Assessment of ASX Clearing and Settlement Facilities Appendix A: Summary of Progress 2021/22

The tables below summarise actions taken by the ASX CS facilities during the 12 months to June 2022 (the assessment period) to address recommendations identified in the Bank's 2021 Assessment of ASX Clearing and Settlement Facilities, as well as outstanding recommendations from previous years. Table 6 sets out the current status and progress for recommendations yet to be fully addressed. Table 7 provides a summary progress for recommendation that ASX fully addressed over the year to June 2022.

Table 6: Recommendations Open at 30 June 2022
Current Status and Progress
Reference* Recommendation Standard Facility Progress
2021-1 Governance. The objectives, strategies and goals for each CS facility should be documented and communicated within the ASX group. The objectives should explicitly place a high priority on the safety of the facility and explicitly support the stability of the financial system and other relevant public interest considerations. This should include a statement as to how “financial stability” can be practically understood by decision-makers within the CS facilities. It should also set out the strategies that have been adopted to safeguard system stability. CS Board processes should include a system for monitoring progress against the strategy and objectives. CCP/SSF 2 All Drafting of the CS facility strategy document has commenced.
2021-3 Governance. As soon as practicable in the circumstances of the current transition to ASX's new operating model, ASX should document governance arrangements that set out clear and direct lines of responsibility and accountability for each of the CS facilities' businesses as required by CCP Standard 2.2/SSF Standard 2.2. This can be done by way of an accountability map that contains the names of staff with senior executive responsibility for all or part of each CS facility's operations. The accountability map could contain details of the reporting lines and lines of responsibility for those senior executives. Such a map would demonstrate the lines of reporting from those senior executives through to a board or board committee within the ASX Group and specify the relevant board or board committee. CCP/SSF 2 All

The ASX Board approved an Accountability Map, which was shared with the Bank in May. A revised version of the document was provided in August following further discussion with the Bank.

See section 2.1.2.


Governance. ASX should clearly specify the roles and responsibilities of directors and of the senior executives referred to in Governance Recommendation 3. This can be done by creating, for each such person, an accountability statement containing details of:

  1. the part of the CS facility's business for which that person has senior executive responsibility; and
  2. the responsibilities of that person.

The accountability statement for the CEO and Managing Director should document his or her responsibility for ensuring that the CS Lead Executive has access to sufficient resources for the operation of the CS facility.


The ASX Board approved a set of Accountability Statements, which were shared with the Bank in May. The Bank considers that further work is required to ensure these documents provide a clear and comprehensive view of accountabilities.

See section 2.1.2.

2021-15 Governance. The ASX boards should continue their emphasis on stakeholder management, potentially through the creation of a stakeholder committee. This should also include more regular meetings with key stakeholders. CCP/SSF 2 All

The ASX Limited Board has reviewed the need for a stakeholder committee but concluded its functions could be adequately covered under existing forums.

ASX completed a stakeholder mapping process. The process of stakeholder review resulted in a number of new or enhanced initiatives to improve stakeholder engagement.

Further actions are planned for the next assessment period:

  • the ERMF will be updated to incorporate a greater focus on stakeholder management
  • ASX is assessing the need for enhanced representation in the Austraclear user group
  • a revised CHESS replacement engagement plan is being developed
  • ASX is designing new stakeholder metrics to align with KRIs and improve understanding and reporting of stakeholder sentiment.

ASX has developed a Stakeholder Charter. This information was published on the ASX website in August.

2021-16 Governance. The CS facilities should publish a Stakeholder Management Charter, which identifies groups of stakeholders and articulates the ASX's approach to engaging with each group of stakeholders. CCP/SSF 2 All ASX published a Stakeholder Charter in August 2022.
2021-17 Governance. The CS boards should require the CS Lead Executive/s to complete an annual self-assessment of compliance with the FSS. CCP/SSF 2 All

ASX has agreed to complete a self-assessment by end-2022.

