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Trade Acceptance Service

On 3 March 2011, ASIC announced a timetable for the introduction of market competition for market operators.  Prior to commencement of operations, a market operator needs to put in place adequate clearing and settlement arrangements.

ASX Group has developed the Trade Acceptance Service and makes it available to market operators so that trades executed on the trading platforms of those market operators can be cleared and settled by ASX Clear and ASX Settlement on the same basis as trades executed on ASX’s market.

The Trade Acceptance Service enables transactions in CHESS-eligible ASX-quoted securities effected through multiple approved trade execution platforms (Approved Market Operators or AMOs) to be accepted by ASX Clear and ASX Settlement (the ASX Clearing and Settlement Facilities) for clearing and settlement in an identical fashion to trades executed on ASX's cash equity market.

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.

Novation

Market transactions executed through an AMO that are eligible for registration and novation in accordance with the operating rules of ASX Clear will be registered and novated with effect from the time of trade execution (that is, immediately after matching of bids and offers on the trading platform).  This is the same basis on which trades executed on ASX’s market are registered and novated by ASX Clear.  Any delay in trade processing through the TAS will not affect the level of counterparty risk mitigation provided to market users by ASX Clear as the central counterparty.  In the event a technical outage results in an extended delay to trade processing, ASX Clear will provide market updates at the time (refer to the Market Communication Protocol in the Reference Material below). 

Trade Acceptance Service: contractual framework

The ASX Clearing and Settlement Facilities are making 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 service fee based on the AMO’s nominated term of service, will apply to the Trade Acceptance Service.  The TAS is available with pricing options for one, three or five-year terms (refer Trade Acceptance Service - Pricing and Service Term Options, released 3 May 2011).  The pricing options are 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 contain the general contractual terms of the Trade Acceptance Service and incorporate:

  • the fees 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 have promulgated 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

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

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Released on 28th January 2010

  1. Market Operator Letter - 28th January 2010
  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')
  3. Attachment 1 - Legal Terms of Service - 28th January 2010
  4. Attachment 2 - Operational and Technical Standards - 28th January 2010
  5. Attachment 3 - AMO Information Handling Standard - 28th January 2010
  6. Attachment 4 - Business and Technical Overview - 28th January 2010

Released on 18th December 2009

 

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