2010/11 Assessment of Clearing and Settlement Facilities in Australia 5.4 Austraclear


Austraclear operates a securities settlement facility for debt securities trades, including government bonds and repos.

Austraclear operates within a sound legal framework, based on its Regulations and Procedures. Under section 822B of the Corporations Act, these have effect as a contract under seal between Austraclear and each of its participants, as well as between participants. Among other things, the rules set out the rights and obligations of Austraclear and each of its participants, including in the event of default or suspension. The finality of settlements undertaken by Austraclear is reinforced by its approval as a RTGS system under Part 2 of the Payment Systems and Netting Act. This approval protects the finality of payments made through Austraclear should a participant enter external administration.

Austraclear addresses settlement risk by the use of a Model 1 DVP mechanism, involving settlement of individual transactions on a gross basis. The interbank cash leg is paid through the Reserve Bank's RTGS system, RITS, with simultaneous transfer of securities title in Austraclear.

Operational Risk Management

EXIGO is the core system used by Austraclear. Since mid 2008, Austraclear has been responsible for first- and second-level operational support of EXIGO. This includes business continuity arrangements, and computer-system support not involving changes to system components or underlying source code. Previously, this support was provided by NASDAQ OMX, which continues to provide third-level and software support. During the previous assessment period, a new agreement was finalised to extend this support beyond 2013.

The EXIGO system was available 100 per cent of the time in 2010/11, above the 99.9 per cent target stipulated in Austraclear's ‘Step-in and Service Agreement’ with the Reserve Bank. Average capacity utilisation of 22 per cent was within its normal range, and peak capacity utilisation was 36 per cent. After capacity utilisation peaked above 50 per cent of total capacity in the previous assessment period, ASX will increase EXIGO's capacity as part of the system development discussed below.

There were two minor operational incidents involving EXIGO during the assessment period. The first was caused by excessive memory usage in load-balancing hardware due to an accumulation of uncleared messages, and resulted in unsuccessful logins for a small number of users for about half an hour. After a similar incident occurred in early 2007, ASX increased the frequency of reboots to every two months; a reboot was scheduled to be conducted shortly after the recent incident. ASX now checks the memory usage daily, and will implement a permanent solution with the upcoming Austraclear system upgrades (discussed below). The second incident, related to an issue with the core switch, resulted in some unsuccessful logins in the early morning (this incident corresponded to the CHESS incident discussed in Section 5.3). The issue was found to be a hardware problem which has now been resolved.

ASX responded to the incidents described above quickly and effectively in order to minimise disruption to Austraclear settlement activity.

System Development

During the year ASX continued work on the Austraclear System Enhancement project, which will deliver the largest set of functional improvements to Austraclear users since the system's introduction in 2006.

The project has been split into two parts: part 1 primarily covers user enhancements, while part 2 is focused on internal operational enhancements. The improvements to user functionality are based on feedback received by ASX via the Austraclear Help Desk, industry working groups and other stakeholders. They cover trade management, trade input, corporate action reporting, market repo trade enhancements and straight-through processing. Testing for part 1 of the project was conducted in quarter 2 2011, with implementation scheduled for later in the year.


It is the Reserve Bank's assessment that Austraclear complied with the Financial Stability Standard for Securities Settlement Facilities during the assessment period. There were a small number of minor operational incidents, but the Reserve Bank is satisfied with both ASX's immediate responses to the situations, as well as the follow-up action to prevent reoccurrence.