See section 2.1.3.


CCP Resilience Guidelines. To align financial risk management practices and governance arrangements with the CCP Resilience Guidance, the ASX CCPs should continue to implement plans to:

  1. enhance the comprehensiveness of stress testing to ensure risks are appropriately identified, captured and stressed
  2. enhance analysis and justification of assumptions used in stress testing models so that risks are adequately captured
  3. remove the assumption made by ASX Clear that excess collateral will not be withdrawn or decreased during periods of stress to more accurately reflect the extreme but plausible conditions appropriate for stress testing
  4. ensure that roles and processes in relation to the governance of financial risk management are appropriately formalised and documented in order to ensure that the CS Boards have sufficient information to effectively oversee the CCPs
  5. ensure that their arrangements for disclosure to, and soliciting feedback from, stakeholders cover all relevant aspects of the CCPs' risk management frameworks, including margin sensitivity analysis, reverse stress testing and management of procyclicality.
CCP 2, 4, 7 Both CCPs

The ASX CCPs are implementing a multi-year work program to address this recommendation. During the assessment period:

  1. ASX Clear and ASX Clear (Futures) progressed work to establish enhanced stress-test scenario methodologies, and expect to implement a range of new scenarios during the next assessment period.
  2. ASX Clear set concentration limits to cap the amount of individual equities that can be posted as collateral.
  3. ASX Clear has completed work on the approach to remove excess collateral from its stress-testing methodology, but this is yet to be implemented.
  4. ASX continued to formalise and document roles and processes in relation to the governance of risk management (see section 3.7.1).
  5. ASX commenced work to enhance its CCP Reporting and Disclosures Policy which it expects will be completed in the next assessment period (see section 3.9.4).
2021-18 Framework for the comprehensive management of risks ASX should establish a process to periodically conduct systematic assessments of the range of potential risks other entities may pose to its CS facilities and the risks ASX CS facilities could potentially pose to other entities. CCP/SSF 3 All Work is underway to develop and implement a systematic assessment process; this is scheduled to be delivered in December.
2020-1 Procyclicality. Consistent with the CCP Resilience Guidance, the ASX CCPs should develop a systematic procyclicality framework designed to avoid destabilising increases in margin and other financial risk requirements during periods of heightened market volatility. This framework should include an appropriate methodology for measuring the degree of procyclicality in the CCPs' risk models. CCP 5, 6 Both CCPs

During the assessment period, the ASX CCPs completed the introduction of margin floors for all products margined using SPAN. ASX Clear will consider developing similar floor methodologies for cash market products as part of the ongoing margin model review. ASX will work to develop an appropriate methodology for measuring the degree of procyclicality in its risk models.

See section 3.4.

2020-2 Late-in-day price movements. The ASX CCPs should put in place arrangements that allow them to monitor and manage exposures arising from large late-in-day price movements, including movements that exceed the coverage provided by initial and additional margin. For ASX Clear (Futures), this also applies to price movements during the overnight trading session. CCP 6 Both CCPs

During the assessment period, ASX Clear (Futures) implemented a process for the collection of overnight variation margin. However, both CCPs will need to make further progress in implementing arrangements to monitor and manage exposures arising from late-in-day price movements.

See section 3.5.3.

2017-1 Liquidity add-ons. ASX Clear should complete its review of add-ons to manage liquidity risk for cash market products and implement these add-ons if the review concludes they are needed. CCP 6 ASX Clear ASX plans to complete its review of liquidity add-ons for cash market products by June 2023.
2020-3 Liquidity risk. ASX Clear (Futures) should take all necessary steps to establish an ability to access liquidity from the Bank in respect of a defaulting participant's noncash collateral. CCP 7 ASX Clear (Futures)

ASX Clear (Futures) has implemented arrangements enabling it to access liquidity from the Bank via ASX Clearing Corporation. ASX Clearing Corporation will need to update its RITS membership agreement to ensure that it is consistent with this arrangement.

