(1) For section 1368 of the Act, the following provisions of Chapter 7 of the Act do not have effect in relation to the following transactions by participants in the facility operated CLS Bank International:
(a) section 794E--settlement of non-cash payments between participants;
(b) Part 7.3--settlement of non-cash payments between participants in relation to the provision or transfer of a financial product mentioned in paragraph 764A(1)(a), (b), (ba), (c), (j) or (k) of the Act.
(2) Subregulation (1) is subject to the conditions set out in this regulation.
(3) CLS Bank International must:
(a) operate under section 25A of the Federal Reserve Act of the United States of America; and
(b) be regulated as a bank by the Board of Governors of the Federal Reserve System of the United States of America.
(4) An Australian entity that is a participant in the facility operated by CLS Bank International:
(a) must be regulated by APRA; and
(b) must not use the services of CLS Bank International as a retail client within the meaning of section 761G of the Act.
(5) CLS Bank International must tell the Reserve Bank of Australia in writing as soon as practicable after any of the following circumstances happen:
(a) CLS Bank International receives a request for an Australian entity to become a participant in the facility it operates;
(b) CLS Bank International proposes approving an additional Australian entity or Australian resident as a shareholder;
(c) CLS Bank International notifies the Board of Governors of the Federal Reserve System of the United States of America of a proposed change in the character or nature of the facility or a significant change in its operations;
(d) material regulatory action is taken against CLS Bank International in any other jurisdiction.
(6) In this regulation:
Australian entity includes:
(a) an Australian bank; or
(b) a financial services licensee within the meaning of section 761A of the Corporations Act 2001 .
material regulatory action , for the facility operated by CLS Bank International, means:
(a) any action by the Board of Governors of the Federal Reserve System of the United States of America that requires CLS Bank International to cease, suspend or vary its operations or to take any other action in the nature of a sanction or corrective action in relation to either the operation of the facility or CLS Bank International; or
(b) regulatory action that is likely to affect Australian participants in the facility or any Australian operations of CLS Bank International.
participant , for the facility operated by CLS Bank International, means a person who, under the facility's operating rules, is allowed to participate directly in the facility, with or without the authority of another participant.