ASIC has released a consultation paper on proposed rules to facilitate competitive outcomes in cash equity clearing and settlement (CS) services provided by the ASX Group. It is the first time ASIC is exercising its new powers under the competition in clearing and settlement (CS) reforms.

The consultation seeks feedback on our proposals to:

• implement the 2017 Council of Financial Regulators Regulatory Expectations for Conduct in Operating Cash Equity Clearing and Settlement Services in Australia (Regulatory Expectations) as enforceable obligations; and
• impose additional requirements in several key areas, including technical interoperability, management of intragroup conflicts of interest, and external assurances on pricing and barriers to competition.

The proposed rules are intended to support the long-term interests of the Australian market by delivering efficient outcomes for investors consistent with those expected in a competitive environment, by:

• ensuring the ASX remains responsive to users’ evolving needs, including in relation to its governance framework; and
• providing access to its cash equity CS services on a transparent and non-discriminatory basis with terms and conditions, including pricing, that are fair and reasonable.

ASIC Commissioner Simone Constant said, ‘We are moving at pace to develop and implement these important rules, which require that during the CHESS replacement program and beyond, the ASX remains responsive to users and does not create barriers to competition.

‘Importantly, the rules also respond to industry concerns around ASX’s handling of the CHESS replacement program and will help to ensure that those mistakes are not repeated.

‘We look forward to engaging with industry on the proposed rules so the best outcome is achieved for the market, for listed companies and for investors and investment,’ Ms Constant said.

Consultation Paper 379 CS Services Rules (CP 379) seeks feedback on our proposals to achieve these high-level outcomes, including through a number of additional obligations not expressly covered by the Regulatory Expectations.

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 conducts annual assessments covering the CS facilities' observance of relevant Financial Stability Standards determined by the RBA. 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 of CS facilities, the RBA and ASIC work closely as appropriate.

More information

• ASIC welcomes Ministerial determination to progress competition in clearing and settlement reforms
• Corporations and Competition (CS Services) Instrument 2024
• Council of Financial Regulators Regulatory Expectations for Conduct in Operating Cash Equity Clearing and Settlement Services in Australia (cfr.gov.au)

ASIC is Australia’s corporate, markets and financial services regulator.