A GUIDE TO BECOMING AN ACH PARTICIPANT

Transcription

1 A GUIDE TO BECOMING AN ACH PARTICIPANT JANUARY 2009 Copyright 2007 ASX Limited A.B.N All rights reserved 2007 No part of this document may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopy, recording or otherwise, without the prior permission of ASX Limited.

2 CONTENTS Contents...1 A business to suit your needs...1 Types of ACH Participants...1 Types of ACH Clearing Participants General Participant can clear both Cash Market and Derivatives Market Transactions for other Market Participants as well as itself General Participant can clear Cash Market Transactions for other Market Participants as well as itself General Participant can clear Derivatives Market Transactions for other Market Participants as well as itself Direct Participant can clear both Cash Market and Derivatives Market Transactions for itself only Direct Participant can clear Cash Market Transactions for itself only Direct Participant can clear Derivatives Market Transactions for itself only...8 How do you become an ACH Participant?...9 The Application Process...10 Pre-lodgement discussions...10 Application process...10 Successful applicants...10 How to appeal if your application is rejected...10 How does a new ACH Participant establish clearing operations?...11 Critical Tasks - Establishing Operations...11 Step One - ASX Equity Markets...13 Step Two Market Supervision Compliance with Admission Requirements including Capital Requirements and Risk Management Framework...14 Step Three - Information Services...16 Steps Four and Five CHESS and DCS...17 Step Seven - Administration...18 Inactive Participants...18 Costs of gaining access to ASX markets...19 Further Information...19 Important Disclaimer...19 Appendix A - Abbreviations...20 Appendix B Useful Websites...20

3 TABLES Table 1 Critical tasks to establish operations Table 2 Application and establishment milestones Table 3 Prerequisites for admission as an ACH Participant Table 4 Pre-requirements for a new ACH Participant Table 5 ASIC and other government pre-trading requirements Table 6 Pre-trading requirements for Information Services Table 7 Critical tasks for establishing a clearing and settlement system... 17

4 A BUSINESS TO SUIT YOUR NEEDS Types of ACH Participants An ACH Participant means an entity admitted as a Participant under the ACH Clearing Rules. ACH Participants can choose one of the following general business models: 1. General Participant* can clear both Cash Market and Derivatives Market Transactions for other ASX Market Participants as well as itself and its clients. 2. General Participant* can clear Cash Market Transactions for other ASX Market Participants as well as itself and its clients. 3. General Participant* can clear Derivatives Market Transactions for other ASX Market Participants as well as itself and its clients. 4. Direct Participant can only clear both Cash Market and Derivatives Market Transactions for itself and its clients. 5. Direct Participant can only clear Cash Market Transactions for itself and its clients. 6. Direct Participant can only clear Derivatives Market Transactions for itself and its clients. The business models are presented diagrammatically on pages 3 to 8, along with a description of the key features and the current fee structure of each model. * General Participants can also clear for other ACH Participants and their clients. Page 1 April 2007

5 ACH PARTICIPANT STRUCTURE Entity Name ASX Market Participant ACH Participant ASTC Participant General Participant Direct Participant Categories of Market Transaction Cash Market Transaction Derivatives Market Transaction ASX Cash Market Transaction Other Cash Market Transaction Options Market Transaction Futures Market Transaction ASX Options Market Transaction Other Options Market Transaction ASX Futures Market Transaction Other Futures Market Transaction Self Settler Uses 3SP Self Settler Uses 3SP Page 2 April 2007

