AGENDA Forum Meeting

Transcription

1 AGENDA Forum Meeting Timing: Location: Monday, 23 June 2014 commencing at 11.00am Lunch from 12.30pm to 2.00pm ASX offices Level 1, 20 Bridge Street, Sydney Indicative Timing 1. Welcome and Introductions 11.00am 11.05am 2. Minutes from the 2 April 2014 meeting 11.05am 11.10am The Forum is invited to approve the minutes from the last meeting. 3. Business Matters 11.10am 12.10pm a. International cost benchmarking of cash market clearing and settlement services Oxera Consulting will present the findings of the international cost benchmarking study of cash market clearing and settlement services. b. Transitioning to a T+2 settlement cycle The Forum will be provided with a summary of the key feedback received through the consultation process. The Forum will be invited to consider a target implementation date for the introduction of a T+2 settlement cycle. 4. Cash Market Clearing and Settlement Performance Report 12.10pm 12.15am Report on the operational performance of cash market clearing and settlement services The agenda paper is provided for noting. 5. Governance Matters 12.15pm 12.25pm a. Matters from the meeting to be reported to the next meeting of the Boards of ASX Clear and ASX Settlement Forum Members are invited to put forward matters from the meeting to be included in the report to next meeting of the Boards of ASX Clear and ASX Settlement. b. Business Committee reports A Report from the Business Committee summarising the key issues from the 7 May 2014 Business Committee meeting, together with the meeting minutes, have been provided. Page 1 of 4

2 6. Next Meeting 12:25pm 12:30pm The next meeting of the Forum will be held on Wednesday, 1 October 2014, commencing at 10.00am Forum Members are invited to put forward agenda items for the next meeting. 7. Lunch 12:30pm 2:00pm Mr Glenn Stevens, Governor of the Reserve Bank of Australia, is the lunch guest. Page 2 of 4

3 ATTENDEES MEMBERS Company Name Job Title ASX Limited, ASX Clear and ASX Settlement Boards Dr Ken Henry AC Forum Chair Director ASX Clear and ASX Settlement Boards Mr Ian McGaw Director Users of clearing and settlement services Chi-X Australia Mr John Fildes Chief Executive Officer Citi Australia Mr Stephen Roberts Chief Executive Officer, Chief Country Officer CommSec representing Mr Paul Rayson Managing Director, CommSec Commonwealth Bank of Australia Deutsche Bank AG Mr James McMurdo Chief Executive Officer Macquarie Securities Group Mr Stevan Vrcelj Group Head Morgan Stanley Australia Mr Steven Harker Managing Director and CEO Patersons Securities Mr Michael Manford Executive Chairman and CEO Pershing Securities Mr Craig Mason Chief Executive Officer (by telephone) UBS Australia Mr Matthew Grounds Chief Executive Officer Industry stakeholders Australian Custodial Services Association (ACSA) Mr Martin Carpenter ACSA Director and Executive Sponsor for the Custody Operations Working Group Australian Financial Markets Mr David Lynch Chief Executive Officer Association (by telephone) Australian Payments Mr Chris Hamilton Chief Executive Officer Clearing Association (APCA) GBST Mr Stephen Lake Managing Director and Chief Executive Officer Group of 100 (G100) Mr Terry Bowen Executive Member Link Market Services and Mr Phillip Muhlbauer Chief Executive Officer Link Super Stockbrokers Association of Australia Mr David Horsfield Managing Director and CEO ASX Group Name Job Title Agenda Items in Attendance Ms Pippa Downes Director, ASX Clear and ASX Settlement Boards All Mr Elmer Funke Kupper Managing Director and CEO All Mr Peter Hiom Deputy CEO All Ms Amanda Harkness Group General Counsel & Company Secretary All Ms Danielle Henderson General Manager, Clearing Services All Mr Daniel Moran Deputy General Counsel (minute taker) All Mr Tim Hogben Executive General Manager, Operations 1-4 Mr Andrew White General Manager, Settlement Services 1-4 Mr Alan Bardwell Chief Risk Officer 3 Mr Ramy Aziz Chief Financial Officer 3 Mr Gary Hobourn Senior Economic Analyst, Regulatory and Public Policy 3 Ms Diane Lewis Senior Manager, Regulatory and Public Policy 3 Page 3 of 4

