees.

The proposals have been drafted to ensure that APRA's governance standards are in line with contemporary best practice, and to establish benchmarks for regulated entities.

The key changes outlined in the proposal include:

• lifting requirements for boards to ensure they have the right mix of skills and experience to deliver the entity’s strategy
• raising minimum standards around the fitness and propriety of responsible persons, and requiring significant financial institutions to engage with APRA on succession planning and potential appointments
• extending existing requirements for superannuation trustees in relation to managing conflicts of interest to banking and insurance
• strengthening board independence, especially in relation to entities that are part of a group
• clarifying APRA’s expectations around the roles of boards, the chair and senior management
• introducing a lifetime tenure limit of 10 years for non-executive directors at an APRA-regulated entity

APRA is now seeking perspectives from key stakeholders and intends to release updated prudential standards and guidance for formal consultation in the first half of 2026. APRA aims to publish the updated framework by the beginning of 2027 ahead of it commencing by 2028.

See: Media Release; Discussion Paper

Authors: Narelle Smythe, Partner; Samantha Carroll, Partner; Lisa Simmons, Partner; Rehana Box, Partner; Con Tzerefos, Partner; Scott Charaneka, Partner; Hannah Glass, Special Counsel; Geena Davies, Senior Associate; Greg Patton, Senior Associate; Nicole Mazurek, Senior Associate; Kim Yen Nguyen, Senior Associate; Nicky Thiyavutikan, Senior Associate; Justin Ho, Senior Associate; Holly Marchant, Senior Associate and Nicholas Dennis, Senior Associate.