Appendix 5: Glossary, acronyms and abbreviations

Acronyms and abbreviations

ABA
Australian Bankers' Association
ABN
Australian Business Number
ABP
account-based pension
ACCC
Australian Competition and Consumer Commission
ACSC
Australian Cyber Security Centre
ACTU
Australian Council of Trade Unions
ADI
authorised deposit-taking institution
AFA
Association of Financial Advisers
AFMA
Australian Financial Markets Association
AFSA
Association of Superannuation Funds of Australia
AFSL
Australian Financial Services Licence
AFTS
Australia's Future Taxation System
AGD
Attorney-General's Department
AGIMO
Australian Government Information Management Office
AIST
Australian Institute of Superannuation Trustees
AML
anti-money laundering
ANAO
Australian National Audit Office
APCA
Australian Payments Clearing Association Limited
APRA
Australian Prudential Regulation Authority
ARCA
Australian Retail Credit Association
ASC
Australian Securities Commission
ASIC
Australian Securities and Investments Commission
ASFA
Association of Superannuation Funds of Australia
ASSOB
Australian Small Scale Offerings Board
ASX
ASX Limited or the exchange operated by ASX Limited
AT1
Additional Tier 1
ATM
automated teller machine
ATO
Australian Taxation Office
AUSTRAC
Australian Transaction Reports and Analysis Centre
AVCAL
Australian Private Equity and Venture Capital Association Limited
BCBS
Basel Committee on Banking Supervision
BIS
Bank for International Settlements
bps
basis points
CAMAC
Corporations and Markets Advisory Committee
CCP
central counterparty
CCR
comprehensive credit reporting
CEO
Chief Executive Officer
CET1
Common Equity Tier 1
CDFI
community development financial institution
CDI
CHESS depositary interest
CFR
Council of Financial Regulators
CIPR
comprehensive income product for retirement
CSEF
crowd-sourced equity funding
CSS
Cyber Security Strategy
CTF
counter-terrorism financing
D-SIB
domestic systemically important banks
DC
defined contribution
DHS
Department of Human Services
DLA
deferred lifetime annuity
DVS
document verification service
EFT
electronic funds transfer
ESMA
European Securities and Markets Authority
FATCA
Foreign Account Tax Compliance Act (US based legislation)
FCA
UK Financial Conduct Authority
FCA Act
Financial Corporations Act 1974
FCS
Financial Claims Scheme
FIDO
Fast Identity Online alliance
FINRA
Financial Industry Regulatory Authority
FIRB
Foreign Investment Review Board
FMI
financial market infrastructure
FOFA
Future of Financial Advice law reform
FSAC
Financial Sector Advisory Council
FSAP
Financial Sector Assessment Program
FSB
Financial Stability Board, formerly the Financial Stability Forum.
FSG
Financial Services Guide
FWC
Fair Work Commission
G-SIB
global systemically important bank
G20
Group of Twenty Finance Ministers and Central Bank Governors from 20 major economies
GDP
gross domestic product
GFC
global financial crisis
GSA
group self-annuitisation
GST
goods and services tax
HQLA
high-quality liquid assets
IADI
International Association of Deposit Insurers
IC
Innovation Collaboration
IMF
International Monetary Fund
IOSCO
International Organisation of Securities Commissions
IRB
internal ratings-based
IWT
interest withholding tax
KYC
know your client/customer
LEI
legal entity identifier
LEIROC
Legal Entity Identifier Regulatory Oversight Committee
LIBOR
London Interbank Offered Rate
LRBA
limited recourse borrowing arrangement
MIS
managed investment scheme
NGO
non-government organisation
NOHC
non-operating holding company
NPV
net present value
OBPR
Office of Best Practice Regulation
OECD
Organisation for Economic Co-operation and Development
OIX
Open Identity Exchange
OSC
Ontario Securities Commission
OTC
over-the-counter trading
P2P
peer to peer
PAYE
Pay As You Earn
PAYG
Pay As You Go
PC
Productivity Commission
PDS
product disclosure statement
PJCCFS
Parliamentary Joint Committee on Corporations and Financial Services
PPF
purchased payment facility
PSB
Payments System Board
R&D
research and development
RBA
Reserve Bank of Australia
RCAP
Regulatory Consistency Assessment Programme
RIS
Regulation Impact Statement
RMB
Reminbi, the official currency of the People's Republic of China
RMBS
residential mortgage-backed securities
ROE
return on equity
SG
superannuation guarantee
SIS Act
Superannuation Industry (Supervision) Act 1993
SIS Regulations
Superannuation Industry (Supervision) Regulations 1994
SME
small and medium-sized enterprises
SMSF
self-managed superannuation fund
SOA
Statement of Advice
SOE
Statement of Expectations
SOI
Statement of Intent
UCT
unfair contract term
UFI
Unauthorised Financial Insurer
VCLP
Venture Capital Limited Partnerships

Glossary

accumulation phase
the period of time over which an individual builds the value of their superannuation benefits before retirement.
account-based pension
an individual investment account set up with superannuation benefits from which a retiree draws a regular income.
annuity
an investment that pays a guaranteed regular income stream.