See section 2.5.1.

2020-4 Exchange-of-value settlement. ASX Settlement should complete analysis of the legal certainty of powers used to support deferral of the movement of securities if this cannot be achieved on the same day as transfer of cash. CCP 11 SSF 10 ASX Settlement and ASX Clear

The Bank is engaging with ASX on draft legal analysis supporting the legal certainty of deferral.

See section 4.6.1.

2019-1 Segregation and portability. ASX Clear should conduct an assessment of whether the protections from arrangements utilising a commingled house/client account structure remain materially equivalent to those provided by omnibus or individual client segregation. ASX should consult with the Bank on the outcome of this assessment within 12 months of the CHESS replacement system going live. CCP 13 ASX Clear

No action is required until the CHESS replacement system goes live.

See section 4.7.2.

2020-5 CHESS capacity and system replacement. ASX should implement the new clearing and settlement system for cash market transactions as soon as this can be safely achieved by ASX and users of CHESS. In the short term, ASX should complete work underway to increase the joint capacity of the current CHESS and CORE systems. CCP 16 SSF 14 ASX Clear and ASX Settlement

ASX has increased the daily capacity of the CHESS and CORE systems to support 10 million and 7.5 million trades respectively.

ASX is progressing towards implementing the CHESS replacement system, although the go-live date has been delayed from April 2023.

See sections 2.4.1 and 4.2.

2020-6 Operational incidents. ASX should implement its response to findings from the IBM review of the ASX Trade Refresh project, ensuring that any relevant steps are taken to apply lessons learned to its clearing and settlement operations, and in particular to the CHESS replacement program. ASX's assessment of how relevant lessons apply to the CHESS replacement program should be subject to independent external review. CCP 16 SSF 14 All ASX has appointed EY to roles as the independent expert overseeing its response to IBM review findings and implementation of these for CHESS replacement under new licence conditions imposed in 2021. EY concluded 24 of the 59 recommendations had been addressed at 30 June, with 19 of the 49 actions specific to CHESS replacement closed. Further, the CHESS replacement program's assessment of the impact of IBM recommendations has been subject to independent review by EY.
2020-7 Operational Risk Management. The ASX CS facilities should continue to embed the use of new systems and processes supporting change management, incident management and knowledge management, and use these systems to identify, monitor and manage operational risks at an enterprise-wide level. ASX Internal Audit should complete its review of the effectiveness of these systems and processes in practice. CCP 16 SSF 14 All

The ASX CS facilities have continued to embed the use of new systems and processes, including to identify, monitor and manage operational risks at an enterprise wide level.

ASX Internal Audit completed its internal review and commissioned external reviews of ASX's risk and compliance management frameworks, which were completed during the assessment period. ASX will implement the recommendations from these reviews over the next year.

See section 2.4.2.

2020-8 Risk management systems. The ASX CCPs should implement plans to ensure that their core systems have the functionality to fully support their risk management approach, including by migrating processes currently operated on non-core systems to core systems. CCP 16 Both CCPs

ASX established a five-year strategic roadmap for its risk management systems that includes actions to address this recommendation. In addition, ASX has completed a review of the systems infrastructure required to support its risk management approach over the long-term.

During the assessment period, ASX made some progress by migrating its overnight margin call calculations from a process located on non-core infrastructure to one run in its core systems.

2021-19 Regulatory reporting. ASX should review the quality controls and systems it has in place to systematically identify and bring to the Bank's attention information required to be reported to the Bank, and address any gaps identified as part of this review. ASX should ensure that these controls are also in place for its implementation of the Bank's upgraded FMI data collection. CCP 21 SSF 19 All

Work to improve ASX's regulatory reporting systems and processes is underway.

See section 2.3.