6 TYPES OF ACH CLEARING PARTICIPANTS 1. General Participant can clear both Cash Market and Derivatives Market Transactions for other Market Participants as well as itself Clients Confirmations Registration ASX Market P articipant A CH Participant A STC Participant Trades Clearing messages S ettlm ent m essages Bank ITS (Integrated Trading) System) Trade advice CHESS and DCS P aym ent/collateral Facilities Features - Can provide third party clearing services to ASX Market Participants. - Clients are afforded some protection by the National Guarantee Fund. - As an ACH General Participant you handle the clearing process and bear the capital requirements for all transactions. You will need to have appropriate facilities and framework in place (including procedures and personnel) to adequately manage the counterparty risks that arise from the clearing function, together with adequate financial resources and systems to comply with ACH Clearing Rules Section 5. - You can achieve economies of scale by spreading your systems and processing costs over a number of ASX Market Participants. - You may provide other processing services to ASX Market Participants (e.g. issuing of confirmations). - You will have expertise in providing clearing services. ASX Fees 1 include - A$220,000 application fee (including GST) - A$8,250 annual fee (including GST) (paid in six monthly instalments) - ACH clearing fees - ASTC Settlement fees (as applicable) - Market Information fees 1 Please refer to the Schedules of Fees for all current fees Page 3 April 2007

7 2. General Participant can clear Cash Market Transactions for other Market Participants as well as itself Clients Confirmations Registration ASX Market P articipant A CH Participant A STC Participant Trades Clearing messages S ettlm ent m essages Bank ITS (Integrated Trading System) Trade advice CHESS P aym ent/collateral Facilities Features - Can provide third party clearing services to ASX Market Participants. - Clients are afforded some protection by the National Guarantee Fund. - As an ACH General Participant you handle the clearing process and bear the capital requirements for all transactions. You will need to have appropriate facilities and framework in place (including procedures and personnel) to adequately manage the counterparty risks that arise from the clearing function, together with adequate financial resources and systems to comply with ACH Clearing Rules Section 5. - You can achieve economies of scale by spreading your systems and processing costs over a number of ASX Market Participants. - You may provide other processing services to ASX Market Participants (e.g. issuing of confirmations). - You will have expertise in providing clearing services. ASX Fees include - A$220,000 application fee (including GST) - A$8,250 annual fee (including GST) (paid in six monthly instalments) - ACH clearing fees - ASTC Settlement fees (as applicable) - Market Information fees Page 4 April 2007

8 3. General Participant can clear Derivatives Market Transactions for other Market Participants as well as itself Clients Confirmations Registration ASX Market P articipant A CH Participant Bank Trades Clearing messages P aym ent/collateral Facilities ITS (Integrated Trading System) Trade advice DCS Features - Can provide third party clearing services to ASX Market Participants. - Clients are afforded some protection by the National Guarantee Fund. - As an ACH General Participant you handle the clearing process and bear the capital requirements for all transactions. You will need to have appropriate facilities and framework in place (including procedures and personnel) to adequately manage the counterparty risks that arise from the clearing function, together with adequate financial resources and systems to comply with ACH Clearing Rules Section 5. - You can achieve economies of scale by spreading your systems and processing costs over a number of ASX Market Participants. - You may provide other processing services to ASX Market Participants (e.g. issuing of confirmations). - You will have expertise in providing clearing services. ASX Fees include - A$220,000 application fee (including GST) - A$8,250 annual fee (including GST) (paid in six monthly instalments) - ACH clearing fees - Market Information fees Page 5 April 2007

9 4. Direct Participant can clear both Cash Market and Derivatives Market Transactions for itself only Clients Confirmations Registration ASX Market Participant A CH Participant A STC Participant Trades Clearing messages Settlment messages Bank ITS (Integrated Trading System) Trade advice CHESS and DCS P aym ent/collateral Facilities Features - Can only clear Cash Market and Derivatives Market Transactions for themselves. - Clients are afforded some protection by the National Guarantee Fund. - As an ACH Direct Participant you handle the clearing process and bear the capital requirements for all transactions. You will need to have appropriate facilities and framework in place (including procedures and personnel) to adequately manage the counterparty risks that arise from the clearing function, together with adequate financial resources and systems to comply with ACH Clearing Rules Section 5. - You will have expertise in providing clearing services. ASX Fees include - A$220,000 application fee (including GST) - A$5,500 annual fee (including GST) (paid in six monthly instalments) - ACH clearing fees - ASTC Settlement fees (as applicable) - Market Information fees Page 6 April 2007

