ASX settlement & the role of CHESS
When you buy or sell financial products such as shares in a listed company, you must exchange the title or legal ownership of those financial products for money. This exchange is called settlement.
For financial products traded on the Australian Securities Exchange, settlement is effected by a world class computer system called CHESS, which stands for the Clearing House Electronic Subregister System.
CHESS is operated by the ASX Settlement Corporation (ASX Settlement), a wholly owned subsidiary of the ASX. ASTC authorises participants such as brokers, custodians, institutional investors, settlement agents and so on to access CHESS and settle trades made by themselves or on behalf of their clients.
Usually, three business days after a buyer and seller agree to a trade, CHESS effects the settlement of that trade. It does this by transferring the title or legal ownership of the shares while simultaneously facilitating the transfer of money for those shares between participants via their respective banks. This type of settlement is called Delivery versus Payment (DvP). It is irrevocable.
What is CHESS?
In addition to performing settlement, CHESS electronically registers the title (ownership) of shares on its subregister. This registration is secure and is an efficient means for holders to register title of their shares if they intend to trade them.
In summary, CHESS performs two major functions for the ASX:
- it facilitates the settlement and clearing of trades in shares; and
- it provides an electronic subregister for shares in ASX listed companies.
CHESS performs these and other functions for a diverse range of financial products, including shares. For further information on CHESS, please ask your broker for a copy of the CHESS brochure (PDF 115KB)
Since 1998, when paper share certificates were eventually phased out, ownership of shares has been recorded electronically. An electronic registration consists of a shareholder's name and shareholding recorded in a computer system.
Frequently asked questions
Answers to the most frequently asked questions about settlement and CHESS Sponsorship.
CHESS Depositary Nominees and CHESS Depository Interests (CDIs)
CHESS Depositary Nominees (CDN) acts as Custodian in relation to CHESS Depository Interest’s (CDI). Obtain your copy of CDN's Financial Services Guide and complaints procedures on CDI’s here.> Understanding CHESS Depositary Interests (PDF 265KB)