4 APOLOGIES MEMBERS Company Name Job Title Association of Superannuation Funds of Australia (ASFA) Ms Pauline Vamos Chief Executive Officer Financial Services Council Mr Greg Cooper Chairman HSBC Bank Australia Mr Tony Cripps Chief Executive Officer J.P. Morgan Mr Robert Priestley Chief Executive Officer, ASEAN and Australia and New Zealand Page 4 of 4

5 FORUM MEETING PAPER AGENDA ITEM 2 Topic Minutes from the 2 April 2014 meeting Date of the Meeting 23 June 2014 Purpose of this paper Action required To provide Forum Members with a copy of the minutes and report to the Boards of ASX Clear and ASX Settlement from the 2 April 2014 Forum meeting. To approve the minutes and report from the 2 April 2014 meeting. Draft minutes and the draft report to the Boards of ASX Clear and ASX Settlement from the 2 April 2014 Forum meeting were ed to all members of the Forum on 23 April 2014 for comments by 5 May A comment was provided on the draft minutes. In response to that comment, the draft minutes were amended in relation to agenda item 3B consultation on transitioning to a T+2 settlement cycle to include additional detail in the ASX CEO s comments regarding the expected impact on clearing fees if regulators were to approve a reduction of capital in the clearing house. The draft minutes were revised to reflect the point that by reducing the clearing fee proportional to a reduction in the default fund a stable return on equity would be maintained, all other things being equal. A copy of the minutes incorporating this revision is attached. There were no changes to the draft report to the Boards of ASX Clear and ASX Settlement suggested by Members. The minutes were signed by the Forum Chair on 13 May A copy of the minutes and report are provided in Attachments A and B. ATTACHMENTS Attachment A Report to the Boards of ASX Clear and ASX Settlement from the 2 April 2014 Meeting Attachment B Minutes from the 2 April 2014 Meeting Page 1 of 1

6 Agenda Item 2 Attachment A FORUM REPORT TO THE BOARDS OF ASX CLEAR PTY LIMITED AND ASX SETTLEMENT PTY LIMITED From the 2 April 2014 Forum meeting There were no material matters or recommendations from the 2 April 2014 Forum meeting to be raised with the Boards of ASX Clear and ASX Settlement. Business conducted and issues discussed by the Forum included the following: Approval of the minutes of the 2 October 2013 meeting. Noting of the update on Business Committee outcomes. One member commented that the proposed solution for protection of client assets may be difficult to achieve by November, based on feedback from payments providers. Noting of the report on consultation on transitioning to a T+2 settlement cycle. Members discussed the potential to reduce the default capital requirements of the clearing house and consequently the pricing of clearing services. Noting of the status of the work on international benchmarking, and that a full report would be provided at the next meeting. Approval of the expansion of the mandate of the Technical Committee to include CHESS replacement. One member commented that, in the context of the introduction of ISO messaging, a domestic registry may provide a halfway house between national and global standards. Noting of the cash market clearing and settlement performance report and management accounts.

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16 FORUM MEETING PAPER AGENDA ITEM 3A Topic International Cost Benchmarking Date of the Meeting 23 June 2014 Purpose of this paper Action required To advise the Forum of the international cost benchmarking for cash market clearing and settlement services. Oxera Consulting (Oxera) will present the findings of the benchmarking analysis at the Forum meeting. To note the findings of the cost benchmarking analysis presented by Oxera. BACKGROUND In the Code of Practice for the Clearing and Settlement of Cash Equities in Australia (Code of Practice), ASX committed to commission an independent international cost comparison of clearing and settlement services. As recommended by the Forum at its first meeting on 2 October 2013, the timeline for the preparation of a report on the international cost benchmarking has been accelerated to ensure that it could be produced by 1 July ASX consulted the Forum and the Business Committee on the scope and methodology of the benchmarking analysis prior to the work being commissioned. Following an RFP process, Oxera was engaged in January 2014 to undertake the analysis based on their earlier experience in preparing similar reports for European and Brazilian regulators and being best placed to deliver the report in the tight project timeframe given. The Business Committee was consulted during the project on some of the key elements of the user-profile analysis. Oxera also directly contacted some members of the Business Committee to discuss their perspectives on the services and fees included on the comparison. Oxera s discussions with participants assisted in validating some of their assumptions in the analysis. All providers of financial market infrastructure (clearing and settlement services) included in the benchmarking analysis were also contacted by Oxera to confirm their understanding of fees and services provided in each jurisdiction. OXERA BRIEFING ON FINDINGS Representatives from Oxera will present the results of their international cost benchmarking analysis and Forum members will be provided with the opportunity to ask the Oxera representatives questions in relation to the findings and analysis. A copy of the final Oxera Report will be available for Forum members prior to the meeting. Oxera will also present their findings to ASX Clear and ASX Settlement Boards, as well as the Business Committee, on Wednesday, 18 June. The findings of the international comparison may also provide a foundation to inform discussion on a range of strategic decisions on the structure of clearing and settlement services going forward. It is anticipated that the Oxera report will be released publicly and made available through the ASX website. Page 1 of 1

