2012/13 Assessment of ASX Clearing and Settlement Facilities Appendix B: Detailed Assessment of Clearing and Settlement Facilities against the Financial Stability Standards


This Appendix sets out the Reserve Bank's assessment of how well ASX Clear Pty Limited (ASX Clear) and ASX Clear (Futures) Pty Limited (ASX Clear (Futures)) have complied with the Financial Stability Standards for Central Counterparties (CCP Standards), and how well ASX Settlement Pty Limited (ASX Settlement) and Austraclear Limited (Austraclear) have complied with the Financial Stability Standards for Securities Settlement Facilities (SSF Standards) during the year to 30 June 2013 (the 2012/13 Assessment period).[1] In setting out its assessment, the Bank has applied the rating system used in the Committee on Payment and Settlement Systems' (CPSS) and the Technical Committee of the International Organization of Securities Commissions' (IOSCO) Principles for Financial Market Infrastructures: Disclosure Framework and Assessment Methodology.[2] Under this framework, the Bank has assessed each of the ASX CS facilities' observance of the requirements of each of the applicable CCP Standards or SSF Standards (together the FSS) as being:

  • Observed – Any identified gaps and shortcomings are not issues of concern and are minor, manageable and of a nature that the facility could consider taking them up in the normal course of its business.
  • Broadly observed – The assessment has identified one or more issues of concern that the facility should address and follow up on in a defined timeline.
  • Partly observed – The assessment has identified one or more issues of concern that could become serious if not addressed promptly. The facility should accord a high priority to addressing these issues.
  • Not observed – The assessment has identified one or more serious issues of concern that warrant immediate action. Therefore, the facility should accord the highest priority to addressing these issues.
  • Not applicable – The standard does not apply to the type of facility being assessed because of the particular legal, institutional, structural or other characteristics of the facility.

Section 821A(aa) of the Corporations Act requires that a CS facility licensee, to the extent reasonably practicable to do so, comply with the FSS and do all other things necessary to reduce systemic risk. In assessing how well a CS facility complies with a CCP or SSF standard, the Bank has assessed how well the facility complies with the headline standard and each of the ‘sub’-standards listed under the headline standard. A single overall rating is applied to each CCP or SSF Standard, reflecting this assessment.

Where a facility has been assessed to observe a CCP or SSF Standard, the Bank nevertheless expects ASX to work towards continual strengthening of its observance of the standard. ASX recognises this and has governance arrangements in place to motivate and encourage continuous improvement. This Appendix includes some recommendations encouraging such improvement in some specific areas. These are not exhaustive, and ASX is encouraged to continue to seek further improvements to its observance of the FSS over the coming Assessment period. This is in accordance with the general obligation on CS facilities to do all things necessary to reduce systemic risk.

Where a facility has been assessed to broadly observe a CCP or SSF Standard, the Bank will have sought evidence that a plan is in place to address the identified issue of concern within a clear, defined and reasonable timeframe, and that it would not be reasonably practicable for the facility to take such actions immediately in order to fully observe the standard. This Appendix includes recommendations that identify the steps required by ASX to address the relevant issues of concern and fully observe the applicable CCP or SSF Standard.

The Bank's ratings of each of the CS facilities against relevant FSS are supplemented by detailed information under each sub-standard that is relevant to the Bank's assessment. The Bank gathered this information through its regular liaison with ASX staff, the supply of regular data and reports by ASX, and a series of specific information requests and meetings with ASX during and immediately following the Assessment period to gather information relevant to assessing compliance with the new FSS. Arrangements for regular liaison and the supply of data and reports by ASX are described in further detail under the detailed assessments of CCP Standard 21 and SSF Standard 19.

