List of tables | Assessment of ASX Clearing and Settlement Facilities

Table 1: Summary of Progress against 2015/16 Recommendations to Observe or Continue Observing the FSS
Recommendation	Standard	Facility	Actions
Liquidity stress testing. ASX Clear and ASX Clear (Futures) should implement plans to expand and refine their liquidity-specific stress scenarios and integrate these into their liquidity stress test frameworks. For ASX Clear (Futures), the expanded scenarios should include stress tests of non-Australian dollar liquidity exposures. ASX Clear should continue to refine and enhance the sensitivity analysis of its liquidity stress test model. This includes examining further the sensitivity of outcomes to certain underlying assumptions, such as the level of priming of securities. ASX Clear should ensure that its liquidity stress test framework is aligned with a clearly defined strategy for managing liquidity obligations in a default scenario. ASX Clear should implement plans to maintain sufficient liquid resources to cover a pre-specified value of stressed liquidity exposures arising from cash market transactions, while continuing to maintain sufficient liquid resources to cover stressed liquidity exposures arising from derivatives transactions. For both ASX Clear and ASX Clear (Futures), processes should be in place to respond promptly to any breaches of target liquidity coverage; these processes should be clearly documented.	CCP Standard 7	Both CCPs	Mostly addressed. The Bank will be seeking further detail on ASX's foreign currency liquidity stress testing arrangements during the next assessment period. The ASX CCPs have refined their liquidity-specific stress test scenarios and incorporated them into their liquidity risk management framework. ASX Clear (Futures) has also developed a foreign currency liquidity stress test framework. ASX Clear has enhanced its liquidity stress test model sensitivity analysis by conducting analysis on the effect of the priming assumption on stress test exposures. This analysis will be performed annually. ASX Clear has implemented a clearly defined strategy for managing liquidity obligations in a default scenario. The new strategy involves maintenance of a formal ‘cash market liquidity buffer’ designed to cover a portion of stressed liquidity exposures arising from cash market transactions, while continuing to maintain sufficient liquid resources to cover stressed liquidity exposures arising from derivatives transactions. The CCPs have also documented their processes for responding to a breach of their liquidity targets, including the cash market buffer in ASX Clear. For more information see Section 2.1.2.
Liquidity risk management. ASX Clear should conduct appropriate due diligence on its participants' ability to understand, quantify and manage any contingent liquidity obligations under its Rules. ASX Clear should ensure that its disclosures remain consistent with its liquidity risk management framework and assist participants in understanding their contingent exposure to the use of tools to address a liquidity shortfall. ASX Clear should enhance and formalise its processes for conducting due diligence on the ability of its committed liquidity providers to perform as required under those commitments.	CCP Standard 7	ASX Clear	Fully addressed. ASX Clear has continued to provide its participants with regular disclosures on participants' contingent exposures to offsetting transaction agreements. ASX Clear's annual liaison with participants now includes a discussion on the results of these disclosures to ensure that participants understand and can manage these contingent exposures. These disclosures remain consistent with ASX Clear's liquidity risk management framework. ASX Clear has implemented regular processes for conducting due diligence on its liquidity providers. This includes periodic checks of whether ASX Limited continues to meet the requirements set out in its agreement with the major bank liquidity provider and whether it has enough funds to deliver on its portion of the facility. For more information see Section 2.1.2.
