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.