17 FORUM MEETING PAPER AGENDA ITEM 3B Topic Transitioning to a T+2 Settlement Cycle. Date of the Meeting 23 June 2014 Purpose of this paper Action Required To provide the Forum with a summary of the key consultation feedback received in relation to the introduction of a T+2 settlement cycle for cash equities, and to discuss implementation. The Forum is invited to consider the timing for the introduction of a T+2 settlement cycle for cash equities in Australia. INDUSTRY SUPPORT FOR A T+2 SETTLEMENT CYCLE The consultation process has demonstrated widespread industry support for the introduction of a T+2 settlement cycle for cash equities. Based on the feedback received through the consultation process and feedback from the Business Committee, it is recommended that an implementation date early in Q (CY) be targeted for the introduction of a T+2 settlement cycle. It is also proposed that the batch settlement cut-off time be pushed back from 10.30am daily to a time no later than 12 noon to support the introduction of a shorter settlement cycle. A batch settlement cut-off time which is up to an hour and a half later has been identified as important in facilitating timely settlement in a T+2 settlement regime because it will provide more time to address any errors in client processing and will better accommodate the Asian time zone. A target implementation date in Q would ensure an adequate transition period for the whole industry and allow sufficient time for all key stakeholders to be prepared for the introduction of a shorter settlement cycle. This timing would also assist in: managing the change in the batch settlement cut-off time, which will have implications for payment provider authorisation processes; liaising with industry in relation to the potential for the T+3 industry convention for debt market products to transition to a T+2 settlement cycle to address the complexities that will arise with a mismatch in settlement times if cash equities move to a T+2 settlement cycle and the underlying bond markets remain at a T+3 settlement cycle; and managing the changes required for settlement processes and payment methods for retail investors. CONSULTATION FEEDBACK ASX received 23 written submissions in response to the consultation paper on transitioning to a T+2 settlement cycle published in February. Eleven of the respondents requested that their submission be treated as confidential. All non-confidential submissions are available on the ASX website. Industry support for shortening the settlement cycle by a business day is based on the expected risk reduction for most industry stakeholders, the benefits of aligning the settlement cycle with global best practice and improved processing efficiencies. Whilst a range of views were received on implementation timing, they tended towards a Q (CY) implementation date. The key feedback received through the consultation includes: the majority of respondents indicated that the expected costs of implementing a T+2 settlement cycle would be minimal or immaterial on the basis that significant system changes would not be required. However, a number of respondents indicated that they expected the costs of implementation to be a little more significant (moderate) on the basis of their systems requiring more significant changes, end-to-end testing and changes to policies, operational procedures and client relations, including potential changes to client agreements; Page 1 of 3