* Referencing indicates the year the recommendation was first raised and the order in which the recommendation appears in this Assessment.
Table 7: Recommendations Fully Addressed at 30 June 2022
Reference Recommendation Standard Facility Implementation measures taken over period
2019-2 Legal basis. The ASX CS facilities should enhance their process for five-yearly review of operating rules and procedures to include a systematic process for benchmarking against industry standards and market protocols, and identifying rules and procedures that are redundant or inconsistent, or where changes are otherwise desirable. CCP/SSF 1 All ASX made amendments to its process for review of operating rules and procedures to ensure that rules identified as having systemic importance are benchmarked against global peers/industry standards at least once every five years, and to outline a systematic process for identifying rules and procedures that are desirable to introduce, or existing rules and procedures that are redundant or inconsistent.
2021-2 Governance. ASX should introduce clearer lines of responsibility and accountability for each CS facility as required by CCP Standard 2.2/SSF Standard 2.2. An appropriate way to do this would be to appoint one or more identifiable executives, the ‘CS Lead Executive/s’, accountable to the relevant CS board for the operation of each of the CS facilities. The CS Lead Executive/s should also be accountable for the achievement of strategies and objectives determined by the relevant CS board. The relevant CS board should have input into both the performance assessment and remuneration of the CS Lead Executive/s. CCP/SSF 2 All

Group Executives for Markets, and Securities and Payments appointed as CS lead executives.

See section 2.1.2

2021-5 Governance. ASX's performance and remuneration policies and frameworks should ensure that any failure by a person identified in Governance Recommendation 3 to appropriately discharge their responsibilities will be reflected in any variable remuneration payable to that person. This will promote the soundness and effectiveness of risk management of the CS facilities as required by CCP Standard 2.5/SSF Standard 2.5. CCP/SSF 2 All ASX has implemented a revised framework for determining performance and remuneration outcomes.
2021-6 Governance. The administrative reporting line for the General Manager, Internal Audit should be to the Managing Director and CEO of the ASX Group. CCP/SSF 2 All General Manager, Internal Audit administrative reporting line adjusted to Chief Financial Officer. The Bank has accepted this revised reporting line.
2021-7 Governance. ASX should conduct an annual skills audit of each CS board in the same manner as the audit currently conducted for the ASX Limited board. CCP/SSF 2 All CS directors were invited to complete a skills self-assessment in May. The results of the self-assessment and a finalised CS Boards Skills Matrix were presented to the Boards in June.
2021-8 Governance. The CS boards should formally approve the application of any group-wide policies, procedures or governance documentation to the CS facilities. Such policies should include a statement, approved by the CS boards, as to the manner in which the relevant policy, procedure or document applies to the CS facilities. CCP/SSF 2 All Documented guidelines for approval of documents with specific application to CS facilities have been approved by the Boards. ASX conducted a review of relevant policies and other governance documents. Processes relating to Board papers and agendas took effect in June.

Governance. The application of the following arrangements for ASX Clear and ASX Settlement should be extended to ASX Clear (Futures) and Austraclear:

  1. the requirement that the boards shall comprise at least 50 per cent non-executive directors who are not also directors of ASX Limited and that the non-ASX Limited directors can also comprise a quorum
  2. the requirement that the Chair is not also an ASX Limited director
  3. provision for meetings of non-ASX Limited directors. These meetings should consider all potential conflicts of interest between the CS facilities and other ASX Group entities.

The composition and appointment of the Chairs of the boards of ASX Clear (Futures) and Austraclear should be changed accordingly.


CS Boards Charter has been revised, reflecting changes consistent with the recommendation. A non-ASX Limited Chair has been appointed to Austraclear and ASX Clear (Futures).

See section 2.1.1.

2021-10 Governance. The non-ASX Limited directors should be represented in board-level discussions of the supervision of risks to the CS facilities. This includes involvement at any board or committee meeting which considers risks or the risk appetite of the CS facilities. CCP/SSF 2 All

Technology Committee must include at least one non-ASX Limited CS director. One non-ASX Limited CS director required for quorum.

