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 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 originally 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 also made additional commitments, including to retain at least 50% non-executive directors on the Boards of ASX Clear and ASX Settlement who are independent of ASX Limited.

Under the updated Code of Practice, the role of the Business Committee was updated as a mechanism for input to ASX’s governance framework in relation to the operation and development of ASX’s cash equities clearing and settlement services and infrastructure. The Business Committee comprises representatives of clearing participants, settlement participants, alternative market operators and relevant industry organisations.

ASX committed to commission an annual external audit of its governance, pricing and access arrangements benchmarked against the Regulatory Expectations.  The results of the first audit will be published on the website by the end of September 2017.