ASX needs to make rule amendments to facilitate the implementation of the new system that will replace CHESS. These rule amendments are being progressed through three tranches.
The consultation rounds on the first and second tranches of draft rule amendments to support the new system have now been completed. A further final round of consultation incorporating both the third tranche of draft rule amendments to support the new system and a consolidated rules package across the three tranches commenced 31 August 2021, with a 15 week consultation period concluding 14 December 2021.
The rule development timeline captures the key dates for the regulatory and public consultation processes across the three tranches of rule amendments for Day 1 of the new system. It also covers rule amendments addressing new business requirements generated through industry consultation for CHESS Replacement but which are not dependant on the new system and which have now been delivered through ASX business as usual (BAU) processes or the Corporate Actions STP Phase 2 Project. The timeline shows both completed and upcoming processes.
Public Consultation on Tranche 1
The first tranche of operating rule amendments was released for public consultation on 15 November 2019, with the period for feedback closing on 17 January 2020. The content related to accounts, participants, securities and pre-settlement aspects for Day 1 CHESS replacement system functionality.
ASX received a total of 12 submissions from a range of stakeholders including participants, registries, industry bodies and vendors.
On 22 May 2020, ASX released its response to consultation feedback received on the tranche 1 draft rule amendments. The response to consultation feedback contains:
- a summary of feedback received in stakeholder submissions;
- ASX's response to such feedback; and
- the draft rule changes made to the ASX Settlement Operating Rules and Procedures and ASX Clear Operating Rules and Procedures, which take into account feedback received.
Public Consultation on Tranche 2
The second tranche of operating rule amendments was released for public consultation on 21 February 2020, with the period for feedback closing on 29 May 2020 (extended from 3 April). The content related to corporate actions, mFund and RTGS payment aspects for Day 1 CHESS replacement system functionality. RTGS supports payments for corporate actions involving entitlement acceptances as well as payments for bilateral demand settlement instructions (addressed in tranche 1 rule amendments).
ASX received a total of 11 submissions from a range of stakeholders including participants, registries, payment providers, an industry body and an approved listing market operator.
On 24 September 2020, ASX released its response to consultation feedback received on the tranche 2 draft rule amendments. The response to consultation feedback contains:
- a summary of the feedback received in stakeholder submissions;
- ASX's response to such feedback; and
- the draft rule changes made to the ASX Settlement Operating Rules and Procedures, which take into account feedback received.
ASX’s response to consultation feedback on the revised implementation timetable released in October 2020 removed from Day 1 scope of the new system certain functionality addressed in the tranche 2 rule amendments. As a result, the rules supporting:
- Electronic acceptance and payment for entitlement offers,
- CHESS processing of elections as to alternate forms of consideration under schemes of arrangement
have been removed from the consolidated rules package (referred to below) and revised timing for these rules will be considered following Day 1 (with that functionality to be part of a future release (the timing for which is yet to be determined)).
Public Consultation on Tranche 3 and consolidated rules package
The third tranche of operating rule amendments as well as a consolidated rules package across all the rule amendments for the new system was released for public consultation on 31 August 2021. The content in tranche 3 relates to netting, settlement, reporting and miscellaneous amendments for Day 1 CHESS replacement system functionality, including as revised to reflect changes to netting and settlement workflows as consulted on in 2021. As part of the miscellaneous amendments, they also include transitional rules addressing migration aspects for the cutover to the new system.
The consultation paper invites feedback from users and other stakeholders on the operation of the draft tranche 3 rule amendments, including any unintended consequences, as well as the combined package of rule amendments.
Written submissions are requested by Tuesday 14 December 2021.
ASX will provide its response to consultation in early June 2022, ahead of formal lodgement of the combined rules package with ASIC in early September 2022 (subject to regulatory clearance).