Today, ASX Limited released a Special Report, along with an external Audit Report, on its Portfolio, Program and Project Management Frameworks (PPPM Reports). The PPPM Reports are relevant to ASX’s delivery, implementation and governance of the recently announced CHESS replacement solution design.
ASX has now published all three of the special reports and accompanying audit reports it was required to provide to ASIC under notice. ASIC will now consider all of the reports to determine if further regulatory action is required.
ASIC Chair Joe Longo said, `The reports highlight some areas in which ASX’s portfolio, program and project management capabilities are well developed, and other areas where improvement is required. We welcome ASX’s commitment to the development of a program management framework.’
‘Replacing CHESS is a complex and technical program of work for ASX and industry. We expect the appointed solution integrator will be key to augmenting ASX’s project delivery capabilities, providing ASX additional capacity to manage technology delivery.’
‘ASIC will closely monitor what regulatory actions may be needed to ensure that ASX’s project delivery meets the highest standards required in the replacement of this critical national infrastructure,’ Mr Longo added.
ASIC and the Reserve Bank of Australia (RBA) (the Regulators) are closely monitoring the delivery of the CHESS replacement by ASX Clear and ASX Settlement to ensure the facilities adhere to the Regulators’ expectations and comply with their clearing and settlement facility licence obligations.
Background
On 21 February 2023, ASIC issued written notices to the licensees ASX Ltd, ASX Clear Pty Ltd and ASX Settlement Pty Ltd under sections 794B and 823B of the Corporations Act 2001 (the Act) requiring them to provide a further special report on the licensee’s Portfolio, Program and Project Management Frameworks by 29 September 2023 and an Ernst & Young audit report by 31 October 2023.
ASX has selected a product-based solution to replace CHESS and entered into an agreement with Tata Consultancy Services (TCS) for the delivery of its TCS BaNCS for Market Infrastructure product, a modular technology platform for clearing and settlement services. Accenture will support ASX’s project delivery as the solution integrator, providing additional capability and capacity in technology project delivery and industry expertise.
ASIC and the RBA are co-regulators of licensed clearing and settlement (CS) facilities.
The RBA and ASIC have separate but complementary 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.
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More information
23-307MR ASIC and RBA acknowledge ASX’s CHESS solution design announcement
23-035MR Further ASIC regulatory response on CHESS Replacement and ASX’s program capabilities
22-357MR ASIC – RBA further regulatory response regarding the ASX CHESS replacement program