Australian Payments Clearing Association Limited (APCA)
a public company owned by banks, building societies and credit unions with specific accountability for key parts of the Australian payments system, particularly payments clearing operations.
Australian Prudential Regulation Authority (APRA)
the prudential regulator of the Australian financial services industry that oversees banks, credit unions, building societies, general insurance and reinsurance companies, life insurance companies, friendly societies, and most members of the superannuation industry.
Australian Securities and Investments Commission (ASIC)
the national regulator of corporate entities, with responsibility for market protection and consumer integrity issues across the financial system.
Australian Competition and Consumer Commission (ACCC)
a national statutory authority responsible for ensuring compliance with the Competition and Consumer Act 2010 (formerly the Trade Practices Act 1974) and the provisions of the Conduct Code. ACCC's consumer protection work complements that of State and Territory consumer affairs agencies.
Australian Financial Markets Association (AFMA)
an industry body representing about 200 organisations that participate in Australian over-the-counter wholesale financial markets such as those for foreign exchange, interest rate products, financial derivatives, repurchase agreements, commodities, equity and electricity derivatives.
Australia's Future Tax System (AFTS)
Australia's future tax system, Report to the Treasurer, December 2009, Australian Government, Canberra.
authorised deposit-taking institution (ADI)
an institution authorised by APRA to carry on banking business such as a bank, credit union or building society.
Basel I, II, III standards
the Basel Committee on Banking Supervision standards governing internationally active banks.
Basel Committee on Banking Supervision (BCBS)
provides a forum for regular cooperation on banking supervisory matters. Its objective is to enhance understanding of key supervisory issues and improve the quality of banking supervision worldwide.
Bitcoin
a type of digital currency.
BPAY
a payments clearing organisation owned by a group of retail banks. Individuals who hold accounts with a BPAY participating financial institution can pay billing organisations that participate in BPAY, using account transfers initiated by phone or internet. The transfers may be from savings, cheque or credit card accounts.
basis points (bps)
a basis point is 1/100th of 1 per cent or 0.01 per cent. The term is used in money and securities markets to define differences in interest or yield.
borrower
a person or entity that incurs a debt to a lender on agreed terms.
capital market
a market for medium to long-term financial instruments. Financial instruments traded in the capital market include shares, and bonds issued by the Australian Government, State governments, corporate borrowers and financial institutions.
CHESS depositary interest (CDI)
a financial product that is a unit of beneficial ownership in an underlying financial product quoted on the ASX.
Common Equity Tier 1 (CET1) capital
comprises 'tangible' equity such as shareholders' common equity.
Comprehensive Credit Reporting (CCR)
a change in credit reporting legislation introduced in March 2014. The change will mean lenders must report positive information about how well consumers meet their repayments, not just negative events, such as defaults.
Comprehensive product for retirement (CIPR)
a combination of products that is designed for retirement that, at a minimum, provides individuals with income, flexibility and risk management (particularly for longevity risk).
Consumers
'retail clients' as defined in the Corporations Act 2001.
Council of Financial Regulators (CFR)
the coordinating body for Australia's main financial regulatory agencies RBA, APRA, ASIC and Treasury. CFR's role is to contribute to the efficiency and effectiveness of financial regulation and to promote stability of the Australian financial system.
Cyber Security Strategy (CSS)
Australian Government's 2009 Cyber Security Strategy.
deferred lifetime annuity (DLA)
a form of lifetime annuity for which income payments are delayed for a set amount of time.
defined benefit (DB) superannuation
a superannuation scheme where contributions are pooled. Benefits are calculated using a predetermined formula, and depend on an individual's salary or wage and length of service.
defined contribution (DC) superannuation
a superannuation scheme where contributions are made, and investment earnings accrue, in an individual's account over their working life. Benefits in retirement are the balance of the account.
derivative
a financial contract whose value is based on, or derived from, another financial instrument (such as a bond or share) or a market index (such as the Share Price Index). Examples of derivatives include futures, forwards, swaps and options.
ePayments code
an update and replacement of the Electronic Funds Transfer Code of Conduct.
Financial Claims Scheme (FCS)
a guarantee on retail deposits of up to $250,000 per depositor per ADI.
Foreign Investment Review Board (FIRB)
a non-statutory body established in 1976 to advise the Treasurer and the Government on Australia's foreign investment policy and its administration.
financial markets
a generic term for markets in which financial instruments are traded. The four main financial markets trade in foreign exchange, fixed interest or bonds, shares or equities, and derivatives.
Financial Sector Assessment Program (FSAP)
a joint International Monetary Fund (IMF) and World Bank program, seeking to identify the strengths and vulnerabilities of countries' financial systems, and to determine how key sources of risks are being managed.
