mandated central clearing of interest - rate derivatives denominated in australian dollars and other major currencies for internationally active dealers. 1 over the next year or so, the rba ’ s priorities for work in this area will include two key elements. the first is the development of more robust crisis management arrangements for fmis. the rba currently sets standards that the fmis it supervises are required to meet. these standards provide a high degree of assurance regarding the stability of these entities, but they don ’ t rule out the possibility that they could experience severe financial difficulties, prejudicing the stability of the overall financial system. given this, it is important that there are appropriate arrangements in place to deal with such an eventuality, should it ever arise. the current arrangements in this area were considered by the fsi and have been under review by the council of financial regulators for some time. in its response to the inquiry, the government endorsed the implementation of a framework to provide regulators with clear powers in the event that an fmi was heading towards failure. this is consistent with an existing proposal consulted on by the government to make the rba the resolution authority for central counterparties and securities settlement facilities based in australia. under the proposed arrangements, the rba would be able to give formal directions and to intervene if severe financial stress of an fmi risked causing wide disruption to the financial system. one way that the rba might do this is to appoint a statutory manager to operate the critical functions of the fmi for a period of time. this is similar to the framework that is already in place for banks and that is the responsibility of apra. for a more detailed update on the progress of reforms, < http : / / www. rba. gov. au / speeches / 2015 / sp - ag - 2015 – 10 – 22. html >. see edey ( 2015 ), available at bis central bankers ’ speeches developing these arrangements for fmis is a significant task. changes in legislation are required and the rba is developing detailed strategies and operational arrangements. these efforts are drawing on international work on resolution strategies led by the financial stability board, as well as similar work that has been undertaken for banks. the second, and related, priority relates to the growing threat to fmis from cyber attacks. by their very nature, these entities are heavily dependent on technology and connections to external parties, and this dependency has increased over recent years. at the same time, the nature of cyber

, the rba released an issues paper inviting submissions on a broad range of topics in this area. a number of these were also discussed in the financial system inquiry ( fsi ). the topic that has attracted most attention is the concerns about excess surcharging on credit cards. in its response to the fsi, the government indicated that it will ban excessive surcharging and give the accc enforcement powers. an important element here is to define what exactly constitutes ‘ excessive surcharging ’. this is an issue the rba will be working on over the months ahead. we will also be working closely with treasury and with the accc as the necessary legislation is developed. bis central bankers ’ speeches another relevant topic is the appropriate level of the interchange benchmarks in the card systems and the compliance arrangements around those benchmarks. we are continuing to consult on whether it is in the public interest for these benchmarks to be lowered. in terms of compliance, perhaps not surprisingly, the schemes have become increasingly adroit at maximising interchange fees while still complying with the benchmarks. we have seen interchange pricing become increasingly complex, with significant price discrimination between merchants. we have also seen the schemes introduce and promote new high - interchange, high - reward cards, with merchants typically having little, or no, visibility over the interchange fees that apply when a specific card is presented. how best to deal with these developments – including whether the compliance arrangements can be simplified and whether transparency of the system can be further improved – is an important ongoing element of our work. clearing and settlement facilities the third area of our regulatory responsibilities that i want to touch on is the one area where the rba still effectively acts as a prudential supervisor ; that is for central counterparties and securities settlement facilities – two types of so - called financial market infrastructures ( fmis ). since the financial crisis, the prudential regulation of these entities has taken on added focus, both in australia and elsewhere. this reflects the critical role that these entities play in the smooth functioning of the financial system, with this role increasing following the agreement by the g20 nations to clear all standardised otc derivative through central counterparties. while, globally, the transition to central counterparties has been slower than was originally agreed, significant progress has been made. in australia, the majority of new trades in standardised interest - rate derivatives is now centrally cleared. this shift has been supported by recently introduced regulations that provide for