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04 March 2003
The Australian Stock Exchange Limited (ASX) has decided to restructure its clearing and settlement functions by creating a single central counterparty, the Australian Clearing House (ACH), which will provide clearing services across all ASX markets. The new structure is to be implemented in stages, becoming fully operational by March 2004.
ACH will hold the licences required under the Corporations Act for clearing
equities, warrants and fixed-interest products in place of the present licensee,
ASX Settlement and Transfer Corporation, as well as those for clearing options
and futures in place of the present licensee, Options Clearing House.
Details of the governance and capital structure of ACH are yet to be finalized.
However, it is anticipated that ACH will have direct access to sufficient capital
to manage its counterparty risk in the event of a clearing participant default.
This capital backing is currently provided by the National Guarantee Fund, which
is administered by a subsidiary of the ASX and which provides both a clearing guarantee
and funding for certain investor protection functions. That fund is to be terminated
when the new structure is established.
The federal government is considering the issue of investors' compensation
arrangements in the financial services sector within the framework provided
by the financial services reform legislation which came into effect on March
11 2002. While acknowledging that the National Guarantee Fund has served the
industry well to date, the ASX regards the framework provided by the new legislation
as a more appropriate and enduring means of performing the investor protection
funding role in the future.
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