At its August 2025 meeting, the Payments System Board addressed several key issues affecting Australia’s financial market infrastructure and payments system.
The Board reviewed the regulatory response to the CHESS batch failure incident that occurred in December 2024. It examined ASX’s plans to ensure the current CHESS system is properly operated, maintained, and supported as critical financial market infrastructure. The Board noted some early progress but expressed ongoing concerns. Additional regulatory steps were agreed upon to ensure that the planned CHESS Replacement project incorporates sufficient resilience for this essential infrastructure.
Members also considered the annual assessment of ASX clearing and settlement facilities against Financial Stability Standards. The Board endorsed the Reserve Bank of Australia’s (RBA) assessment, which will be published after being provided to ASX, the Treasurer, and the Australian Securities and Investments Commission (ASIC). Members observed limited progress by ASX in addressing fundamental concerns about operational resilience and risk management over the past year. The response to last year’s CHESS batch failure highlighted a need for urgent improvements in governance and risk culture at ASX. The Board emphasized that delivering on current risk management, technology, and transformation initiatives is vital for maintaining services critical to Australia’s financial stability.
Oversight of international financial market infrastructures was another topic discussed. This included entities such as LCH SwapClear, CME, Clearstream Banking, Euroclear Bank, CLS, and Swift. Many are undergoing extensive modernization programs aimed at improving system resilience. The Board stressed the importance of strong project governance, testing procedures, and migration strategies for these efforts. Risks related to reliance on a small number of third-party service providers were also discussed. ASIC’s decision to grant Clearstream Banking a clearing and settlement facility licence was welcomed by members who underscored the necessity for RBA and ASIC to have adequate oversight of such facilities operating within Australia.
The resilience of Australia’s payments system was highlighted as increasingly important given a more complex environment for operational risk. The Board called for greater focus by regulators and industry participants on system-wide interdependencies. It endorsed continued research into interoperability challenges, risks from third-party providers and concentration issues, arrangements supporting high-value payment resilience, and vulnerabilities arising from utility outages.
Cash distribution arrangements were also considered due to ongoing challenges in ensuring access across all regions of Australia. Members recognized cash remains an important payment method—especially as a backup during electronic payment disruptions—and supports inclusion in rural communities. A new proposed regulatory framework for cash distribution service providers has been under consultation by both CFR and ACCC; it aims to address risks tied to continuity of cash services nationwide.
The Board received an update on stakeholder responses regarding merchant card payment costs and surcharging following publication of a Consultation Paper in July 2025. Feedback indicated potential impacts on competition among small issuers and fintechs if proposed regulations proceed unchanged. Preliminary discussions were held about possibly reducing regulatory burdens on smaller entities; further consideration will occur as part of ongoing consultations.
Finally, global developments in stablecoins were reviewed amid rapid growth in this market segment—primarily dominated by US dollar stablecoins—and expanding use cases including payments and cross-border transactions. While domestic adoption remains low so far, members discussed possible implications should usage increase significantly within Australia. They welcomed government reforms designed to strengthen regulation around stored-value facilities such as stablecoins through robust licensing requirements.
"TheBoard reviewed ASXs plans to ensure the current CHESS is adequately operated, maintained andsupported as a critical financial market infrastructure. Members noted that early progress is beingmade and agreed that significant concerns remain."
"The Board also agreed on further regulatory steps to ensure CHESSReplacement is designed with an appropriate level of resilience for critical financial marketinfrastructure."
"Members observed that ASX has made limited progress in addressing theRBAs fundamental concerns in relation to operational resilience and risk management over thepast year."
"ASXs response to the CHESS batch failure incident in December 2024 and its aftermathhas also demonstrated that ASX must take urgent steps to improve its governance and risk culture."
"Thesuccessful delivery of ASXs current risk management, technology and transformation initiativesis crucial to the continuity of services that are critical to the stability of the Australianfinancial system."
"Many of these infrastructuresare engaged in complex, multi-year transformation programs to modernise systems and enhanceresilience."
"Members emphasised the importance of strong project governance, testing and migrationstrategies to support the ongoing safety and resilience of critical infrastructure."
"Members alsodiscussed the risks associated with growing reliance by financial market infrastructures on a smallnumber of critical third-party service providers."
"The Board welcomed ASICs decision to grantClearstream Banking a clearing and settlement facility licence."
"Members highlighted the importance ofthe RBA and ASIC, as co-regulators of clearing and settlement facilities operating in Australia,having sufficient oversight of such facilities."
"The Board highlightedthe growing importance of operational resilience in the context of a more complex and challengingenvironment for operational risk in the payments system."
"Regulators and entities will need to increase theirfocus on system-wide interdependencies."
"The Board endorsed an ongoing research program examininginteroperability, third-party and concentration risks, resilience arrangements for high-valuepayments and the vulnerability of the payments system to utilities outages."
"There is an ongoing need for industry cooperation to work towards a moredurable future distribution system that supports the availability of cash in the community, including inrural and regional Australia."
"Cash remains an important means of payment for many Australians and canplay a valuable role as a back-up to electronic payments, as part of a resilient and inclusivepayments ecosystem."
"Members noted that a new proposed regulatory framework for providers of cashdistribution services...should contributeto the management of risks relating to...cash distribution services across Australia.”
“Membersnoted feedback regarding the potential impact of...proposed card payments regulations on...smallissuers...and fintechs...”
“Members held a preliminary discussionon whether there is a case to reduce...regulatory burden...on smallissuers..."
“The issue will be considered further aspart of...consultation process..."
“Members discussed recent sharp growth inthe global stablecoin market…noting…the market is largely concentrated…in US dollar stablecoins.”
“Members discussed expansion…for stablecoins…including…as means…of payment…and cross-border transactions.”
“They also considered emergingregulatory frameworks across jurisdictions.”
“…members discussed…potential domestic implications if…the use…were…to grow considerably.”
“The Board also welcomed…the Governments proposed reforms aimed atensuring that stored-value facilities,…stablecoins,…operate under strong regulatory…andlicencing regime.”