Audit and Risk Committee (ARC) Charter includes a standing invitation for a representative of the non-ASX directors of the CS boards to attend. ARC may request that this person withdraw for any part of a meeting.

2021-11 Governance. ASX should continue to explore ways to provide its boards with access to skills, experience and networks relevant to large technology project implementation. CCP/SSF 2 All

ASX has established the Technology Committee to oversee technology project implementation. The committee has the ability to appoint external experts to assist it in carrying out its responsibilities.

See Appendix B.1.

2021-12 Governance. The ASX Group boards should strengthen their oversight of technology project implementation. To achieve this, ASX should proceed with its proposal to establish a board committee to monitor technology project implementation. The respective responsibilities of this committee and the ARC will need to be carefully defined. CCP/SSF 2 All See 2021-11 above.

Governance. ASX Group should adopt:

  1. structured and documented processes for director recruitment and board renewal, ultimately including a tenure policy
  2. a more systematic approach to board education with an emphasis on supporting directors in the supervision of ASX's technology program
  3. systems for considering and implementing feedback arising from the annual board feedback survey
  4. more rigorous director performance management
  5. documented guidance as to the matters which should be referred to the various board meetings.

New processes for recruitment and appointment of nonexecutive ASX and CS directors, and director tenure guidelines, have been implemented. These changes were reflected in arrangements related to director independence and the Nomination Committee Charter.

Changes to the structure of Board days took effect in June.

A set of guidelines to assist management to identify the most appropriate forum for consideration of information they wish to raise for discussion, approval or noting by directors was approved in May.

2021-14 Governance. ASX should take steps to improve their identification and management of intragroup conflicts of interest. The non-ASX Limited directors should have unqualified access to independent legal advice and other expert advice on matters where the interests or obligations of a CS facility could potentially conflict with the interests of another entity in the ASX Group. To facilitate this, ASX should consider establishing a small unit of staff dedicated to supporting the CS Boards, including by providing assistance with obtaining external advice. CCP/SSF 2 All

Amendments to the ASX Group Support Agreement confirm that CS directors have access to external advice, paid for by ASX Operations. Amendments to the same effect were incorporated in the revised CS Boards Charter in May.

The ASX Boards considered the issue of dedicated CS support and determined that they do not require a separate unit of staff dedicated to supporting the CS Boards.

2020-9 Margin period of risk. The ASX CCPs should review whether their calibration of MPOR assumptions and margin add-ons is consistent with the time it would take to liquidate large and diverse portfolios, taking into account the sequencing of liquidation in a default scenario. CCP 6, 12 Both CCPs

ASX conducted an analysis concluding that the calibration of MPOR assumptions and margin add-ons is consistent with the time it would take to liquidate large and diverse portfolios, taking into account the sequencing of liquidation in a default scenario.

See section 3.3.3.

* Referencing indicates the year the recommendation was first raised and the order in which the recommendation appears in this Assessment.
Table 8: Summary of Progress Against 2021 Areas of Supervisory Focus
Development Standard Facility Actions
Special topic
2021/22 special topics. The Bank will carry out special topic assessments of the ASX CS facilities' margin arrangements and the CHESS replacement system, with a secondary focus on the facilities' collateral arrangements, exchange-of-value settlement arrangements and SSF central securities depository arrangements CCP Standards 5, 6, and 11, SSF Standards 5, 9 and 10 All facilities

See chapter 3 (Margin) and chapter 4 (CHESS replacement, as well as exchange-of-value and central securities depositories for ASX Settlement).

Special topic reviews of: exchange-of-value settlement arrangements (Austraclear); central securities depository arrangements (Austraclear); and collateral were deferred.

