The Reserve Bank of Australia (RBA) has announced significant changes to the Financial Stability Standards for Securities Settlement Facilities (SSF Standards).

The RBA says its decision aims to balance the risks posed by small firms to the financial system against the regulatory burden imposed on them.

The most notable change involves the settlement activity threshold. 

Previously set at $200 million, the threshold has been increased to $40 billion of financial obligations settled through a clearing and settlement (CS) facility within a financial year. 

This adjustment, equating to around 1 per cent of total annual settlement activity for Australian equity securities and less than 1 per cent for Australian debt securities, is intended to mitigate systemic risk without unduly burdening smaller entities.

The existing SSF Standards have now been revoked under section 827D(8) of the Corporations Act 2001, and new SSF Standards will be introduced under section 827D(1) of the Act. 

The new standards are identical to the existing ones, except for the revised settlement activity threshold.

The increase in the settlement activity threshold is meant to recognise that smaller firms should not bear the same regulatory burden as larger institutions unless their activities pose significant risks to the financial system. 

This change is expected to streamline operations for smaller CS facility licensees, promoting efficiency and reducing unnecessary regulatory overheads.

By adjusting the threshold to $40 billion, the RBA says it aims to ensure that regulatory efforts are focused where they are most needed, enhancing the resilience of the financial system while supporting market participants' operational needs.