2015/16 Assessment of ASX Clearing and Settlement Facilities A2.2 Austraclear Standard 18: Disclosure of rules, key policies and procedures, and market data
A securities settlement facility should have clear and comprehensive rules, policies and procedures and should provide sufficient information and data to enable participants to have an accurate understanding of the risks they incur by participating in the securities settlement facility. All relevant rules and key policies and procedures should be publicly disclosed.
Austraclear fully discloses its Regulations and Procedures to participants, and publicly discloses its rules and a range of additional relevant information subject to disclosure requirements on its public website (SSF Standard 18.1). This includes information regarding the general descriptions of system design and the roles and obligations of Austraclear and its participants (SSF Standard 18.2). Austraclear provides new participants with comprehensive documentation, and verifies their understanding of their responsibilities as participants. Existing participants are also provided with education on their obligations where required (SSF Standard 18.3). ASX has updated its published response to the CPMI-IOSCO Disclosure Framework and plans to periodically review and enhance this document where appropriate (SSF Standard 18.4).
The Bank will continue to monitor steps by Austraclear to refine and enhance its disclosure.
Austraclear's disclosure of rules, key policies and procedures, and market data is described in further detail under the following sub-standards.
18.1 A securities settlement facility should adopt clear and comprehensive rules, policies and procedures that are fully disclosed to participants. Relevant rules and key policies and procedures should also be publicly disclosed (including specific requirements relating to SSF Standards 1.4, 2.2, 11.3, 13.4, 15.2 and 15.3).
Austraclear's Regulations and Procedures form the basis of all material aspects of the SSF's service to participants. The Regulations and Procedures, together with associated Guidance Notes, are disclosed on the ASX public website.[14] The Regulations and Procedures are also posted on the Customer Portal, ASX's participant website. During the Assessment period, ASX enhanced the design and functionality of its participant website to better support the dissemination of non-public information to participants.
To assist participants in their understanding of the risks of participating in Austraclear, and for the information of other interested stakeholders, ASX publishes a range of additional material on its public website; this includes information required to be disclosed under the FSS. Information specific to Austraclear includes information about participant requirements, SWIFT message protocols, trade and settlement monitoring systems, known software release issues and change requests, and business continuity arrangements. More general information includes: the ASX Group's regulatory framework; requirements of the FSS; requirements of the Corporations Act for provision of services in a ‘fair and effective’ way; the ASX Group's other obligations under the Corporations Act; and ASX Group's observance of the Principles.
Specific disclosure requirements are dealt with under SSF Standards 1.4, 2.2, 11.3, 13.4, 15.2 and 15.3.
18.2 A securities settlement facility should disclose clear descriptions of the system's design and operations, as well as the securities settlement facility's and participants' rights and obligations, so that participants can assess the risks they would incur by participating in the securities settlement facility (see SSF Standards 2.8 and 8.5).
General descriptions of Austraclear's system design and operations are available on the ASX public website, including as part of ASX's response to the CPMI-IOSCO Disclosure Framework (see SSF Standard 18.4). The Disclosure Framework document describes the ASX group structure, provides a general description of the CS facilities and their roles, system design and operations, outlines the legal and regulatory framework for clearing and settlement, and provides a description of steps taken by ASX to ensure compliance with the Principles and the corresponding FSS. The ASX public website also provides high-level additional information on system design and operations.
The rights and obligations of Austraclear and its participants are defined in the Austraclear Regulations and Procedures, which are published on the ASX public website and the Customer Portal. These documents are supplemented with explanatory material to support participants' understanding of the risks they face by participating in the system. There is a clear process for changing Austraclear's Regulations and Procedures, with changes notified to participants via the ASX website (see SSF Standard 1.3).
18.3 A securities settlement facility should provide all necessary and appropriate documentation and training to facilitate participants' understanding of the securities settlement facility's rules, policies and procedures and the risks they face from participating in the securities settlement facility.
All applicants for participation in Austraclear are provided with a comprehensive application pack, which includes information regarding key requirements of the facilities. Applicants have access to the Regulations, Procedures and Guidance Notes via the ASX website, as well as other publicly available information about the facilities, services and participation requirements. When Austraclear has completed an initial assessment of an application, the applicant is also invited to attend formal ‘on boarding’ meetings with the Compliance and Operations departments to discuss key areas of importance for participants.
As part of the formal admission process, the applicant is required to certify that it has resources and processes in place to comply with its obligations under the applicable Operating Rules and Procedures (see SSF Standard 15.2). This is reviewed and discussed with the applicant prior to approving admission. When reviewing the submissions, ASX will make enquiries of participants about their risk assessments, the design of the controls to mitigate those risks, and details of participants' arrangements to ensure compliance with the Operating Rules and Procedures.
Where ASX becomes aware or suspects that a participant lacks a satisfactory understanding of the Regulations and Procedures, or the risks of participation, ASX will generally work collaboratively with the participant to educate them on their obligations. ASX may become aware of issues through its routine risk monitoring activities or through its regular discussions with participants (see SSF Standard 14.5). An example of a matter that might raise concerns would be if a participant had a high frequency of technical connectivity issues. If the matter was serious, ASX may require that the participant remediate the weakness. ASX may also impose conditions on participation, or require that the participant appoint an independent expert to assist with the remediation task.
18.4 A securities settlement facility should complete regularly and disclose publicly responses to the CPSS-IOSCO Disclosure Framework for Financial Market Infrastructures.[15] A securities settlement facility also should, at a minimum, disclose basic risk and activity data, as directed by the Reserve Bank from time to time.
ASX has published its response to the CPMI-IOSCO Disclosure Framework, including information describing how its CS facilities observe the applicable Principles.[16] This document was revised during the Assessment period, in part to reflect the introduction of ASX's enhanced recovery arrangements. ASX plans to continue updating this document periodically (at least annually) and to further enhance its disclosure as necessary from time to time.
ASX reports publicly basic risk and activity data for the CS facilities via a monthly activity report. The Bank will continue to monitor steps by Austraclear to refine and enhance its disclosure.