ASX Clear has today published amendments to the ASX Clear Operating Rules and Procedures which propose a consolidation of the two capital measures that non-bank  ASX Clear participants are required to maintain under the existing rules into a single capital measure. These rule changes were the subject of a consultation paper issued on 14 October 2020 and a response to consultation issued on 17 January 2022.

The attached rule amendments are substantively the same as the amendments proposed in the 17 January 2022 response to consultation paper. However ASX has (a) reduced the prescribed timeframe required for a participant to be able to demonstrate its eligibility to be approved as a Dual Capital Participant to three consecutive years (originally proposed to be five consecutive years) and (b) removed the ‘margin method’ and ‘arbitrage method’ position risk calculation methods.

A number of miscellaneous rule changes are also being proposed.

What's changing?

ASX will be amending the Rules to:

• introduce a single capital measure for non-bank ASX Clear participants, but retain an alternate framework for low risk direct clearing participants;
• limit the amount of Approved Subordinated Debt (ASD) that can be included in Liquid Capital, other than for low risk direct clearing participants subject to the alternate framework;
• allow for a temporary increase in the amount of ASD that can be included in Liquid Capital.

The rule and procedure changes can be viewed in attachment A and B.

Attachment C provides further detail of the proposed miscellaneous rule amendments.

What do I need to do by when?

ASX Clear participants (in particular, non-bank ASX Clear participants) should prepare for these changes to ensure compliance with the new rules when they come into effect.

Effective date

As referenced in ASX market notice 0921.23.09 published on 8 September 2023, ASX has now commenced a project to replace the Return Lodgement and Monitoring (RLM) system.  The effective date of the proposed rule changes included in this market notice cannot be before the go-live of the replacement RLM system because the replacement system will provide the functionality to accommodate the capital reporting changes under the rule amendments.

This means that the proposed effective date of these rule changes is still to be confirmed, however it will be the later of (a) mid-June 2024 or (b) the go-live date of the RLM replacement system. This allows a minimum of six months notice to participants of the final rule changes, as referenced in the 14 October 2020 consultation paper. ASX will confirm the effective date of these rule changes in a separate market notice. The Capital Liquidity Handbook will also be updated in due course.

Need more information?

Please see links below to the market notices relating to the 14 October 2020 consultation paper and 17 January 2022 response to consultation paper.

• 14 October 2020 consultation paper market notice
• 17 January 2022 response to consultation paper market notice

Issued by

Colm Grace,
General Manager, Clearing Risk Policy & Management

Contact information

Marisa Khan, Trully Smith
1800 635 850
CRAteam@asx.com.au

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