Trade Acceptance Service

Background

It is anticipated that legislation will be introduced into Parliament this year to give effect to the Australian Government's decision to have the Australian Securities and Investments Commission (ASIC) supervise real-time trading on Australia's domestic licensed markets, with ASIC to begin performing these functions in the third quarter of 2010. The Government has indicated that moving to whole-of-market supervision by ASIC is the first step in the process towards considering competition for market services.

In anticipation of these developments, and to enable a timely process of engagement with Potential Market Operators, clearing and settlement participants and other stakeholders, development work for the provision of the Trade Acceptance Service is well underway. Subject to regulatory clearance and participant readiness, ASX's cash market clearing and settlement facility operators, Australian Clearing House Pty Limited (ACH) and ASX Settlement & Transfer Corporation Pty Limited (ASTC), intend to be ready to provide the Trade Acceptance Service in accordance with the Government's announced timetable for its consideration of outstanding licence applications by Potential Market Operators.

Overview: Trade Acceptance Service

The Trade Acceptance Service will enable transactions in CHESS-eligible ASX-quoted securities effected through multiple approved trade execution platforms (Approved Market Operators or AMOs) to be accepted by ACH and ASTC (the ASX Clearing and Settlement Facilities) for clearing and settlement.

The Trade Acceptance Service will be provided by the ASX Clearing and Settlement Facilities directly to AMOs. The Trade Acceptance Service is to be distinguished from the post-trade processing services which the ASX Clearing and Settlement Facilities provide to participants in those facilities in respect of transactions accepted by the facilities for clearing and settlement (Clearing and Settlement Services) and is illustrated below.

Trade Acceptance Service - Overview

Clearing and settlement arrangements for transactions in CHESS eligible
ASX-quoted securities in a multi market operator environment 

§ ASX is an Approved Market Operator under the operating rules of the ASX Clearing and Settlement Facilities.

Trade Acceptance Service: contractual framework

The ASX Clearing and Settlement Facilities will make the Trade Acceptance Service available to AMOs under a published set of contractual terms of service (Legal Terms of Service).  An initial application fee of $10,000 (excl. GST), and an annual fee of up to $450,000 (excl. GST) per annum per AMO, will apply to the Trade Acceptance Service.  The annual fee has been based on the cost of developing the Trade Acceptance Service and the technical and operational support and business services which will be provided to AMOs that acquire the service. 

The Legal Terms of Service will contain the general contractual terms of the Trade Acceptance Service and will incorporate:

  • a fee schedule for the Trade Acceptance Service; and
  • a form of application to be completed by Australian financial market licensees that seek approval as AMOs and to acquire the Trade Acceptance Service.

Additionally, the ASX Clearing and Settlement Facilities intend to promulgate under the Legal Terms of Service:

  • operational and technical standards: these standards set the basic parameters of trade acceptability and specify other technical and operational requirements applicable to AMOs that acquire the Trade Acceptance Service; and
  • information handling standard: this standard deals with the disclosure and use of information provided by AMOs to the ASX group in connection with the provision of the Trade Acceptance Service.

The legal framework for the provision of the Trade Acceptance Service is illustrated below:

Trade Acceptance Service: contractual framework

Registration of Interest

The ASX Clearing and Settlement Facilities seek to directly engage in a fair and equitable way with all Potential Market Operators, clearing and settlement participants and other stakeholders on the implementation of the Trade Acceptance Service.  If you wish to register an interest in being provided with the Trade Acceptance Service, please contact Rohan.Delilkhan@asx.com.au General Manager, Clearing and Settlement Services.

Reference material

Released on 18th December 2009

Released on 28th January 2010

  1. Market Operator Letter - 28th January 2010 (PDF 91KB)
  2. Participant Bulletin P2010/026 - Update - Clearing and settlement arrangements for potential operators of trade execution platforms for CHESS eligible ASX quoted securities ('Trade Acceptance Service') (PDF 30KB)
  3. Attachment 1 - Legal Terms of Service - 28th January 2010 (PDF 82KB)
  4. Attachment 2 - Operational and Technical Standards - 28th January 2010 (PDF 151KB)
  5. Attachment 3 - AMO Information Handling Standard - 28th January 2010 (PDF 97KB)
  6. Attachment 4 - Business and Technical Overview - 28th January 2010 (PDF 366KB)

Additional and/or updated versions of documents will be added to this section as they become available.