CCP default management. ASX Clear and ASX Clear (Futures) should continue enhancing their approach to the testing and review of their default management arrangements. Such enhancements should include increasing the complexity and scope of their default management fire drills. Both CCPs should also ensure that these fire drills involve all relevant internal and external stakeholders and committees, and test the interaction between all relevant stakeholders. ASX Clear and ASX Clear (Futures) should more prominently involve their default brokers in the testing of default management arrangements for exchange-traded products. On an annual basis, both CCPs should engage with their default brokers on the default brokers' proposed method for closing out the hypothetical portfolio used in the fire drill, including expected close-out prices and timeframes. ASX Clear and ASX Clear (Futures) should also involve the Risk Consultative Committees and other clearing participants in future default management fire drills that test the CCPs' recovery arrangements. As part of their annual review of the DMRF, ASX Clear and ASX Clear (Futures) should assess the potential implications of any changes to the resolution regimes that govern their participants. This includes the resolution regimes of any offshore-based participants. ASX Clear and ASX Clear (Futures) should also review their DMRF in light of the proposed establishment of a special resolution regime for financial market infrastructures (FMIs) in Australia, once the regime has been finalised. ASX Clear (Futures) should validate through its testing and review processes its expectation that its default management arrangements take appropriate account of stability interests in other jurisdictions in which it has material activity, most notably in New Zealand.	CCP Standard 12	Both CCPs	Mostly addressed. The Bank will assess ASX's plans to enhance its default management fire drills as part of its ongoing supervision of ASX. The CCPs have: engaged more deeply with their default brokers on the close-out process run an internal fire drill that tested their recovery arrangements reviewed the implications of changes to the resolution regimes applicable to the CCPs' participants given some initial consideration to how ASX Clear (Futures) would validate its expectation that its default management arrangements take appropriate account of stability interests in New Zealand. Work to respond to the recommendations will nonetheless continue into the next assessment period. In particular, ASX plans to enhance the CCPs' default management fire drills. ASX also intends to engage the CCPs' Risk Consultative Committees in future years. The CCPs have not reviewed their DMRF in light of the proposed special resolution regime, since the regime has not been finalised. For more information, see Section 2.3.
SSF default management. ASX should carry out further work to enhance the facilities DMRF documentation for its SSFs, including the documents that set out the specific procedures to be followed in the event of default of an Austraclear participant, ASX Settlement participant, participating bank, or payment provider. In particular, these documents should provide guidance on the discretionary decisions that may need to be taken by the Participant Incident Response Committee and other relevant parties, including elaborating on relevant factors for consideration in making these decisions. ASX Settlement and Austraclear should formalise the review of their default management procedures within ASX's broader framework for testing and review of the DMRF. ASX Settlement and Austraclear should carry out their plans to enhance participant and client education and communication regarding their default management arrangements. As part of this: ASX Settlement should extend the scope of its Guidance Note on the suspension and termination of ASX Settlement participants to explain the potential implications of the default of a participant or payment provider on other ASX participants, and develop an accessible information note on the ASX Settlement back-out algorithm. Austraclear should complete its planned updates of participant disclosures on the key aspects of its default management arrangements, including releasing a Guidance Note on the suspension and termination of Austraclear participants which explains the potential implications of the default of a participant or participating bank on other ASX CS facilities. Any disclosures should be easily accessible, preferably in a centralised location. In developing its new system for clearing and settlement of cash market securities, ASX Settlement should ensure that any default management processes are clearly documented, and that the effectiveness of these processes can be tested and reviewed on an ongoing basis. ASX Settlement and Austraclear should continue enhancing their approach to the testing and review of their default management arrangements. Such enhancements should include increasing the complexity and scope of the ASX default management fire drills. ASX Settlement and Austraclear should also ensure that these fire drills involve all relevant internal stakeholders and committees, and test the interaction between all relevant stakeholders. As part of the annual ASX default management fire drills, consideration should be given to the implications of the default of an Austraclear participant, ASX Settlement participant, participating bank or payment provider for other ASX CS facilities.	SSF Standard 11	Both SSFs	Mostly addressed. The Bank will assess ASX's plans to enhance its default management fire drills as part of its ongoing supervision of ASX. The SSFs have: significantly enhanced the documentation supporting the DMRF, which now provides guidance on discretionary decisions established a framework for reviewing the SSF default management arrangements on an annual basis enhanced the disclosures available to participants on key aspects of the DMRF by creating or updating guidance notes available to participants on ASX's website. Work to respond to the recommendations will nonetheless continue into the next assessment period. In particular, ASX will run its first settlement-focussed fire drill in Q4 2017 and aims to develop and enhance these fire drills over time. ASX is considering what changes to its default management processes may be necessary to implement with the replacement system for CHESS. For more information, see Section 2.3.
