Introduction of the ASX Code of Practice for Clearing and Settlement of Cash Equities in Australia

The Council of Financial Regulators (CFR) today notes the release by the ASX of a Code of Practice for Clearing and Settlement of Cash Equities.

The Government announced on 11 February 2013 that it had accepted the recommendation of the Council agencies that a decision on any licence application from an equities clearing facility seeking to compete in the Australian market be deferred for two years. The Government also accepted the Council's recommendation that the ASX work with its key stakeholders to develop a Code of Practice to govern the conduct and organisation of its cash equity market clearing and settlement operations.

The Council agencies developed principles to underpin the Code. These principles are: user input to governance; transparent and non-discriminatory pricing of clearing and settlement services; and access to clearing and settlement infrastructure on non-discriminatory and transparent terms.

The ASX has developed the Code of Practice in response to those principles and in consultation with industry and market operators that use its clearing and settlement facilities.

The Council agencies will monitor the effectiveness of the Code on an ongoing basis over the next 18 months. The Council agencies will commence their public review of the Code in late 2014, prior to the expiry of the two year deferral period in February 2015. This will involve consideration of whether the Code is achieving the desired outcomes, the level of acceptance by industry and the ASX's adherence to the Code.

The Council agencies will then advise the Government on options that could include maintaining the Code for a further period, alternative regulatory arrangements for the ASX or allowing for the introduction of competition.