Assessment of ASX Clearing and Settlement Facilities Appendix A: 2019 Areas of Supervisory Focus

Table 6: Summary of Progress against 2019 Areas of Supervisory Focus
Development Standard Facility Actions
Review of Planned Work
Legal basis. Completion of work to enhance, formalise and document BAU controls for legal risks. CCP and SSF Standard 1 All facilities ASX implemented a SharePoint site that acts as a central resource for BAU controls for legal risks. The site includes links to updated contract review and execution processes and formalised guidance on when legal advice should be sought. ASX established guidelines for engaging external lawyers. ASX intends to conduct further work to embed requirements for legal input in documented business processes. For more information see section 3.1.2.
Settlement finality. Implementation of planned changes to operating rules for all CS facilities to clarify that changes to operating hours are exceptional and require individual justifications. CCP Standard 8, SSF Standard 7 All facilities On 6 July, ASX amended operating rules to clarify that changes to operating hours are exceptional and require individual justifications.
CCP Resilience Guidance. Implementation of ASX's plans to address gaps against the CCP Resilience Guidance that are minor but indicative of good practice in financial risk management. CCP Standards 2, 4, 5, 6, 7 and 15 Both CCPs The ASX CCPs continue to implement a multi-year work program to address identified gaps against the CCP Resilience Guidance, see Box B.
Liquid resources. The implementation of the additional liquidity facility by ASX Clear. CCP Standard 7 ASX Clear ASX Clear executed an $80 million additional liquidity facility with a major bank, see section 2.2.3.
CHESS replacement. The development of the new clearing and settlement system for cash market transactions, including how the new system aligns with the requirements in the FSS and supports ASX's risk management capabilities, and the clarity, effectiveness and documentation of default management processes. CCP Standard 14 ASX Clear and ASX Settlement ASX has consulted on extending the timeline of the CHESS replacement project by one year with a revised target launch date for the new system in April 2022, see section 3.3.1.

Cyber resilience. Continued enhancement of ASX's cyber resilience via:

  • the implementation of actions identified in ASX's Cyber Strategy roadmap
  • ASX's evaluation of current and emerging technology that could lead to further enhancements to the abilities of ASX to recover from cyber attacks in a timely manner.
 CCP Standard 16, SSF Standard 14 All facilities ASX has progressed work to implement actions in its Cyber Strategy roadmap. Work to evaluate technology that could further enhance recovery capabilities is expected to take longer to progress, see section 3.3.4.
Other

ASX Group support agreement. The Bank will conduct a broader review of the ASX Group Support Agreement, covering aspects outside the scope of the 2018/19 special topic assessment of the CS facilities' legal basis.

 CCP Standard 14 and SSF Standard 12 All facilities The review was postponed pending the completion of work to enhance the certainty of access to business, operational and investment risk capital and will be undertaken in the next assessment period.
Collateral concentration limits. The Bank will discuss with ASX Clear its conclusion that it is not necessary to impose concentration limits for equity collateral. CCP Standard 5 ASX Clear ASX conducted further analysis that concluded concentration limits are not necessary in equity collateral. ASX plans to share this analysis with the Bank and conduct similar analysis on a quarterly basis to verify that this conclusion remains appropriate. See section 3.4.3.