Investment risk. ASX Clear and ASX Clear (Futures) should implement plans to: limit unsecured exposures to individual nongovernment investment counterparties/issuers to the level of capital set aside for non-participant-default or general business risk losses ensure that other investments are with government-related obligors or secured by assets issued by government-related or other highly creditworthy obligors, subject to prudent concentration limits ensure that ASX Clear and ASX Clear (Futures)' minimum liquid resource requirement (under CCP Standard 7.3) is invested in or secured by government/semi-government securities or cash. Other investments should be able to address effectively any additional liquidity shortfalls (e.g. be investments in, or secured by, securities eligible for repo with the Bank).	CCP Standard 15	Both CCPs	Fully addressed. From 1 July 2017, the CCPs have limited unsecured exposures to a non-government investment counterparty to the level of capital set aside for general business risk losses ($75 million). The CCPs have also set a target on their investments to ensure that their minimum liquid resource requirement is met by investments in government/semi-government securities or cash. All other investments are with highly creditworthy obligators. For more information, see Section 2.1.1.
Cyber resilience. The CS facilities should review their cyber risk management arrangements in light of CPMI-IOSCO Cyber Guidance. As part of this review, the CS facilities should: consider developing participant requirements in the area of cyber resilience, liaising as appropriate with the Bank and other relevant authorities develop concrete plans to improve their capabilities to meet the two-hour recovery time objective following an extreme cyber attack.	CCP Standard 16, SSF Standard 14	All facilities	Ongoing. The Bank will assess the outcome of reviews currently being undertaken of ASX's cyber resilience arrangements through its ongoing supervision. The Bank conducted a detailed assessment of the CS facilities against the governance chapter in the CPMI-IOSCO Cyber Guidance. ASX has initiated an external review of its cyber resilience arrangements against industry standards and will be conducting a self-assessment against the remaining chapters of the guidance, which it aims to complete in November 2017. ASX has also developed a plan to improve the CS facilities' capabilities to recover from a cyber attack, which will be progressed in the next assessment period. In addition, ASX has reviewed the case for developing participant requirements in the area of cyber resilience and will update guidance notes supporting the CS facilities' admission requirements to underscore the importance of cyber risk and observance of international best practice. For more information, see Section 2.4.2.
Resolution planning. The CS facilities will need to review their operational arrangements in light of the proposed special resolution regime for FMIs in Australia, once the regime has been finalised. In particular, the CS facilities will need to ensure that their operations are organised in such a way as to facilitate effective crisis management actions under that regime.	CCP Standard 16, SSF Standard 14	All facilities	Ongoing. The Australian special resolution regime for FMIs in Australia is not yet in place, so there has been no progress. For more information, see Section 2.2.

Table 2: Ratings of FSS Observance^(a),(b)
Standard	ASX Clear	ASX Clear (Futures)	ASX Settlement	Austraclear
CCP and SSF Standard 1: Legal Basis	Observed (→)	Observed (→)	Observed (→)	Observed (→)
CCP and SSF Standard 2: Governance	Observed (→)	Observed (→)	Observed (→)	Observed (→)
CCP and SSF Standard 3: Framework for the Comprehensive Management of Risks	Observed (→)	Observed (→)	Observed (→)	Observed (→)
CCP and SSF Standard 4: Credit Risk	Observed (→)	Observed (→)	N/A	N/A
CCP and SSF Standard 5: Collateral	Observed (→)	Observed (→)	N/A	N/A
CCP Standard 6: Margin	Observed (→)	Broadly observed (↓)	---	---
CCP Standard 7 and SSF Standard 6: Liquidity Risk	Observed (→)	Observed (→)	Observed (→)	Observed (→)
CCP Standard 8 and SSF Standard 7: Settlement Finality	Observed (→)	Observed (→)	Observed (→)	Observed (→)
CCP Standard 9 and SSF Standard 8: Money Settlements	Observed (→)	Observed (→)	Observed (→)	Observed (→)
SSF Standard 9: Central Securities Depositories	---	---	Observed (→)	Observed (→)