Risk management framework. The Bank will monitor how recent developments, including revisions to the CS Boards Charter, ASX's new organisational model and the recommendations of this Assessment, are reflected in the upcoming review of ASX's Enterprise Risk Management Framework and in updates to the underlying frameworks for settlement and clearing risk. The Bank will discuss with ASX how this review process takes into account:

  • how any gaps in the ERMF contributed to issues experienced in the ASX Trade Refresh project and CHESS replacement program
  • whether the ERMF worked as intended during those events
  • any changes that are required to address or support recommendations from the IBM review of the ASX Trade outage and the EY reviews of the CHESS Replacement program.
CCP and SSF Standard 3 All facilities

The revised ERMF (November 2021) was updated to reflect revised documentation and ASX's new operating model (see section 2.2).

See chapter 4 for discussion of the CHESS replacement program and follow up to IBM review.

Review of planned work
CCP Resilience Guidance. Implementation of ASX's plans to address gaps against the CCP Resilience Guidance. CCP Standards 2, 4, 5, 6, 7 and 15 Both CCPs The CCPs continue to implement a multi-year work program to address identified gaps against the CCP Resilience Guidance.

Default management and recovery. Implementation of ASX's work plan to enhance its default management and recovery frameworks, taking into account potential gaps identified in the 2019/20 special topic assessment. These include:

  • A review of the legal certainty of arrangements for ASX Limited to replenish ASX contributions to the CCPs' default funds.
  • The implementation of planned enhancements to fire drills, lessons learned from the Nasdaq Clearing AB default and benchmarking to the Committee on Payments and Market Infrastructures-International Organization of Securities Commissions (CPMI-IOSCO) paper on Central Counterparty default management auctions – Issues for consideration.
  • The continued enhancement of its recovery plan via benchmarking it to the CPMI-IOSCO Recovery of financial market infrastructures – Revised report and updating it for the gaps identified.
  • The implementation of enhancements to the default management framework including periodic audits and improved documentation.

CCP Standards 12, 2, 3, 4, 7 and 14,

SSF Standards 11, 2 and 3

All facilities

ASX continued to implement the work plan to enhance its default management and recovery frameworks, and this is expected to continue into the future. Of note:

  • The review of the legal certainty of arrangements for ASX Limited to replenish contributions to the ASX CCPs' default funds will be deferred to 2022/23.
  • ASX completed a gap analysis against the CPMI-IOSCO paper on default management auctions and shared its results with the Bank; ASX Clear (Futures) introduced amended Operating Rules and Procedures with respect to its framework for default management auctions.
  • ASX will perform a gap analysis against the CPMI-IOSCO guidance on recovery of financial market infrastructures by December 2022, and share the outcome with the Bank.
  • ASX updated its documentation to clarify the role of the ASX Limited Board and the CS Boards in default management.

Cyber resilience. Continued enhancement of ASX's cyber resilience via:

  • the implementation of actions identified in ASX's Cyber Strategy
  • ASX's evaluation of current and emerging technology that could lead to further enhancements to the abilities of ASX to recover from cyber-attacks in a timely manner.
CCP Standard 16,
SSF Standard 14
All facilities

During the assessment period, ASX continued to implement enhancements to its cyber security practices in line with actions set out in its Cyber Strategy.

See section 2.4.4.

Stress test severity. The Bank will discuss with ASX how it plans to validate whether its stress scenarios could cover an event of similar severity as the 1987 stock market crash, taking into account differences in the current market environment. CCP Standard 4, 7 Both CCPs

ASX has engaged a third party to complete an independent validation of whether its stress scenarios could cover an event of similar severity as the 1987 stock market crash, taking into account differences in the current market environment.

ASX has made plans to establish a Stress Test Advisory Group during the next assessment period.

ASX Group support agreement. The Bank will conduct a broader review of the ASX Group Support Agreement, covering aspects outside the scope of the 2018/19 special topic assessment of the CS facilities' legal basis. CCP Standard 14 and SSF Standard 12 All facilities This review has been deferred to 2022/23.