The Reserve Bank of Australia said on 23 September that ASX clearing and settlement facilities still fell short of its expectations in several important areas. One or more facilities only partly observed standards covering governance, comprehensive risk management, credit risk and operational risk. The central bank will retain heightened supervisory scrutiny. It made no new recommendations in the annual assessment.
ASX Clear and ASX Settlement were upgraded from not observed to partly observed on operational risk. The RBA linked that change to improved CHESS resourcing and contingency arrangements. It cautioned that the upgrade did not represent a broader finding that operational risk had improved across the group.
GOVERNANCE AND RESILIENCE GAPS
The RBA said ASX’s governance arrangements had long not given sufficient priority to the interests of its clearing and settlement facilities, and that it was too early to assess whether recent changes would strengthen decision-making. Austraclear, the debt-securities settlement facility, was also rated partly observed for operational risk.
The assessment said further work was required to maintain critical services during severe or prolonged disruption. ASX established a Transformation Portfolio to address longstanding shortfalls in governance, capability, culture and risk management, and the RBA set out the outcomes ASX must achieve through it.
SUPERVISION REMAINS INTENSIVE
The findings follow the ASIC Inquiry into ASX Group, which concluded that barriers in ASX’s governance, capability and culture required a fundamental reset. The annual assessment acknowledges progress, but preserves supervisory pressure on the operator of infrastructure central to Australian securities clearing and settlement.
During the next assessment period, the RBA will focus on the governance and independence of the facilities, continuity of critical services, financial risk models, data and controls, and ASX’s transformation.