CCP Standard 10: Physical Deliveries	N/A	Observed (→)	---	---
SSF Standard 10: Exchange-of-value Settlement Systems	---	---	Observed (→)	Observed (→)
CCP Standard 11: Exchange-of-value Settlements	Observed (→)	Observed (→)	---	---
CCP Standard 12 and SSF Standard 11: Participant Default Rules and Procedures	Observed (→)	Observed (→)	Observed (→)	Observed (→)
CCP Standard 13: Segregation and Portability	Observed (→)	Observed (→)	---	---
CCP Standard 14 and SSF Standard 12: General Business Risk	Observed (→)	Observed (→)	Observed (→)	Observed (→)
CCP Standard 15 and SSF Standard 13: Custody and Investment Risks	Observed (↑)	Observed (↑)	N/A	Observed (→)
CCP Standard 16 and SSF Standard 14: Operational Risk	Observed (→)	Observed (→)	Observed (→)	Observed (→)
CCP Standard 17 and SSF Standard 15: Access and Participation Requirements	Observed (→)	Observed (→)	Observed (→)	Observed (→)
CCP Standard 18 and SSF Standard 16: Tiered Participation Arrangements	Observed (→)	Observed (→)	Observed (→)	Observed (→)
CCP Standard 19 and SSF Standard 17: FMI Links	Observed (→)	Observed (→)	Observed (→)	Observed (→)
CCP Standard 20 and SSF Standard 18: Disclosure of Rules, Key Policies and Procedures, and Market Data	Observed (→)	Observed (→)	Observed (→)	Observed (→)
CCP Standard 21 and SSF Standard 19: Regulatory Reporting	Observed (→)	Observed (→)	Observed (→)	Observed (→)
(a) The arrows in brackets indicate the change in ratings from last year: a horizontal arrow indicates no change; a single vertical up arrow indicates a single upgrade (e.g. from ‘broadly observed’ to ‘observed’); and a single vertical down arrow indicates a single downgrade (e.g. from ‘observed’ to ‘broadly observed’). (b) ‘N/A’ means that the Bank has determined that the standard is not applicable to the ASX facility; ‘---’ means that an equivalent standard does not exist for the type of facility (e.g. for CCP Standard 6, there is no equivalent standard for SSFs).

Table 3: Recommendations to Observe or Continue Observing the FSS
Recommendation	Standard	Facility
Risk model validation. The ASX CCPs should review the frequency of the independent validation of their credit risk models to ensure that they align with the CCP Standards. For more information, see Section 2.1.4.	CCP Standard 4	Both CCPs
Analysis of credit stress testing. The ASX CCPs should ensure that they perform comprehensive and thorough analysis of their credit stress test scenarios, models and underlying parameters and assumptions on at least a monthly basis. For more information, see Section 2.1.3	CCP Standard 4	Both CCPs
Intraday exposures. By the end of 2017, ASX Clear (Futures) should implement its plans to introduce a scheduled intraday margin call during ASX 24's Night Session to improve its management of intraday exposures created during this session. By 30 June 2020, ASX Clear (Futures) should put in place arrangements to be able to monitor and manage intraday exposures created during ASX 24's Night Session on a near realtime basis, or take other steps to ensure comprehensive management of intraday exposures created during ASX 24's Night Session. For more information, see Section 3.6.2.	CCP Standard 6	ASX Clear (Futures)
Margin period of risk. ASX Clear and ASX Clear (Futures) should conduct and document analysis of the margin period of risk assumptions used in their initial margin models for all products, and review these assumptions in light of this analysis. For more information, see Section 3.2.	CCP Standard 6	Both CCPs
Liquidity risk. ASX Clear and ASX Clear (Futures) should complete the implementation of add-ons to manage liquidity risk for cash equities and products margined using the Chicago Mercantile Exchange Standard Portfolio Analysis of Risk (CME SPAN) model. For more information, see Section 3.1.4.	CCP Standard 6	Both CCPs
Default broker. ASX Clear should implement its plans to secure an additional default broker. For more information, see Section 2.3.	CCP Standard 12	ASX Clear

Table 4: Supervisory Focus
Development	Standard	Facility
Developments in International Standards
CCP Resilience Guidance. The alignment of the CCPs' risk management arrangements with the new CPMI-IOSCO Resilience Guidance. For more information, see Section 2.2.	CCP Standards 2, 3, 4, 5, 6, 7 and 14	Both CCPs
