Clearing and Settlement of Cash Equities in Australia

Code of Practice

On 12 October 2016, the Council of Financial Regulators released the ‘Regulatory Expectations for the Conduct of Cash Equity Clearing and Settlement Services in Australia’ (Regulatory Expectations) and ASX updated its Cash Equities Clearing and Settlement Code of Practice.

The Regulatory Expectations provide a framework for ASX’s conduct in operating its cash equities clearing and settlement (CS) services while it remains the sole provider of these services.  They relate to key governance, pricing and access matters.

The ASX Cash Equities Clearing and Settlement Code of Practice sets out ASX’s commitment to comply with the Regulatory Expectations, and its commitments to customers and other stakeholders in managing cash equities clearing and settlement infrastructure and services for the Australian market.

ASX’s core commitments under the Code of Practice, which was introduced in August 2013, remain in place.  These include providing transparent and non-discriminatory pricing of and access to its CS services, and protecting the confidential information of users of its services.  ASX has made additional commitments, including to retain at least 50% non-executive directors on its CS boards who are independent of ASX Limited.

Under the updated Code, the Business Committee is recognised as the primary advisory body to ASX in the operation of its clearing and settlement services and infrastructure.  The Business Committee has provided effective input to ASX since its inception, and consists of a wide range of cash equity clearing and settlement participants and other market operators that connect to ASX’s infrastructure.

ASX will commission an annual independent audit of its governance, pricing and access arrangements benchmarked against the Regulatory Expectations, and release the results of the audit on its website at the same time as it releases its full-year financial results, beginning in August 2017.