Assessment of ASX Clearing and Settlement Facilities – September 2024 1. Executive Summary

The Reserve Bank of Australia (RBA) has carried out its annual Assessment of the ASX Clearing and Settlement (CS) facilities over the period 1 July 2023 to 30 June 2024. The Assessment covers the four ASX CS facilities: two central counterparties (CCPs) – ASX Clear and ASX Clear (Futures); and two securities settlement facilities (SSFs) – ASX Settlement and Austraclear. The RBA has assessed the CS facilities’ compliance with applicable Financial Stability Standards (FSS), as well as the CS facilities’ general obligation to do all other things necessary to reduce systemic risk.

The RBA’s assessment is that the ASX CS facilities observe many of the FSS. The RBA requires ASX to place high priority on board oversight and stakeholder engagement, as well as recommendations related to the management of risk, technology asset lifecycles and vendors.

1.1 Key findings

The ASX CS facilities were rated as observed or broadly observed for many of the FSS. There are three FSS for which all ASX CS facilities were rated as partly observed:

  • Governance: There have been a number of improvements in ASX’s governance arrangements, including progress in the effectiveness of ASX’s Internal Audit function. However, ASX needs to continue its focus on the effectiveness of board reporting and facilitating constructive stakeholder engagement.
  • Framework for the Comprehensive Management of Risks: The RBA continues to hold concerns about ASX’s risk culture and its persistently heightened risk position.
  • Operational Risk: The RBA undertook a detailed review of selected aspects of the Operational Risk FSS. The RBA has concerns regarding ASX’s management of asset lifecycles, projects and vendors and has made a number of recommendations for their improvement.

Other key findings relating to the FSS include:

  • Segregation and Portability: The RBA found that both CCPs’ adherence to the FSS is consistent with a rating of broadly observed. The RBA considers that both CCPs should include porting in their default management ‘fire drills’ and benchmark their portability arrangements against international best practice.
  • General Business Risk: The RBA downgraded ASX’s CS facilities to broadly observed. The RBA expects ASX to complete work to develop a wind-down plan for its CS facilities.
  • Tiered Participation Arrangements: The RBA downgraded both CCPs to a rating of broadly observed. The RBA expects ASX to develop a formal policy to identify, monitor and manage risks that arise from tiered participation arrangements and evaluate any gaps in its ability to manage these risks.
  • Regulatory Reporting: The RBA rated all ASX CS facilities as broadly observed. The RBA expects ASX to review and improve its regulatory reporting processes, including for major inflight projects.