ASX Group Structure

All four CS facilities are part of the ASX Group (ASX). In the ASX corporate structure, the two central counterparties (CCPs) – ASX Clear and ASX Clear (Futures) – are subsidiaries of ASX Clearing Corporation Limited (ASXCC), while the two securities settlement facilities (SSFs) – ASX Settlement and Austraclear – are subsidiaries of ASX Settlement Corporation Limited (Figure 1). ASXCC and ASX Settlement Corporation Limited are in turn subsidiaries of the ASX Group's parent entity, ASX Limited. ASX Limited is the licensed operator of the ASX market, while another subsidiary, Australian Securities Exchange Limited, is the licensed operator of the ASX 24 market. The ASX market provides a trading platform for ASX listed securities and equity derivatives, while ASX 24 is an exchange for futures products. ASX Clear and ASX Settlement provide clearing and settlement services for the ASX market, and ASX Clear (Futures) provides clearing services for the ASX 24 market.

ASX Limited is a listed company. The ASX Limited Board is responsible for overseeing the processes for identifying significant risks to ASX and ensuring that appropriate policies as well as adequate control, monitoring and reporting mechanisms are in place. In addition, ASX Limited's Board assigns certain responsibilities to subsidiaries within the group, including the boards of the four CS facilities (the CS Boards). The CS Boards are responsible for managing the particular clearing and settlement risks faced by each respective CS facility, including through compliance with the FSS. The CS Boards all have the same directors, and are subject to common governance arrangements with high-level objectives set out in the CS Boards' Charter.

ASX Clearing Corporation Limited (ASXCC) is a wholly owned subsidiary of ASX Limited. ASXCC is the holding company for and manages the financial resources of the two CCPs. It invests the assets of the two CCPs and their participants according to a treasury investment policy and investment mandate approved by the CS Boards.

The CS facilities rely in the delivery of their services on group-wide operational and compliance resources that reside in ASX Operations Pty Limited, which is a wholly owned subsidiary of ASX Limited.

  • ASX Operations Pty Limited (ASX Operations) provides most operational resources required by the CS facilities, including services to enable ASX Compliance to perform its services.
  • ASX Compliance Pty Limited (ASX Compliance) provides compliance services to the licensed entities of the ASX Group, including monitoring and enforcing participants' compliance with the Operating Rules of the CS facilities.

ASX has adopted a group-wide organisational structure to manage the business operations of its various entities, including the CS facilities. Its business units are organised into nine main areas:

  • Office of the Chief Executive Officer (CEO)
  • Risk
  • Operations
  • Technology
  • Business Development
  • ASX Compliance
  • Corporate Affairs and Government Relations
  • General Counsel and Company Secretariat
  • Chief Financial Officer (CFO) Office
  • People and Development.

Risk contains a number of business units that play key roles in the management of risks faced by the CS facilities:

  • Clearing Risk Policy – develops and maintains policies and standards related to CCP risk management.
  • Clearing Risk Management – implements CCP risk management policies and standards, and maintains effective procedures for carrying out those policies and standards.
  • Enterprise Risk – responsible for enterprise-wide risk management, including general business risk.
  • Portfolio Risk Management – responsible for managing investment and liquidity risks associated with ASXCC's investment portfolio.
  • Internal Audit – conducts risk-based reviews of internal controls and procedures across ASX. Internal Audit reports to the Chief Risk Officer for administrative purposes only.

ASX's clearing risk policy framework also sets out roles for a number of internal committees that bring together decision makers and experts from business units across the group:

  • Clearing Risk Policy Committee (CRPC) – reviews policies and standards prior to CS Board submission.
  • Capital and Liquidity Committee (CALCO) – advises on changes to clearing risk policies and standards related to capital, liquidity and balance sheet management.
  • CCP Risk, Operations and Compliance Committee (CROCC) – discusses and shares information across relevant operational, compliance and risk management business units.
  • Enterprise Risk Management Committee (ERMC) – reviews and approves enterprise risk management policy and related reporting prior to Board submission.
  • Risk Quantification Group (RQG) – responsible for quantitative risk management matters.
  • Default Management Committee (DMC) – coordinates ASX's response to a clearing participant default, and conducts the review and testing of the CCPs' default management approach.


The full text of the detailed assessments of each of these CS facilities is available at <https://www.rba.gov.au/payments-and-infrastructure/financial-market-infrastructure/clearing-and-settlement-facilities/assessments/2012-2013/>. [1]

Available at <http://www.bis.org/publ/cpss106.htm>. [2]