Assessment of ASX Clearing and Settlement Facilities 1. Summary of Regulatory Priorities

This section summarises actions taken by the ASX CS facilities during 2016/17 (the Assessment period) in relation to recommendations identified in the Bank's 2015/16 Assessment of ASX Clearing and Settlement Facilities (the September 2016 Assessment), and summarises the recommendations identified by the Bank in its September 2017 Assessment of the facilities against the FSS. Further detail is provided in Section 2, which describes the material developments in the ASX CS facilities relevant to the FSS, and Section 3, which provides the results of a detailed assessment conducted by the Bank of the ASX CCPs' margin arrangements against the CCP Standard on margin.

1.1 Progress against 2015/16 Recommendations

In the Bank's September 2016 Assessment, the ASX CS facilities were rated ‘observed’ for all FSS, except for the CCPs, which were rated ‘broadly observed’ for CCP Standard 15: Custody and investment risks. The September 2016 Assessment made a recommendation for steps to be taken by the CCPs in order for them to ‘observe’ Standard 15, as well as other recommendations in order for the ASX CS facilities to continue to observe various standards. Table 1 summarises actions taken by the ASX CS facilities in relation to these recommendations during the Assessment period.

The Bank's September 2016 Assessment also made recommendations that support continuous improvement of the ASX CS facilities risk management arrangements. In line with these recommendations, ASX has:

  • enhanced the documentation of its risk management framework, including updating its recovery plan
  • implemented processes to periodically test the CCPs' procedures for accessing their liquid resources
  • made significant enhancements to the CCPs' DMRF.

The Bank will follow up ASX's progress against the outstanding recommendations for continuous improvement through its ongoing supervision (for further details see Appendix A).

1.2 2017 Assessment and Regulatory Priorities

It is the Bank's assessment that, except for ASX Clear (Futures), the CS facilities ‘observed’ all relevant requirements under the FSS as at 30 June; ASX Clear (Futures) ‘observed’ or ‘broadly observed’ all relevant requirements in the FSS (Table 2).[2] The Bank therefore concludes that the facilities have conducted their affairs in a way that causes or promotes overall stability in the Australian financial system.[3] Compared to the September 2016 Assessment, the Bank has raised the ASX CCPs' rating to ‘observed’ for CCP Standard 15 since they have fully addressed the recommendation in this area. The Bank has lowered ASX Clear (Futures)' rating for CCP Standard 6: Margin to ‘broadly observed’, reflecting issues identified as part of the Bank's detailed assessment of this CCP's margin arrangements (see Section 3).

The Bank has made recommendations that the CS facilities should address to observe or continue to observe relevant requirements in the FSS. This includes recommendations for ASX Clear (Futures) to address the concern identified by the Bank in relation to its management of intraday exposures in the Night Session. These recommendations are set out in Table 3 and will be a key part of the Bank's regulatory priorities in the next assessment period.

With a view of streamlining the Assessment report, unlike last year, the Bank will not include specific recommendations to encourage continuous improvement in this report. There are nevertheless areas that the Bank has identified that will be an important part of its supervisory engagement with ASX in the next assessment period. These relate to developments in international standards and work ASX has underway to strengthen the facilities' risk management arrangements, and are summarised in Table 4.

In addition to the recommendations and supervisory focus, the Bank expects ASX to work towards continual strengthening of its risk management arrangements. This is in accordance with the general obligation on CS facilities to do all things necessary to reduce systemic risk. ASX recognises this and has governance arrangements in place to motivate and encourage continuous improvement. As part of its ongoing supervisory engagement, the Bank will continue to discuss with ASX areas where there may be opportunities for improvement.


In undertaking its Assessment, the Bank has applied the rating system used in the Principles for Financial Market Infrastructures: Disclosure Framework and Assessment Methodology produced by CPMI and IOSCO in December 2012. See Appendix C for more detail on this system. [2]

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. [3]