Amendments to ASX Settlement Operating Rules

What's this about:
Notice reference number: 0896.19.08
Date published: 30/08/19
Effective as of: 30/09/19
Last updated: 30/08/19

ASX today formally lodged amendments to ASX Settlement Operating Rule 14.15.8 and Appendix 1 in respect of the processing of off-market takeover offers.

These amendments relate to one of two BAU business requirements identified by stakeholders through the Corporate Actions Working Group convened by ASX in 2017 in connection with the replacement of CHESS (captured as item 2 in Appendix 2 to ASX’s Consultation Paper CHESS Replacement: New Scope and Implementation Plan released in April 2018 available here).

They enhance the existing process for the acceptance of an off-market takeover offer in respect of CHESS holdings where a Holder instructs the bidder or their representative (Participant Bidder) that they accept a takeover offer, rather than their Controlling Participant.

They do this by introducing an indemnity from the Controlling Participant in favour of the bidder, Issuer, Participant Bidder, ASX Settlement and the Holder against all losses suffered as a result of the Controlling Participant failing to action a Participant Bidder initiated takeover offer acceptance message (MT036) within the scheduled time (by End of Day on the following Business Day). 

If a MT036 message is neither accepted nor rejected by the Controlling Participant, the holder’s acceptance into the takeover offer will not be actioned. This has the same impact as a rejection (ie the CHESS holding is not reserved in a sub-position in favour of the Participant Bidder). The existing indemnity provided by a Controlling Participant under the ASX Settlement Operating Rules however only extends to a rejection by a Controlling Participant of a MT036 message without adequate justification, not to a failure to accept or reject the message. This amendment extends the existing indemnity to address this gap and aims to ensure the timely actioning of MT036 messages.

These amendment do not address another aspect of this BAU business requirement which would have imposed an additional obligation on Controlling Participants to seek the relevant Holder’s instructions when they receive a MT036 message, so as to be able to respond within 1 business day of receipt of that message on the basis of those instructions. ASX is not proceeding with this aspect at this time following feedback received through ASX’s Consultation Paper in 2018 and further bilateral conversations with stakeholders which indicated that the introduction of such an obligation on Controlling Participants could create additional uncertainty where Holders had already provided acceptance to the Participant Bidder, delay the processing of a MT036 message and lead to a higher rejection rate. Such an outcome would be contrary to the rationale for this business requirement of enhancing the existing process for acceptance of an off-market takeover offer and reducing the risk of an entitled holder missing a takeover offer.

These amendments in mark-up are provided here.

Effective Date

Subject to
regulatory clearance, these rule amendments will become effective on Monday, 30
September 2019.

What do I need to do by when?

ASX Settlement participants that are Controlling Participants need to comply with their existing obligation under ASXS Settlement Operating Rule 14.14.9 to accept or reject a MT036 message by End of Day on the following Business Day.

Need more information?

Issued by

Con Korkofigas

Senior Manager and Senior Legal Counsel

Contact information

Con Korkofigas

Senior Manager and Senior Legal Counsel

Adriana Wild Taylor

Legal Counsel