18 Agenda Item 3B a range of views from respondents in relation to implementation timing, with around half of respondents indicating support for moving to T+2 in Q (CY) on the basis that it is more feasible and achievable for the whole industry and their clients. There were a significant number of respondents calling for a more aggressive timeframe for implementation in Of those calling for the introduction of T+2 in 2015, a number of respondents supported an implementation date in early 2015 to coincide with the introduction of T+2 in Europe and a few others indicated that mid-2015 (CY) was more realistic. - The respondents supportive of an implementation date in Q include a number of retail participants, custodians, share registries and other stakeholders. The primary reasons given for targeting an implementation date in Q included managing the changes required for settlement processes and payment methods for retail investors, the need for an adequate transition period to address all of implementation issues for industry and the benefits of leveraging the lessons and successes from the introduction of T+2 in Europe; strong support for pushing back the batch settlement cut-off time to assist in managing timely settlement and reduce the potential for an increase in settlement failure with the introduction of a T+2 settlement cycle. There were a range of views about what would be the optimum time for batch cut-off from 11.30am through to 1pm, with a majority of respondents suggesting that it should be moved to either noon or 12.30pm. - A number of respondents who were supportive of moving the batch settlement cut-off time to 11.30am or 12.00noon, indicated that they did not support moving the batch cut-off beyond these times on the basis of the importance of minimising the resultant delays to other daily back office tasks and afternoon settlement processes, and minimising the changes to funding processes. - Respondents that were supportive of moving the batch settlement cut-off time to somewhere between noon and 1.00pm were so on the basis that it would provide more time for client processing and would better accommodate operations, clients and custodians in the Asian time zone. strong opposition was expressed by a significant majority of stakeholders in relation to the idea of introducing a second batch settlement to manage late settlements. This was due to the operational duplication and significantly increased costs associated with a second batch. A number of respondents were also of the view that an additional batch settlement may not provide the right incentives for timely settlement; some respondents have raised the difficulties of managing ETF creations for cross-listed ETFs in the Australian market with a T+2 settlement cycle where the underlying securities in the US market settle under a T+3 regime. It was indicated that while accelerated creations in the primary market can be facilitated, they would not be guaranteed and, as such, could lead to increased settlement risk in relation to the corresponding Australian trades; some respondents have raised the issue of the mismatch in settlement times if cash equities move to a T+2 settlement cycle and the underlying bond markets remain at a T+3 settlement cycle, which would create complexities and may increase the settlement risk for domestic fixed income ETFs in relation to creations and redemptions of the ETF units in the primary market. This mismatch in settlement times between cash market products and the underlying bond market also raises issues for the trading in CDIs over AGBs; there was broad support for the ex period for all corporate actions and applicable reorganisations of capital to be reduced by a business day with the introduction of a T+2 settlement cycle to align the ex period with settlement cycle (that is, a 2 business day ex period will be implemented); there was strong support for trade netting to occur at the end of day on T+0 under a T+2 settlement regime (which maintains a consistent approach to trade netting which occurs 2 business days prior to settlement date). This was on the basis that it provides clarity of cash liquidity requirements a full day before settlement; the majority of respondents were supportive of the proposed changes to the ASX Settlement Operating Rules to reduce the settlement disciplinary milestones by 1 business day such that financial penalties will be levied for settlement fails on T+2 and the automatic close-out requirement will apply for settlement shortfalls that remain after batch settlement on T+4. This was on the basis that maintaining a consistent approach to the settlement disciplinary measures would appropriately Page 2 of 3

19 Agenda Item 3B incentivise timely settlement in a T+2 settlement regime. However, a number of respondents suggested that consideration should be given to applying a waiver of the fail fees for failed settlements on T+2 during an initial implementation phase; a large number of respondents commented on the importance of ASX continuing its discussions with NZX in relation to the benefits of NZX moving to a T+2 settlement cycle together with the Australian market given the number of dual-listed securities and the complexities a mismatch in settlement times may create for corporate actions. However, it was noted by a number of respondents that the Australian market s move to a T+2 settlement cycle should not be dependent on NZX shortening its settlement cycle; and one respondent expressed concern that the consultation paper did not examine the case for shortening the settlement cycle to T+1. In response to the consultation question querying the feasibility of adopting a T+1 settlement cycle for special markets, a large number of respondents indicated that the introduction of a T+1 settlement regime more broadly in the Australian market was a step too far at this point in time. CONSULTATION WITH THE BUSINESS COMMITTEE The Business Committee was consulted on the development of the consultation paper and was briefed on the key consultation feedback received in its 7 May 2014 meeting. Based on the consultation feedback received from stakeholders across the industry, the Business Committee endorsed: a Q (CY) target implementation date for the introduction of a T+2 settlement cycle for cash equities; and the batch settlement cut-off being changed to a time no later than noon to support the introduction of a T+2 settlement cycle. NEXT STEPS AND CONSIDERATIONS In order to progress the transition to a T+2 settlement cycle, ASX proposes to undertake the following in H2 2014: targeted consultation with APCA and payment providers in relation to changing the batch settlement cut-off time: complete an internal analysis of default management processes for the purpose of determining the revised batch settlement cut-off time; commence discussions with the RBA and ASIC regarding regulatory approval; and further discussions with EFT issuers and AFMA in relation to the industry convention for the settlement of debt products (i.e. debt products not quoted on the ASX market). The feedback from the Forum on the timing that should be targeted for the introduction of a T+2 settlement cycle for cash equities in Australia, and any other feedback relevant to the introduction of a shorter settlement cycle, will be provided to the Boards of ASX Clear and ASX Settlement for consideration in progressing this initiative. Page 3 of 3

