Appendix 4: Glossary, acronyms and abbreviations

Acronyms and abbreviations

ABA
Australian Bankers’ Association
ABAC
APEC Business Advisory Council
ACC
Australian Crime Commission
ACCC
Australian Competition and Consumer Commission
ACSC
Australian Cyber Security Centre
ADI
authorised deposit-taking institution
AFMA
Australian Financial Markets Association
AFSL
Australian Financial Services Licence
AGD
Attorney-General’s Department
AIFRS
Australian equivalents to International Financial Reporting Standards
ALRC
Australian Law Reform Commission
AML
anti-money laundering
AOFM
Australian Office of Financial Management
APEC
Asia-Pacific Economic Cooperation forum
APRA
Australian Prudential Regulation Authority
ASC
Australian Securities Commission
ASD
Australian Signals Directorate
ASEAN
Association of Southeast Asian Nations
ASIC
Australian Securities and Investments Commission
ASFA
Association of Superannuation Funds of Australia
ASX
ASX Limited or the exchange operated by ASX Limited
ATM
automated teller machine
ATO
Australian Taxation Office
AUSTRAC
Australian Transaction Reports and Analysis Centre
BCBS
Basel Committee on Banking Supervision
BIS
Bank for International Settlements
bps
basis points
CAMAC
Corporations and Markets Advisory Committee
CCPs
central counterparties
CCR
comprehensive credit reporting
CEPAR
Centre of Excellence in Population Ageing Research
CERT
Computer Emergency Response Team
CFR
Council of Financial Regulators
CGFS
Committee on the Global Financial System
CGS
Commonwealth Government Securities
CIFR
Centre for International Finance and Regulation
CIV
collective investment vehicle
CLF
committed liquidity facility
COAG
Council of Australian Governments
CPSS
Committee on Payment and Settlement Systems
CSEF
crowd-sourced equity funding
CUBS
Credit unions and building societies
CSS
Cyber Security Strategy
CSOB
Cyber Security Operations Board
CSOC
Cyber Security Operations Centre
DB
defined benefit
DC
defined contribution
DLA
deferred lifetime annuity
EFT
electronic funds transfer
EMV
Europay, Mastercard and Visa
ESMA
European Securities and Markets Authority
ETFs
exchange-traded funds
FATCA
Foreign Account Tax Compliance Act (US based legislation)
FCA
UK Financial Conduct Authority
FCS
Financial Claims Scheme
FIDO
Fast Identity Online alliance
FMI
financial market infrastructure
FOFA
Future of Financial Advice law reform
FOS
Financial Ombudsman Service
FSAC
Financial Sector Advisory Council
FSAP
Financial Sector Assessment Program
FSB
Financial Stability Board, formerly the Financial Stability Forum.
FSF
Financial Stability Forum (Now the Financial Stability Board)
FSG
Financial Services Guide
FS-ISAC
US-based Financial Services Information Sharing and Analysis Center
FSOC
Financial Stability Oversight Council
FSR
Financial Services Reform
G20
Group of Twenty Finance Ministers and Central Bank Governors from 20 major economies
GDP
gross domestic product
GFC
Global Financial Crisis
GLAC
Gone Concern Loss Absorbing Capacity
GSA
group self-annuitisation
GST
goods and services tax
HFT
high-frequency trading
HQLA
high-quality liquid assets
HVCS
High Value Clearing System operated by Australian Payments Clearing Association Limited.
IAIS
International Association of Insurance Supervisors
IASB
International Accounting Standards Board
IDPS
investor-direct portfolio services
IMF
International Monetary Fund
IMR
Investment Manager Regime
IOSCO
International Organisation of Securities Commissions
IRB
internal ratings-based
IWT
interest withholding tax
KYC
know your client
LCR
liquidity coverage ratio
LIBOR
London Interbank Offered Rate
LIF
life income fund
LMI
lenders mortgage insurance
LVR
loan-to-valuation ratio
MAMBO
Me and My Bank Online
MIS
managed investment scheme
MIT
managed investment trust
MLH
minimum liquidity holdings
MOU
memorandum of understanding
NCC
National Credit Code
NCCP Act
National Consumer Credit Protection Act 2009
NCPFs
non-cash payment facilities
NFC
near field communications
NISS
National Identity Security Strategy
NIST
US-based Department of Commerce’s National Institute of Standards and Technology
NPP
New Payments Platform or New Policy Proposal (depending on the context)
NSFR
net stable funding ratio
NTA
net tangible assets
OAIC
Office of the Australian Information Commissioner
OBPR
Office of Best Practice Regulation
OECD
Organisation for Economic Co-operation and Development
OTC
over-the-counter trading
P2P
peer-to-peer
PC
Productivity Commission
PDS
product disclosure statement
PI
professional indemnity
PPFs
purchased payment facilities
PSB
Payments System Board
RBA
Reserve Bank of Australia
RBNZ
Reserve Bank of New Zealand
RE
responsible entity
RITS
Reserve Bank Information and Transfer System
RMB
Reminbi, the official currency of the People’s Republic of China
RMBS
residential mortgage-backed securities
SAFs
small APRA funds
SCCI
specialist credit card institutions
SIS Regulations
Superannuation Industry (Supervision) Regulations 1994
SG
superannuation guarantee
SME
small and medium enterprises
SMSF
Self-managed superannuation fund
SOA
Statement of Advice
SOE
Statement of Expectations
SOI
Statement of Intent
UCCC
Uniform Consumer Credit Code
UCITS
European Undertakings for the Collective Investment of Transferable Securities
VCLP
Venture Capital Limited Partnership

