Assessment of ASX Clearing and Settlement (CS) Facilities against the Principles for Financial Market Infrastructures (Principles) 3. Summary Assessment and Recommendations

This Section summarises ASIC's and the Bank's Assessment of the ASX CS facilities, and sets out recommendations identified by ASIC and the Bank from this Assessment.

3.1 Summary Assessment

Tables 2 to 5 summarise ASIC and the Bank's Assessment of ASX's CS facilities against the Principles. In setting out this Assessment, ASIC and the Bank have applied the rating system used in the Principles for Financial Market Infrastructures: Disclosure Framework and Assessment Methodology produced by CPSS and IOSCO in December 2012.^[1] Under this rating system, a facility's observance of a Principle may be rated as:

Observed – The FMI observes the Principle. Any identified gaps and shortcomings are not issues of concern and are minor, manageable and of a nature that the FMI could consider taking them up in the normal course of its business.

Broadly observed – The FMI broadly observes the Principle. The assessment has identified one or more issues of concern that the FMI should address and follow up on in a defined timeline.

Partly observed – The FMI partly observes the Principle. The assessment has identified one or more issues of concern that could become serious if not addressed promptly. The FMI should accord a high priority to addressing these issues.

Not observed – The FMI does not observe the Principle. The assessment has identified one or more serious issues of concern that warrant immediate action. Therefore, the FMI should accord the highest priority to addressing these issues.

Not applicable – The Principle does not apply to the type of FMI being assessed because of the particular legal, institutional, structural or other characteristics of the FMI.

ASIC and the Bank have assessed how well each CS facility has complied with each Principle, and applied a single overall rating to each Principle, reflecting this assessment. The summarised assessments of each of the CS facilities against the Principles are supplemented by detailed information under each Key Consideration set out in Appendix A. Recommendations arising from the Assessment are set out in Section 3.2.

3.2 Recommendations

Where a CS facility has been assessed to observe a Principle, ASIC and the Bank nevertheless expect ASX to work towards continual strengthening of its observance of the Principle. ASX recognises this and has governance arrangements in place to motivate and encourage continuous improvement. Tables 6 to 9 include some recommendations encouraging such improvement in some specific areas. These are not exhaustive, and ASX is encouraged to continue to seek further improvements to its observance of the Principles.

Where a facility has been assessed to broadly observe a Principle, ASIC and the Bank will have sought evidence that a plan is in place to address the identified issue of concern within a clear, defined and reasonable timeframe, and that it would not be reasonably practicable for the facility to take such actions immediately in order to fully observe the Principle. Tables 6 to 9 also include recommendations that identify the steps required by ASX to address the relevant issues of concern and fully observe the applicable Principle.

Footnote

The disclosure framework and assessment methodology are available at <http://www.bis.org/publ/cpss106.htm>. [1]