20 FORUM MEETING PAPER AGENDA ITEM 4 Topic Report on the operational performance of cash market clearing and settlement services Date of the Meeting 23 June 2014 Purpose of this paper Action required To report on key performance metrics for ASX s clearing and settlement services. To note the agenda paper. BACKGROUND The clearing and settlement of equities performs a critical role in the operation of Australia s financial markets, helping to reduce counterparty and systemic risk, and provide transaction efficiency and certainty for end investors. Core processes that provide these benefits include novation, netting and settlement. Novation Through a contractual process known as novation, ASX Clear becomes the seller to every buyer and the buyer to every seller, making it liable for completing all cleared transactions on the relevant market. Novation is deemed to occur at the point of trade and performs two important functions: it replaces the clearing participants credit exposures to other clearing participants by substituting the clearing house as the central counterparty; and it enables the netting of settlement obligations. Through novation, ASX Clear provides protection to non-defaulting clearing participants (and, indirectly, their clients) from the inability of a defaulting clearing participant to meet its obligations. A key metric for monitoring novation is the percentage of on and off market trading that is novated. Prior to novation, CORE (for ASX) and the Trade Acceptance Service (for AMOs) perform verification functions for trades submitted to ASX Clear. Following verification trades are registered for clearing. If the verification conditions are not satisfied then trades are rejected and not submitted to CHESS. Once a trade is registered it is novated. Novation is deemed to have occurred at the point of trade. Netting ASX Clear is approved as a netting market for the purposes of the Payment Systems and Netting Act. This enables the netting of settlement obligations in each individual equity, providing greater market efficiency at the time of settlement and reducing participant transaction and funding costs. A key metric for monitoring netting is the percentage by which novated value is netted down for settlement. This metric is termed netting efficiency. Page 1 of 6

21 Agenda Item 4 Settlement ASX's model for settlement maximises efficiency, while minimising the risk of settlement failure. It does this by simultaneously transferring the legal ownership of shares and facilitating the transfer of money for those shares. This is done through a Model 3 multilateral net batch settlement mechanism with irrevocable settlement finality at the end of the processing cycle. The transfer of money occurs across the Exchange Settlement Accounts of payment providers in the RBA s Information and Transfer System (RITS). A key metric for monitoring settlement is the percentage of scheduled settlement that successfully settles (i.e. the opposite of the fail rate ). This metric is termed settlement efficiency. Service availability ASX s critical processes of novation, netting and settlement and are supported in ASX s core system CHESS. It is critical for market operations, that CHESS remains stable and available for processing. A key metric for monitoring systems availability is the percentage of systems uptime as measured against target availability times. The business service availability target for CHESS is 99.80%. For the current June 2014 quarter 1, the average monthly system availability was 100% for CHESS. The average monthly availability of CHESS has been 99.99% between November 2011 and May Trade Acceptance Service ASX Clear s Trade Acceptance Service (TAS) provides a mechanism for Chi-X to submit trades into the clearing house. The CHESS system performs the clearing and settlement functions. The business service availability target for TAS is 99.80%. For the current June 2014 quarter 1, the average monthly system availability was 100% for the TAS. The average monthly availability of the TAS has been 99.99% between November 2011 and May REPORTING ON CLEARING AND SETTLEMENT SERVICE PERFORMANCE The key metrics noted above on novation, netting efficiency and settlement efficiency for the current June 2014 quarter in addition to the March 2014 and December 2013 quarter are reported in Attachment A. They are also supported by charts demonstrating a longer reporting period in Attachment B. 1 up to 31 May 2014 Page 2 of 6

22 ATTACHMENT A SUMMARY METRICS RELATING TO THE PERFORMANCE OF ASX S CLEARING AND SETTLEMENT SERVICES Agenda Item 4 June 2014 Quarter 2 March 2014 Quarter December 2013 Quarter System Availability (CHESS) 100% 100% 100% System Availability (TAS) 100% 100% 100% Total Trades Accepted (ASX) 28,005,473 46,770,262 43,971,842 Total Trades Accepted (AMOs) 7,205,680 9,979,893 10,113,292 Total Trades Rejected (ASX) Total Trades Rejected (AMOs) Daily Average Traded Value (On and Off Market) $4.7 billion $5.0 billion $4.9 billion Daily Average Cleared Value $3.4 billion $3.6 billion $3.5 billion Percentage Novated 71.5% 71.8% 71.4% Daily Average Cleared Value Post-Netting $1.3 billion $1.4 billion $1.4 billion Netting Efficiency 60.1% 60.7% 60.0% Daily Average Settled Value (Including Non-Novated) $7.3 billion $7.7 billion $8.4 billion Settlement Efficiency 99.9% 99.9% 99.9% 2 up to 31 May 2014 Page 3 of 6