10 5. Direct Participant can clear Cash Market Transactions for itself only Clients Confirmations Registration ASX Market Participant A CH Participant A STC Participant Trades Clearing messages Settlment messages Bank ITS (integrated Trading System) Trade advice CHESS P aym ent/c ollateral Facilities Features - Can only clear Cash Market Transactions for themselves. - Clients are afforded some protection by the National Guarantee Fund. - As an ACH Direct Participant you handle the clearing process and bear the capital requirements for all transactions. You will need to have appropriate facilities and framework in place (including procedures and personnel) to adequately manage the counterparty risks that arise from the clearing function, together with adequate financial resources and systems to comply with ACH Clearing Rules Section 5. - You will have expertise in providing clearing services. ASX Fees include - A$220,000 application fee (includes GST) - A$5,500 annual fee (includes GST) (paid in six monthly instalments) - ACH clearing fees - ASTC Settlement fees (as applicable) - Market Information fees Page 7 April 2007

11 6. Direct Participant can clear Derivatives Market Transactions for itself only Clients Confirmations Registration ASX Market Participant A CH Participant Bank Trades Clearing messages P aym ent/c ollateral Facilities ITS Integrated Trading System) Trade advice DCS Features - Can only clear Derivatives Market Transactions for themselves. - Clients are afforded some protection by the National Guarantee Fund. - As an ACH Direct Participant you handle the clearing process and bear the capital requirements for all transactions. You will need to have appropriate facilities and framework in place (including procedures and personnel) to adequately manage the counterparty risks that arise from the clearing function, together with adequate financial resources and systems to comply with ACH Clearing Rules Section 5. - You will have expertise in providing clearing services. ASX Fees include - A$220,000 application fee (includes GST) - A$5,500 annual fee (includes GST) (paid in six monthly instalments) - ACH clearing fees - Market Information fees Page 8 April 2007

12 HOW DO YOU BECOME AN ACH PARTICIPANT? For your company to become an ACH Participant it must first apply and meet the requirements outlined below (a full list can be found in ACH Clearing Rule 3.2). A new applicant must: 1. Be a body corporate incorporated under the Corporations Act or registered as a foreign company under the Corporations Act; 2. If incorporated or resident outside Australia, must have personnel located in Australia; 3. Hold an Australian Financial Services Licence (AFSL) which authorises the applicant to carry on its business as a Participant; 4. Meet the business integrity requirements; 5. Meet the management requirements; 6. Have facilities, procedures, personnel and financial resources that are adequate for the applicant to meet its obligations as an ACH Participant; 7. Comply with the business connection requirements; 8. Comply with the capital regime requirements; 9. Have insurance in place; 10. If the applicant seeks to be authorised to clear Options Market Transactions but is not or does not seek to be authorised to clear Cash Market Transactions associated with those Options Market Transactions, appoint a Participant which is authorised to clear the Cash Market Transactions and enter into, and maintain, a Clearing Agreement with that other Participant; 11. If the applicant is not itself able to settle Cash Market Transactions in an Approved Settlement Facility, appoint an ASTC Settlement Participant and maintain a Settlement Agreement with that ASTC Settlement Participant; 12. Comply with any conditions imposed by ACH; and 13. Pay the appropriate application fee. Page 9 April 2007