Updated FMI Recovery Report. The alignment of the facilities' recovery planning arrangements with the revised CPMI-IOSCO guidance on recovery. For more information, see Section 2.2.	CCP Standards 3, 4 7 and 14, SSF Standards 3, 4, 6 and 12	All facilities
Cyber resilience. The CS facilities' self-assessment against the CPMI-IOSCO Cyber Guidance and the implementation of the facilities' concrete plans to improve their capabilities to recover from a cyber attack. For more information, see Section 2.4.2.	CCP Standard 16, SSF Standard 14	All facilities
Review of Planned Work
Risk system enhancements. The ASX CCPs' progress in developing and implementing their short-term risk system enhancements over the next assessment period, as well as the development of ASX's five-year plan to improve its risk systems. For more information, see Section 2.1.7.	CCP Standards 4, 5, 6 and 7	Both CCPs
Settlement prices. The ASX CCPs' consultation with their participants on the determination of settlement prices during an outage of ASX Trade and ASX 24. For more information, see Section 3.7.	CCP Standard 6	Both CCPs
Margin model sensitivity analysis. The implementation of the CCPs' new sensitivity analysis framework, and the expansion of the product scope covered by the analysis. For more information, see Section 3.8.	CCP Standard 6	Both CCPs
Default management. The CS facilities' plans to enhance their default management fire drills, including the introduction of SSF-specific fire drills. For more information, see Section 2.3.	CCP Standard 12, SSF Standard 11	All facilities
Operational risk review. The external review of the CS facilities' operational risk management arrangements and ASX's response to the findings of the review. For more information, see Section 2.4.1.	CCP Standard 16, SSF Standard 14	All facilities
CHESS replacement. The development of the new clearing and settlement system for cash securities transactions, including: how the new system aligns with the requirements in the FSS; the clarity, effectiveness and documentation of the default management processes; contingency plans regarding the replacement of CHESS should the decision be taken not to proceed with a DLT solution. For more information, see Section 2.4.3.	CCP Standard 14	ASX Clear and ASX Settlement

Table 5: ASX CCP Initial Margin Models
Product	CCP	Model	Look-back period	Close-out period	Total margin requirement^(a)
Exchange-traded derivatives	Both	CME SPAN	60 or 252 days^(b)	1 or 2 days^(b)	$5,450m
OTC IRDs	ASX Clear (Futures)	Filtered historical simulation value at risk	June 2008 onwards	5 days	$276m
Cash market products	ASX Clear	Historical simulation value at risk (for All Ordinaries index equities with at least two years of price history)	2 years	1 day	$75m
Cash market products	ASX Clear	Flat rates (for all other products)	N/A	1 day	$95m
(a) Daily average total over 2016/17. (b) ASX uses the highest of one- or two-day price/implied volatility movements across both the 60- or 252-day periods. Sources: ASX; RBA

Table 6: ASX Margin Model Backtesting Results for 2016/17
Facility	Margin Model	Target Coverage (per cent)	Actual Coverage (per cent)
ASX Clear	CMM	99.7	99.91
ASX Clear	CME SPAN	99.7	99.96
ASX Clear (Futures)	CME SPAN	99.7	100
ASX Clear (Futures)	OTC IRD FHSVaR	99.7	100

Table 7: Summary of Progress against 2015/16 Recommendations to Support Continuous Improvement
Recommendation	Standard	Facility	Actions
Documentation. ASX Clear and ASX Clear (Futures) are encouraged to continue enhancing the documentation of the key elements of their financial risk management frameworks, including clear articulation to participants and regulators (and where appropriate the public) of the analytical basis and rationale for the choice and calibration of key margin and stress test model parameters and assumptions.	CCP Standard 2	Both CCPs	Ongoing. The Bank will continue to review in light of the CCP Resilience Guidance. The CCPs have improved the quality of their documentation.
CCP guidance on resilience and recovery. ASX Clear and ASX Clear (Futures) are encouraged to review the following aspects of their risk management arrangements in light of forthcoming CPMI-IOSCO guidance on resilience and recovery of CCPs:	CCP Standards 2, 4, 5 and 7	Both CCPs	Ongoing. The Bank will assess ASX against the CCP Resilience Guidance during the next assessment period. ASX reviewed its risk management arrangements against the draft guidance to identify potential areas for improvement. For more information see Section 2.2.
