SECOND QUARTER 2012 UPDATE TECHNOLOGY UPGRADE RELEASES FOR CLEARING AND SETTLEMENT SERVICES

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1 SECOND QUARTER 2012 UPDATE TECHNOLOGY UPGRADE RELEASES FOR CLEARING AND SETTLEMENT SERVICES INTRODUCTION To assist Participants and system vendors with their planning and resource allocation and to improve their ability to choose which ASX clearing and settlement services to utilise (we recognise that customers are seeking more tailored service offerings) ASX has prepared this document detailing its approach to managing technology upgrade releases for its clearing and settlement services and providing the current schedule of releases. This document follows the previous edition issued in December A similar document is available on request about ASX s approach to managing its schedule of releases for its cash market trading system, ASX Trade. Purpose of this Document This document details ASX s approach to managing technology releases relating to its clearing and settlement services by: explaining how ASX categorises technical releases relating to its clearing and settlement services and the responses available to users; including information about communications and support; and providing an overview of the schedule of planned Mandatory and Enhancement s relating to ASX s clearing and settlement services for the next thirteen months. The objectives of ASX s approach to Management are to ensure that: the impact of each technical release relating to its clearing and settlement services is managed in a controlled and transparent manner; and implementation of releases and change support is achieved as efficiently as possible for all users. Please note that all release dates are subject to the successful completion of testing and the approval by regulatory authorities of any relevant rulebook changes associated with the release. Notwithstanding ASX s approach to Management, Participants and system vendors retain responsibility for their own readiness for these release dates. RELEASE MANAGEMENT APPROACH SUMMARY ASX has two broad categories of standard scheduled releases - Mandatory s and Enhancement s. Mandatory s require Participants to amend their applications connected to and, in some cases, their operational processes related to the relevant ASX clearing and/or settlement service. Enhancement s allow Participants to choose whether or not to amend their applications to take advantage of a new service. 1

2 There will also be a change freeze period during which ASX will not implement any release other than a Critical Correction (unless required to do otherwise by a regulator or regulatory obligation). The change freeze period extends from 15 December until 15 January. Depending on the system, other change freeze periods may also be advised from time to time. ASX aims to give users certainty on the timing of Mandatory s while allowing them, to the greatest extent possible, to choose which Enhancement to implement and when. This will support efficient resource allocation and business prioritisation for users, while delivering ASX technical innovations to those sections of the market that value them most highly. RELEASE CATEGORIES Mandatory A Mandatory will require all users and venders to amend their applications that directly connect to the relevant ASX clearing and/or settlement service. ASX may require accreditation of each application either in entirety or to capture the scope of the mandatory change. A Mandatory may comprise any change, including improvements and corrections to the messaging structure, logic (API in some instances) or content associated with the relevant system. Enhancement An Enhancement is designed to introduce incremental innovation into ASX s clearing and/or settlement functions without requiring all users to upgrade all applications at a single point in time. An Enhancement is voluntary and enables a user to prioritise its business objectives and allocate its resources as it requires. General A Mandatory may contain Enhancement or Configuration (see below) components if significant efficiencies are present for users or the ASX. The inclusion of an Enhancement component in a Mandatory does not prevent a user from choosing not to develop to the enhancement nor will a user be required to obtain accreditation against the enhancements. Critical and Configuration s Critical Correction ASX will implement a Critical Correction in the event of a critical production fault needing the immediate implementation of a change. Dependent on the fault the change may require users to amend their applications. Configuration ASX will routinely implement maintenance (including non-critical fault fixes) and improvement changes to the configuration and performance of its internal systems without notice to users. However, ASX will provide notice and information to users when it considers that a Configuration may impact user applications or operations. COMMUNICATION Notification ASX will publish a quarterly update to the schedule of system upgrades included in this document, detailing the anticipated implementation windows and content for each scheduled Mandatory and Enhancement. New initiatives will also be added once the timing of their implementation is clear. Documentation Detailed documentation on the scope, technical specifications and projected timeframes for individual Mandatory and Enhancement s will be provided by ASX no later than 90 days prior to the implementation date (unless required to do otherwise by a regulator or regulatory obligation, or to resolve a critical production issue). ASX will confirm the go-live date of each release by ASX Notice generally at least two weeks prior to implementation (unless otherwise agreed with stakeholders). 2

3 SUPPORT Specific points of contact may be provided for queries during the development phase of a clearing and settlement system release. This will be notified in release-specific documentation issued at the time. At go-live, the Clearing and Settlement Operations team will generally be the first point of contact for implementation queries and issues relating to releases, as follows: System Telephone Derivatives Clearing System () Deriv.clearing@asx.com.au chesshelp@asx.com.au Austraclear (02) exigo@asx.co.au Additional go-live support arrangements and points of contact may also be established for specific releases, details of which will be provided where applicable in release-specific documentation. Any queries on the schedule as a whole should be directed to Eloise Wett, General Manager, Settlement and Digital Services on (02) or at Eloise.Wett@asx.com.au. 3

