ASIC has released the findings of its fourth assessment of the Australian Clearing House Pty Limited (ACH) and ASX Settlement and Transfer Corporation Pty Limited (ASTC).
Under the Corporations Act, ASIC is required to conduct an annual assessment of how well ACH and ASTC are complying with their obligations to supervise their respective clearing and settlement facilities.
ACH and ASTC each hold an Australian clearing and settlement facility licence and are wholly owned subsidiaries of Australian Stock Exchange Limited (ASX). ACH provides all clearing services and ASTC provides all settlement services, for transactions entered into on ASX’s financial products market.
ASIC’s latest report concludes that the ACH and ASTC continue to have adequate arrangements for supervising their respective clearing and settlement facilities, including arrangements for:
- handling conflicts between the commercial interests of the licensee and the need to ensure that the clearing and settlement facility’s services are provided in a fair and effective way; and
- enforcing compliance with the operating rules of the clearing and settlement facility.
ASIC’s fourth assessment of ASX as an Australian market licence holder was released earlier this year in a report dated February 2006.
Background
A clearing and settlement facility is defined under the Act as a facility that provides a regular mechanism for the parties to transactions relating to financial products to meet obligations to each other. Anyone who operates a clearing and settlement facility in Australia must obtain a licence to do so, or otherwise be exempted by the Minister.
As part of the conditions of granting a licence to operate a clearing and settlement facility, the licensee must supervise the clearing and settlement facility in accordance with Part 7.3 of the Act.
ASIC is required to conduct an assessment of how well a licensed clearing and settlement facility is complying with its obligations to supervise the facility. ASIC must do this at least once per year in relation to each licensee. ASIC can also assess how well a licensee is complying with its other obligations under the Act.