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Clearing services and pricing

ASX is committed to the principles of transparency and non-discrimination in pricing its cash equities clearing and settlement services.

Clearing services

Customer benefits

ASX Clear services are provided to clearing participants, who are typically brokers or clearing and custody service providers. The two key benefits to clearing participants are netting efficiencies and counterparty credit protection.

Netting efficiencies

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.

The left-hand diagram below depicts participant A’s trading activity in a single stock. At a gross level, participant A has sold $100 of shares to, and bought $50 of shares from, participant B. Participant A has also sold $30 of shares to, and bought $50 of shares from, participant C. Post novation, participant A’s trades with participants B and C are replaced with trades between participant A and ASX Clear. Post netting, this becomes a net sale of shares for $30 from participant A to ASX Clear (right-hand diagram).

Counterparty credit protection

Through novation, ASX Clear provides protection to non-defaulting clearing participants (and, indirectly, their clients) from a defaulting clearing participant which does not meet its obligations. Different arrangements apply for different categories of financial product transactions.

Clients, typically investors, must be fully informed and satisfied with the creditworthiness and performance risk of their clearing participant. ASX Clear does not interpose itself between a clearing participant and its clients.

Novation does not change the exposure that clients have if their own clearing participant defaults and cannot meet its obligations to them.

Clearing Pricing

ASX Clear is the central counterparty for products traded on ASX and other unaffiliated Approved Market Operators. ASX Clear charges participants where a trade is submitted for registration and/or clearing.

Cash market clearing fees

Headline cash market clearing fee

Service  Explanation  Charge
Equities Fee for registration and clearing of cash equity trades Ad valorem of 0.225bp

Worked example - headline clearing fee

A transaction of 1,000 shares at $15.15 involving 2 participants is novated by ASX Clear.

The transaction value = 1,000 × 15.15 = $15,150

ASX Clear will charge each participant a transaction clearing fee of 0.225bp of the transaction value.

The clearing fee = 15,150 × 0.00225% = $0.34 per participant.

Cash market clearing fee schedule

The fee schedule sets out the fees for cash market clearing services for ASX Clear participants and a brief service description for each of those services.  It also provides the details of the ASX cash market clearing revenue sharing scheme.

Participants with queries on the fee schedule should contact their ASX Account Manager.

 

Transparency in relation to fee changes

Participants are notified of any fee changes by way of market notice.

If ASX changes cash market clearing and/or settlement fees, participants will be provided with information to assist in their analysis of the impact of clearing and settlement price changes on their total service costs. In the event that fees are changed, participants will be notified individually of the pricing changes and the implications for their businesses.

Market notices are available via the participant portal on ASX Online.  For access contact the ASX Online Help Desk on 131 279 or email.

Non-discrimination - fee waivers and discounts

ASX Clear and ASX Settlement do not discriminate between different participant types with respect to fees and charges.

Under Financial Stability Standard guidelines, ASX is required to publish its policies with respect to any available fee waivers and discounts.  Under ASX’s Cash Equities Clearing and Settlement Code of Practice, ASX has committed to provide the details of the applicable terms, conditions and eligibility criteria of any rebates, revenue sharing arrangements and discounts applicable to each cash market clearing and settlement service.

Fee and billing process

ASX Clear and ASX Settlement are wholly-owned subsidiaries of ASX Limited (ASX) and are responsible for the provision of clearing and settlement services to ASX participants.

Fees are invoiced by ASX Operations (which is also a wholly-owned subsidiary of ASX) on behalf of ASX Clear and ASX Settlement.  Invoices are issued monthly in arrears.

ASX Clear provides quarterly clearing and settlement activity reports on request to cash equity clearing and settlement participants. The reports include a breakdown of headline services, quantities and unit prices over the calendar quarter, including historical charting.