13 Admission as an ACH Participant is conditional upon the applicant holding an AFSL or obtaining an AFSL from the Australian Securities and Investments Commission (ASIC) AFSL within three months of achieving ACH admission. THE APPLICATION PROCESS Pre-lodgement discussions Before you lodge an application, you are encouraged to discuss your application for admission as an ACH Participant with your ASX Equity Markets Account Manager. The pre-lodgement discussion will clarify the admission requirements for new ACH Participants, the application process and your ongoing requirements as a new ACH Participant, and will include a review by ASX Prudential Risk Management of your ability to comply with the requirements of ACH Clearing Rules Section 5. Application process A new applicant is required to complete and submit the relevant application form for admission as a new ACH Participant. After discussions with your ASX Equity Markets Account Manager and ASX Prudential Risk Management, you can obtain an application form from our website, The Participant s Application Kit can be found under Participant icon Library and Information. The ACH Clearing Rules are located at Your application should be submitted to your ASX Equity Markets Account Manager. ASX will review your application to ensure it complies with the ACH Clearing Rules. If your application complies with the Rules and meets all of the requirements, your ASX Equity Markets Account Manager will prepare a submission in support of your application that is then forwarded to ASX management for consideration. Successful applicants Upon successfully gaining admission as an ACH Participant, you will receive a copy of the ACH Clearing Rules and a certificate of admission as an ACH Participant. How to appeal if your application is rejected Before ACH can reject any application for admission as an ACH Participant, you will be given an opportunity to appeal the decision before a hearing of the ASX Appeal Tribunal, as prescribed by the ACH Clearing Rules, Policies and Procedures. However, if you withdraw your application, your fee will be refunded, less ASX s administration processing costs and any related infrastructure costs. Page 10 April 2007

14 HOW DOES A NEW ACH PARTICIPANT ESTABLISH CLEARING OPERATIONS? There are three main steps involved in establishing operations for a new ACH Participant. These steps will vary depending on how you have organised your business and the type of operation you plan to run. Your ASX Equity Markets Account Manager will assist with the coordination of the establishment process. You should also note these steps are not sequential and can be implemented concurrently to reduce the time required to establish your operations. 1. ACH and ASTC will assist you in establishing direct electronic links to CHESS and DCS. 2. ASX Information Services can provide various electronic signals containing trading information to new Participants. Market Information can also connect you to our Voiceline service. This is a public address service over which price-sensitive listed company announcements and Market Control information is provided. 3. Open mail and distribution channels and obtain access to ASXOnline to maintain details and changes of the ACH Participant and to access ACH Clearing Rules and other ASX information. Critical Tasks - Establishing Operations Table 1 is an overview of some of ASX departments involved in establishing clearing operations, each department s function and estimates of the time required to complete critical tasks. Some departments may complete tasks concurrently, while the completion of other tasks may depend on the completion of an earlier task. You should be aware that some critical tasks are provided by outside or third party service providers. Any delays in the timely provision of services by third party service providers may adversely affect the commencement of operations and is outside the control of ASX Page 11 April 2007

15 Establishing Operations - Critical Task Timeline Business Days Required* Equity Markets days - 40 days 2. Market Supervision 30 days 3. Information Services 30 days 4. Clearing Operations CHESS 40 days 5. Clearing Operations - DCS 20 days 6. ASIC Australian Financial Services Licence 45 days Table 1 Critical tasks to establish operations Steps ASX Department Function Estimated Number of Business Days Required One Equity Markets Application process Two Market Compliance admission requirements including capital requirements 30 Supervision Three Information Market data and other information, including historic date reference 30 Services data, corporate action services & ASX publications (rule books, daily diaries, etc.) Four ACH Electronic links to the CHESS. 40 Five ACH Electronic links to DCS 20 Six Non ASX /Others ASIC AFSL 45 The "Number of Business Days Required" is the estimated time required by each department to complete all the tasks which are usually necessary to enable a broker to commence trading. In some cases this will vary because of the nature of the application or third party supplier requirements. Page 12 April 2007