Recovery planning. The CS facilities are encouraged to continue to refine the documentation of their recovery plans, including considering further elaborating: stress scenarios; communications procedures; the methodology for determining critical services; how structural weaknesses are identified and addressed; and links to other FMIs.	CCP Standard 3, SSF Standard 3	Both CCPs	Fully addressed. The CCPs have updated and refined the documentation supporting their recovery plan to further elaborate on the methodology for determining critical services and links to other FMIs. For more information see Section 2.2.
Credit stress testing. ASX Clear (Futures) is encouraged to review the assumptions it makes regarding the value of its prefunded financial resources in extreme but plausible market conditions, in light of any changes to its collateral haircuts.	CCP Standard 4	ASX Clear (Futures)	Ongoing. The Bank will consider this in light of the CCP Resilience Guidance. Over 2016/17 ASX developed quarterly reporting of the impact of the worst stress over the last 20 years on the value of non-cash and FX margin collateral. For more information see Section 2.1.6.
Liquidity, concentration and spread risks. ASX Clear and ASX Clear (Futures) are encouraged to complete their review of spread, concentration and liquidity add-ons for their margin and credit stress testing models and incorporate these add-ons as appropriate.	CCP Standards 4 and 6	Both CCPs	Partly addressed. In light of the margin special topic, the Bank has increased the priority of this issue and made a specific recommendation. The CCPs have implemented spread add-ons in their CME SPAN margin parameters. The CCPs continue to refine the design of add-ons to account for liquidity risk. For more information see Section 3.1.4.
Risk management system enhancements. ASX Clear and ASX Clear (Futures) are encouraged to continue to progress planned enhancements to their risk management systems, including to deliver the capability to calculate on a near real-time basis: credit stress test exposures liquidity stress test exposures margin requirements, using a range of models and parameters.	CCP Standards 4, 6 and 7	Both CCPs	Not addressed. The Bank will consider this in reviewing the five-year plan ASX will develop in 2017/18. During the Assessment period, ASX modified and reprioritised certain aspects of its technology transformation program. Rather than developing a new risk management system for the CCPs, ASX will instead be making incremental enhancements to the CCPs' existing risk management systems as part of a five-year plan to be developed over 2017/18. For more information see Section 2.1.7.
Liquidity risk management. ASX Clear and ASX Clear (Futures) are encouraged to regularly test their procedures for accessing their liquid resources, including the on-market liquidation or repo of non-cash collateral and collateral investments, drawdown of ASX Clear's committed liquidity facilities and potential repo of eligible securities at the Bank.	CCP Standard 7	Both CCPs	Fully addressed. ASX has recently implemented processes to periodically test its procedures for accessing its liquid resources. ASX will now confirm that it has tested its operational capability to conduct transactions to liquidate or repo the full range of assets held by ASXCC on a six-monthly basis. ASX will also regularly review the terms of its commercial bank committed liquidity facility to ensure ongoing compliance with those terms. For more information see Section 2.1.2.