4 SCHEDULE OF PLANNED RELEASES AS AT APRIL 2012 Proposed Mandatory and Enhancement s for ASX s Clearing and Settlement Services All release dates are subject to any necessary regulatory approvals and the successful completion of all implementation system testing. dates will be reconfirmed prior to go-live by ASX and will be reviewed in a quarterly update to this schedule (per the communication section above), with new initiatives being added once the timing of their implementation is clear. 4

5 The above schedule has been updated to reflect more detailed planning around near future technical releases. In addition, it has been designed to minimise the potential impact of releases and to ensure the most efficient bundling of software development and testing effort. You will note some items present on the previously published release schedule have been removed as follows; Clearing & Settlement Fee Unbundling ASX is developing the capability to unbundle cash equity clearing and settlement fees. related technical changes specific to this capability are internal facing and hence ASX will no longer track this activity in the clearing and settlement release management document. Stakeholders will be provided with advance notice of any fee structure changes separate to this communication. Phase 1 Technical changes relating to this initiative will be released as part of Phase 2. Phase 1 will provide data on ASX Online enabling Clearing Participants to download and monitor their potential end-of-day margining numbers on a daily basis ahead of the actual go-live. ASX expects Phase 1 data to be available by the end of June Table of Proposed Mandatory and Enhancement s for ASX s Clearing and Settlement Services as at APRIL 2012 Fee Date Q June Q Functionality ASX Managed Funds Service (AMFS) Service Phase 2 ASX Collateral Phase 3 Entity ASX Settlement ASX Settlement Type Enhancement Mandatory Description New suite of messages to support the settlement of primary market fund applications and redemptions routed via ASX to fund managers unit registries from ASX Participants. Delivery of various system improvements. Details of changes to be confirmed. ASX Clear Mandatory release for go-live of cash market margining on an end-of-day basis only and amendments to the LEPO settlement methodology. ASX Settlement Enhancement To support a centralised collateral management service. This entails the introduction of new account types, new messaging, position status monitoring and the role of a collateral management agent in the system. technical release in ; service go-live schedule for Q ASX Clear Mandatory release for go-live of cash market margining on an intraday basis, as an adjunct to the end-of-day functionality implemented in Phase 2. 5

6 Date Q May October Q Austraclear System Austraclear System ASX Trade Accept (SFEIN Functionality ASX Equity OTC Clear Phase 1 1 Entity ASX Clear Type Mandatory Description Clearing of OTC equity options traded bilaterally. Phase 1 covers crossed trades only, the top 20 classes, a strike range limited to between % of the underlying spot price, and expiries no more than 12 months in the future, and no less than 5 business days for new OTC contracts (existing series with less than 5 business days to expiry can also be traded). In Phase 1, trade reporting and validation will be largely manual processes. CME SPAN 4.0 Phase 2 1 ASX Clear Mandatory Migration from ADMS, the current margining methodology used on ASX Clear based on the TIMS algorithm, to CME SPAN 4.0. Phase 2 Phase 3 Austraclear System Service ASX Clear Mandatory release for go-live of cash market margining on an end-of-day basis only and amendments to the LEPO settlement methodology. ASX Clear Mandatory release for go-live of cash market margining on an intraday basis, as an adjunct to the end-of-day functionality implemented in Phase 2. Austraclear Mandatory Delivery of various system useability improvements and the SWIFT MT564 Corporate Action Message. ASX Collateral Austraclear Enhancement To support a centralised collateral management service. This entails the introduction of new account types, new messaging, position status monitoring and the role of a collateral management agent in the system. ASX Trade Accept Phase 1 ASX Clear (Futures) Mandatory Austraclear service go-live scheduled for. Replacement of the ASX 24 SFEIN system (previously known as the Sydney Futures Exchange Information Network) with a system that meets ASX contemporary support requirements for registering off market 1 There are changes to the OI to support ASX Equity OTC Clear Phase 1. While there are no additional messaging changes to support CME SPAN 4.0, some existing end of day files and associated tables will become obsolete and new files and tables, including the actual SPAN file, will come into existence. There will be a single release of MCM that will provide support for both projects. 6

7 Date Functionality Entity Type Description Replacement) transactions. Phase 1 covers EFP and Block Trade registrations for ASX 24 products. ASX Trade Accept ASX Equity OTC Clear Phase 2 ASX Clear Enhancement Clearing of OTC equity options traded bilaterally. Phase 2 will include the development of an internet portal that will allow Participants to manage the OTC trade reporting process and enforce all required validations. The restrictions on crossings, stocks, strikes and expiries in Phase 1 will be reviewed for Phase 2. Please note that all release dates are subject to the successful completion of testing and the approval by regulatory authorities of any relevant rulebook changes associated with the release. dates will be reconfirmed prior to go-live by ASX and will be reviewed in a quarterly update to this schedule (per the communication section above), with new initiatives being added once the timing of their implementation is clear. Notwithstanding ASX s approach to Management, Participants and system vendors retain responsibility for their own readiness for these release dates. 7