16 Step One - ASX Equity Markets The information below contains a summary of the ASX departments you will liaise with during the establishment process. The following sections provide detailed 'checklists' outlining the critical tasks that need to be completed and the estimated time required for each task. While the tasks outlined in this guide are comprehensive, additional tasks may be required on a case-bycase basis for a particular business model and some requirements may change at short notice. Your ASX Equity Markets Account Manager can advise you on any changes. Table 2 Application and establishment milestones Tasks Dependent on task: Actual Completion Date: A Submit application See Prerequisites B Receive approval A C Receive Participant Identification (PID) number A D Receive ACH approved start date B Table 3 Prerequisites for admission as an ACH Participant Rule Pay prescribed fee (dependent on level of participation) ACH Clearing Rule 3.1.1(c) Submit application for admission as an ACH Clearing Participant ACH Clearing Rule for approval 3.1.1(a) Obtain AFSL from ASIC (either before or within 3 months of ACH Clearing Rule admission as an ACH Clearing Participant) 3.2.1(c) Submit Responsible Executive applications ACH Clearing Rule 3.5 Meet communication requirements of ACH ACH Clearing Rules 3.6.1(b) Maintain adequate facilities, procedures, personnel, financial, and ACH Clearing Rule organisational resources (f) Have the capacity to communicate reliably with the Clearing ACH Clearing Rule System 3.6.1(b) Satisfy ACH admission requirements 3.1.1(b), Completed Table 4 Pre-clearing requirements for a new ACH Participant Pre- clearing Requirements Rule Completed Comply with capital requirements and demonstrate an understanding of, and ability to comply with, the capital requirements of ACH. Submit notification of business offices, if applicable ACH Clearing Rule 5.1 ACH Clearing Rule Submit Professional Indemnity Insurance certificate of currency ACH Clearing Rule 4.3 Agree to comply with ACH Clearing Rules and Procedures ACH Clearing Rule Establish and maintain disaster recovery and business continuity arrangements ACH Clearing Rule Page 13 April 2007

17 Table 5 ASIC and other government pre-clearing requirements Australian Securities and Investments Commission and government requirements Completed Register Company Name / Change of Company Name (if applicable) with ASIC Obtain Australian Financial Services Licence Issue internal authorities to employees who will represent your organisation in a securities trading or advisory capacity Check ASIC Australian Financial Services Licence conditions Pro Forma 209 for further information If trading under a business name, register the business name with each relevant State Government body Step Two Market Supervision Compliance with Admission Requirements including Capital Requirements and Risk Management Framework Capital Regimes The ACH Clearing Rules impose explicit obligations on Participants with respect to capital requirements (ACH Clearing Rule Section 5). The capital regime that applies to an ACH Participant will depend on the transactions for which it has clearing permission. [Go to next page] Page 14 April 2007

18 The following flowchart may assist in identifying the capital models available: ACH Direct or General Participant YES ACH Direct or General Participant only or ASX Market and ACH Direct or General Participant? ACH Clearing Rule 5 NO Subject to other acceptable capital regime? YES or or or Risk Based Requirements ACH Rules Schedule 1 (equities, options and futures) NTA Requirements ACH Rules Schedule 2 (futures only) Other Capital Regime Rule 5.2 (futures only) The following is a brief summary of the three available capital regimes: Risk Based Capital Requirements This approach relies on both the balance sheet and prescribed risk measurement techniques as the measure of a Participant s financial stability. The capital liquidity requirements are classified into two distinct components: a measure of liquid capital (i.e. regulatory capital); and a measure of risk in the organisation (total risk requirement). At all times, a Participant will be required to have sufficient liquid capital to cover its total risk requirement. Included in liquid capital is core liquid capital (which is defined in Schedule 1 to the ACH Rules). All Participants are required to have a minimum of A$2,000,000 core liquid capital. If a Participant wishes to clear equities, it must comply with these requirements. Page 15 April 2007

19 NTA Requirements This approach relies on the Balance Sheet as the measure of a Participant s financial stability and permits ACH to restrict open positions to a multiple of NTA. This approach is common in the Australian and some overseas futures markets and is currently only permitted to be used by ACH Participants that clear futures transactions only. The minimum NTA for an ACH Participant is A$5 million. (Note however there are increased reporting requirements if the NTA is maintained at these minimum levels). Other Capital Regime ACH recognises that some Participants may be subject to other prudential supervisors capital regimes and, upon application by the Participant, ASX may be willing to grant an exemption from the ACH capital requirements on the basis of such supervision. This admission is subject to the conditions set out in ACH Clearing Rule 5.2. Under this approach, the prudential supervision of the Participant rests with the prudential supervisor responsible for the other capital regime, rather than with ACH. It is only permitted to be used by ACH Participants that clear futures transactions only. For further information, please obtain a copy of the Capital Requirements Guidance document from your ASX Equity Markets Account Manager. