Review of Settlement Practices for Australian Equities 6. Conclusion

Current settlement practices have served the Australian equities market well over many years. The batch settlement process is well established, operationally efficient and minimises liquidity demands. The events of late January, however, suggest that there is room for some changes to settlement practices that would lessen the effects of any similar disruptions in the future. In particular, the Bank sees a strong case for moving to trade-by-trade settlement for equities over the medium term, while taking steps to enhance the robustness of the existing batch settlement process in the interim. The Bank will be working with ASX and industry participants over the coming months to assess whether, and how, the changes suggested in this paper might be implemented.