CCP default management. ASX Clear is encouraged to implement its plans for enhancing the effectiveness of its default management arrangements, including improvements to portability and the close-out process for ETOs, and finalise its policy on dealing with ‘specific cover’ exposures. ASX Clear and ASX Clear (Futures) are encouraged to continue examining ways in which their new risk management system could be used to facilitate, and mitigate risks arising in, the default management process. The CCPs are encouraged to continue developing the system functionality over time, integrating learnings from fire drills and other enhancements identified by the Default Management Steering Group. In the meantime, the CCPs are encouraged to continue to explore options to improve the effectiveness of the default management process within their existing systems. ASX Clear and ASX Clear (Futures) are encouraged to carry out plans to sign on an additional default broker for the markets that they clear for (i.e. ASX and Chi-X markets for ASX Clear, and ASX 24 for ASX Clear (Futures)). ASX Clear and ASX Clear (Futures) are encouraged to carry out their plans to enhance participant and client education and communication regarding the CCPs' default management arrangements. As part of this, the CCPs are encouraged to complete their planned updates of existing participant disclosures on the key aspects of their default management arrangements. For ASX Clear, this should include the development of an ASX Clear Client Fact Sheet. Any disclosures should be easily accessible, preferably in a centralised location.	CCP Standard 12	Both CCPs	Partly addressed. The Bank will follow up in the next assessment period. Consistent with the recommendations, the CCPs have made significant progress in enhancing their DMRFs over the Assessment period by: finalising ASX Clear's position on specific cover exposures progressing negotiations with an additional default broker for ASX Clear (Futures) publishing an ASX Clear client fact sheet developing information on the impact of a participant default on ETO investors for periodic roadshows. ASX also intends to implement plans to improve the operational efficiency of the transfer or porting of client ETO positions. As mentioned above, rather than developing a new risk management system for the CCPs, ASX will instead be making incremental enhancements to the CCPs' existing risk management systems as part of a five-year plan to be developed over 2017/18. During the Assessment period, one of ASX Clear's two default brokers resigned. Having only one default broker is not consistent with ASX Clear's Default Management Standard, therefore the Bank has made a specific recommendation that this be addressed. For more information see Section 2.3.
Timeliness and reliability of insurance payments. The CS facilities are encouraged to review their assumptions in respect of the reliability and timeliness of payments under their insurance policies in calculating their general business risk capital.	CCP Standard 14 and SSF Standard 12	All facilities	Fully addressed. ASX has reviewed its assumptions on the reliability and timeliness of insurance payments, concluding that they remain appropriate.
Commercial settlement banks. ASX Clear (Futures) is encouraged to review its risk management arrangements applicable to commercial settlement banks, and consider establishing a formal framework for the management of these risks.	CCP Standard 9	ASX Clear (Futures)	Ongoing. The Bank will monitor this as part of its ongoing supervision. ASX plans to develop a formal framework for the management of risks arising from its use of commercial settlement banks.
Replacement of cash equities clearing and settlement system. ASX Settlement is encouraged to continue to invest in the ongoing maintenance and smooth functioning of the CHESS system in the transition to its replacement system, ensuring that it continues to meet the needs of users and that it continues to support stability in the financial system. ASX is also encouraged to invest in appropriate contingency arrangements, to ensure the timely implementation of an alternative CHESS replacement system should the decision be taken not to proceed with the DLT solution.	SSF Standard 14	ASX Settlement	Ongoing. The Bank will review this in the context of both the external review of operational risk management and the CHESS replacement project. The CHESS system met its operational targets during the Assessment period. CHESS is also within scope of the external review of their operational risk management arrangements that ASX has initiated. The Bank has had discussions with ASX on its contingency plans should the decision be taken not to proceed with a DLT solution to replace CHESS. The Bank intends to continue to engage with ASX on this issue in 2017/18. For more information see Section 2.4.3.
Participant core capital requirements. ASX Clear is encouraged to complete enhancements to participant minimum core capital requirements.	CCP Standard 17	ASX Clear	Ongoing. Expected to be fully addressed in the next assessment period. ASX Clear released a response to feedback on its proposed changes to minimum capital requirements. ASX Clear has modified the proposal and intends to implement the new requirements in 2017/18. For more information see Section 2.1.5.
Concentration in tiered participation. ASX Clear and ASX Clear (Futures) are encouraged to review their approach to monitoring concentration risks in tiered participation, including triggers for further investigation and actions, and processes for ongoing review of concentration risk.	CCP Standard 18	Both CCPs	Ongoing. The Bank will consider this as part of its ongoing supervision.

Table 8: ASX CS Facility System Availability and Usage Statistics for 2016/17
Facility	Core system	Availability (per cent)	Peak usage (per cent)	Average usage (per cent)
ASX Clear	Derivatives Clearing System	100	22	9
ASX Clear/ASX Settlement	CHESS	100	30	21
ASX Clear (Futures)	Genium	100	22	9
ASX Clear (Futures)	Calypso	100	50	39
Austraclear	EXIGO	99.98	45	24

Assessment of ASX Clearing and Settlement Facilities List of tables

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