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 Paper Clearing System (APCS)
operated by Australian Payments Clearing Association Limited.
Asia-Pacific Economic Cooperation forum (APEC)
APEC was established in 1989 and has become the primary regional vehicle for promoting open trade and practical economic cooperation. It has 21 member countries, including Australia.
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.
Austraclear
a separate legal entity within the ASX Group that solely provides settlement and related depositary services.
Australian Competition and Consumer Commission (ACCC)
a Commonwealth 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.
Australian Office of Financial Management (AOFM)
the agency responsible for the management of Australian Government debt and certain financial assets. It issues Treasury Bonds, Treasury Indexed Bonds and Treasury Notes, manages the Government’s cash balances and invests from time to time in high quality financial assets.
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.
BCBS
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.
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 which participate in BPAY, using account transfers initiated by phone or internet. The transfers may be from savings, cheque or credit card accounts.
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.
Committee on the Global Financial System (CGFS)
a committee of the BIS that seeks to support central banks in developing appropriate policy recommendations in relation to financial stability, intermediation and transparency.
Committed Liquidity Facility (CLF)
the CLF is part of Australia’s implementation of the Basel III liquidity reforms. It enables some ADIs to access a pre-specified amount of liquidity by entering into repurchase agreements with the RBA using securities deemed eligible by the RBA.
Commonwealth Government Securities (CGS)
debt obligations of the Australian Government evidenced by the issue of securities. The vast bulk of the CGS on issue is represented by Treasury Bonds and Treasury Indexed Bonds.
consumer price index (CPI)
a general measure of price inflation for the household sector compiled and published by the Australian Bureau of Statistics.
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.
eftpos
electronic funds transfer at point of sale. The eftpos system is a domestic debit card system managed by eftpos Payments Australia Limited.
equity market
a market where investors buy and sell securities providing ownership of a company’s shares.
exchange rates
the price of one currency expressed in terms of another currency. Any exchange rate can be quoted two ways, e.g. Australian dollars per US dollar (USD/AUD) or US dollars per Australian dollar (AUD/USD). The convention for the Australian dollar is that it is quoted as the foreign currency price of the Australian dollar.
exchange-traded funds (ETFs)
types of managed funds that can be bought and sold like shares and track the performance of a specified index or benchmark (such as the S&P/ASX 200 index), a currency or commodity, or other assets.
Financial Claims Scheme (FCS)
the Australian Government’s guarantee on retail deposits of up to $250,000 per depositor per ADI.
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 (FSF), 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 co-operation 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.
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.
Investor-direct portfolio services (IDPS)
for acquiring and holding investments that generally involves custody arrangements and consolidated reporting to investors. The service is typically marketed as a master fund or wrap account.
International Monetary Fund (IMF)
is an international organisation of 188 member countries that was established to promote international monetary co-operation, 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.
interest rate spreads
the difference between the average yield a financial institution receives from loans and other interest-accruing activities and the average rate it pays on deposits and borrowings an important determinant of profitability.
International Organisation of Securities Commissions (IOSCO)
an international organisation whose members co-operate to promote high standards of regulation in order to protect investors and ensure that markets are fair, efficient and transparent.
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.
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 coverage ratio (LCR)
the Basel III liquidity standard requires ADIs to hold a level of high-quality liquid assets, such as reserves with the central bank or government securities, sufficient in size to cover estimated net cash outflows in a severe liquidity stress.
liquidity management
activities within a financial institution to ensure that holdings of liquid assets (e.g. cash, bank deposits and other financial assets) are sufficient to meet its obligations as they fall due, including unexpected transactions.
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.
memorandum of understanding (MOU)
an agreement between two or more parties setting out responsibilities and obligations on matters of common interest. For example, MOUs exist between the Reserve Bank of Australia, Australian Prudential Regulation Authority and Australian Securities and Investments Commission.
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.
MySuper
low-cost, simple default superannuation accounts, established as part of the Stronger Superreforms announced in 2011.
Organisation for Economic Co-operation and Development (OECD)
regarded as representing industrial market countries. It seeks to encourage economic growth, high employment and financial stability among member countries 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.
Reserve Bank of Australia (RBA)
Australia’s central bank.
retirement phase (or decumulation phase)
the period after an individual has retired from the workforce and qualifies for, and may be in receipt of, superannuation benefits.
securitisation
asset securitisation is the process of converting a pool of illiquid assets, such as residential mortgages, into tradeable securities.
Self-managed superannuation fund (SMSF)
a superannuation fund with fewer than five members, all of whom are trustees (or directors of a corporate trustee).
small and medium-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.
Superstream
a Stronger Super reform to be implemented on a transitional basis starting from 1 July 2014. The reform is aimed at improving the efficiency of the superannuation system. Under SuperStream, employers must make super 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.