Financial Stability Board (FSB)
formerly the Financial Stability Forum. The FSB was formed in April 2009 as the re-establishment of the Financial Stability Forum, which had existed since 1999. The FSB has a mandate to assess the vulnerabilities affecting the financial system, identify and oversee action to address them, and promote cooperation and information sharing among authorities responsible for financial stability. Its membership comprises the G20 countries such as Australia.
financial market infrastructure (FMI)
the channels through which financial transactions are cleared, settled and recorded, including payments systems and trading platforms.
fiscal policy
Government spending and taxation policies that influence macroeconomic conditions.
Future of Financial Advice (FoFA)
regulatory reforms relating to financial advice that commenced in mid-2013. These reforms included the introduction of the 'best interests' duty and a ban on conflicted remuneration.
gross domestic product (GDP)
a measure of the value of economic production in the economy.
Group self-annuitisation (GSA)
in a GSA, participants contribute funds to a pool that is invested in financial assets. Regular payments from the pool are made to surviving members. GSAs allow pool members to share, but not completely eliminate, longevity risk and do not require capital to back guarantees.
Innovation Collaboration (IC)
a recommended public-private sector collaborative committee, to be chaired by Treasury to facilitate financial system innovation and enable timely and coordinated policy and regulatory responses.
insolvency
a situation where an entity has insufficient assets to cover the value of its liabilities, resulting in an inability to meet its financial obligations as they fall due.
International Monetary Fund (IMF)
an international organisation of 188 member countries that was established to promote international monetary cooperation, exchange stability, and orderly exchange arrangements; foster economic growth and high levels of employment; and provide temporary financial assistance to countries to help ease balance of payments adjustments.
internal ratings-based (IRB)
an approach allowed under the Basel II guidelines, where major banks use their own risk models to calculate risk weights for the purposes of regulatory capital requirements.
Know Your Client (KYC)
customer identity verification requirements applied under anti-money laundering legislation.
lender
a person or institution that provides loans on agreed terms to borrowers.
leverage
the amount of debt used to finance an asset. A firm with significantly more debt than equity is considered to be highly leveraged.
liquidity
the capacity to sell an asset quickly without significantly affecting the price of that asset. Liquidity is also sometimes used to refer to assets that are highly liquid.
liquidity management
activities within a financial institution to ensure that holdings of liquid assets (for example cash, bank deposits and other financial assets) are sufficient to meet its obligations as they fall.
longevity risk
the uncertainty about how long a particular person (or group of people) will live. For an individual, it is the risk of outliving their savings. For providers of guaranteed retirement income products, it is the risk recipients will live longer, and draw more benefits, than the provider has allowed for.
lump sum
an amount of a superannuation benefit paid to a fund member as a stand‐alone cash amount. Benefits can be paid as one or more lump sums.
monetary policy
the setting of an appropriate level of the cash rate target by the Reserve Bank of Australia to maintain the rate of inflation in Australia between 2 and 3 per cent per annum on average over the business cycle.
myGov
a secure single sign-on site that allows users to access a range of Australian Government services.
MySuper
low-cost, simple default superannuation products, established as part of the Stronger Super reforms announced in 2011.
Organisation for Economic Co-operation and Development (OECD)
a forum of industrial market countries that seeks to encourage economic growth, high employment and financial stability among its members and contribute to the economic development of less-advanced members and non-member countries.
Payments System Board (PSB)
created in 1998, within the Reserve Bank of Australia (RBA). The PSB is responsible for determining the RBA's payments system policy so as to best contribute to: controlling risk in the financial system; promoting the efficiency of the payments system; and promoting competition in the market for payment services, consistent with the overall stability of the financial system. Powers to carry out the PSB's policies are vested with the RBA.
platforms
administrative services made available by intermediaries for the holding, dealing and viewing of investments selected by individual investors. They provide the capability for investors to choose investment products and generally offer a range of tools to analyse investment portfolios.
Productivity Commission (PC)
The Productivity Commission is the Australian Government's independent research and advisory body on a range of economic, social and environmental issues affecting the welfare of Australians. Its role is to help governments make better policies in the long term interest of the Australian community.
Reserve Bank of Australia (RBA)
Australia's central bank.
retirement phase
the period after an individual has retired from the workforce and qualifies for, and may be in receipt of, superannuation benefits.
Self-managed superannuation fund (SMSF)
a superannuation fund with fewer than five members, all of whom are trustees or directors of a corporate trustee.
simple bonds
bonds with certain features including a face value of less than $1,000, a maturity of less than 15 years, and being issued by a listed entity or wholly-owned subsidiary of one.
small and medium-sized enterprise (SME)
there are a range of definitions for SMEs based on number of employees, turnover and other factors, but in essence the term relates to businesses that are not large businesses.
Stronger Super
the Stronger Super reforms were implemented in response to the Super System Review. Reforms include MySuper, SuperStream, strengthening governance and a number of measures relating to SMSFs.
SuperStream
a Stronger Super reform implemented on a transitional basis starting in 2013. The reform is aimed at improving the efficiency of the superannuation system. Under SuperStream, employers must make superannuation contributions on behalf of their employees by submitting data and payments electronically in accordance with the SuperStream standard. All superannuation funds, including SMSFs, must receive contributions electronically in accordance with this standard.