23 ATTACHMENT B PERFORMANCE OF ASX S CLEARING AND SETTLEMENT SERVICES FROM JUNE 2011 TO MAY 2014 Agenda Item 4 Page 4 of 6

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26 FORUM MEETING PAPER AGENDA ITEM 5B Topic Business Committee Reports Date of the Meeting 23 June 2014 Purpose of this paper Action required To provide Forum Members with a copy of the summary report and minutes from the 7 May 2014 Business Committee meeting. To note the agenda paper. The Business Committee has met once on 7 May 2014 since the Forum last met. In this meeting, the Business Committee was invited to provide feedback on the target implementation date for the introduction of a T+2 settlement cycle, early considerations of a principal to principal clearing participant model, and the appropriate approach to the second phase of corporate actions straight through processing. A copy of the summary report and the minutes for the 7 May 2014 Business Committee meeting are provided in Attachments A and B. ATTACHMENTS Attachment A Report to the Forum from the 7 May 2014 Business Committee Meeting Attachment B Minutes from the 7 May 2014 Business Committee Meeting Page 1 of 1

27 Agenda Item 5B Attachment A BUSINESS COMMITTEE REPORT TO THE FORUM From the 7 May 2014 Business Committee meeting At its 7 may 2014 meeting, the Business Committee was updated on progress in the international cost benchmarking analysis, the consultation feedback received in relation to transitioning to a T+2 settlement cycle for cash equities and the risk management framework for cash market transactions cleared through the central counterparty (ASX Clear). The Business Committee was invited to provide feedback on the target implementation date for the introduction of a T+2 settlement cycle, early considerations of a principal to principal clearing participant model, and the appropriate approach to the second phase of corporate actions straight through processing. Key Recommendations The Business Committee recommended: a Q (CY) implementation date for the introduction of a T+2 settlement cycle for cash equities should be targeted; the batch settlement cut-off should be changed to a time no later than noon to support the introduction of a T+2 settlement cycle; that further consideration should be given to the issues concerning the look through of regulatory obligations relating to retail clients to the clearing participant and a potential principal to principal clearing participant model should be examined. The initial focus should be obtaining clarity on the regulatory obligations (across the Corporations Act, the Market Integrity Rules and ASX s Operating Rules) relating to the end customer, in particular retail clients, which apply to the trading participant, clearing participant and settlement participant; and that the second phase of corporate actions straight through processing initiative should focus on corporate actions types with higher volumes and where it is feasible to do end-to-end straight through processing. Key Issues Discussed The widespread industry support for the introduction of a T+2 settlement cycle for cash equities and the balance to be struck in pushing back the batch settlement cut-off time to support the introduction of a shorter settlement cycle such that it minimised the resultant delay in daily post settlement processes. The importance of progressing the second phase of corporate actions straight through processing in the near to medium term to ensure the momentum of moving to straight through processing is maintained. An outline of a simplified principal to principal clearing participant model and the key issues for consideration, including the potential benefits and the significant regulatory challenges to implement any such model. Page 1 of 2

28 Agenda Item 5B Attachment A Agreed Actions 1. ASX to continue to engage with ETF issuers and further consider the appropriate response to the potential for increased failed settlements in the context of ETFs and the mismatch in the settlement period with the underlying which remains on a T+3 settlement cycle (i.e. fixed income securities). 2. ASX to provide the Business Committee a roadmap for cash market clearing and settlement services at its 27 August 2014 meeting which incorporates, among other things, the introduction of a T+2 settlement cycle, proposed implementation of measures to enhance flexibility in clearing participant structures and CHESS replacement. 3. ASX to update the Committee at its 27 August 2014 meeting on its proposed approach to obtaining clarity of the regulatory obligations relating to retail clients that apply to the clearing participant and consideration of a potential principal to principal clearing participant model. 4. ASX to include a roadmap for the second phase of the corporate actions straight through processing initiative in the forward work program. 5. ASX to update the Committee on the outsourcing Guidance Note at its 27 August 2014 meeting. Page 2 of 2

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