ASIC Chair Joe Longo has welcomed the establishment of a new Advisory Group to advise ASX Clear and ASX Settlement on strategic clearing and settlement issues. Importantly, this includes input into the governance of the ASX CHESS replacement project.
Appointment of Independent Chair
On 2 August, Mr Longo hosted a roundtable, comprised of a small group of recognised industry leaders, and including ASIC Commissioner Danielle Press and the Deputy Governor of the Reserve Bank of Australia, Michele Bullock.
The roundtable was convened to address longstanding industry concerns over the CHESS replacement project and the adequacy of ASX’s stakeholder engagement and governance, including ASX’s management of intragroup conflict of interests.
During the roundtable, ASX announced the appointment of Alan Cameron AO as Independent Chair of the Advisory Group.
Mr Longo said, ‘ASIC welcomes the appointment of Alan Cameron as Independent Chair to the Advisory Group. Mr Cameron and the Advisory Group will have an important role in assisting ASX to restore trust and confidence in the project.
‘There was a consensus that ASX, the Advisory Group and industry must work collaboratively to achieve the best outcome for the market, for listed companies and investors, and not favour any particular Group’s interests.’
We expect ASX and the Advisory Group to work together in the best interests of the market, including for the replacement of CHESS. The Advisory Group will provide important input to the governance of the CHESS replacement project.
In a letter of expectations to be sent in the coming weeks, ASIC and the RBA will advise ASX of the regulators’ expectations in respect of the Advisory Group. A public response from the boards of ASX Clear and ASX Settlement is expected.
ASIC is prepared to use a range of regulatory options to ensure that ASX Clear and ASX Settlement adhere to the regulators’ expectations with respect to the Advisory Group.
Background
ASIC and the RBA are co-regulators of licensed clearing and settlement (CS) facilities.
The RBA and ASIC have supervisory responsibilities for the four CS facilities in the ASX Group: two central counterparties – ASX Clear Pty Ltd and ASX Clear (Futures) Pty Ltd – and two securities settlement facilities – ASX Settlement Pty Ltd and Austraclear Limited.
The RBA has determined standards for the purposes of ensuring that CS facility licensees conduct their affairs in a way that promotes the overall stability of the Australian financial system. The RBA conducts annual assessments of how well the ASX CS facilities are complying with their statutory obligations to comply with those standards and to do all other things necessary to reduce systemic risk.
ASIC has separate, but complementary, responsibilities for the licensing and supervision of CS facilities licensed under Part 7.3 of the Act. ASIC is responsible for assessing whether a CS facility’s services are provided in a fair and effective way. ASIC also has regulatory responsibilities for operators of licensed markets, including the ASX market. In carrying out supervision and assessments of CS facilities, the RBA and ASIC work closely as appropriate.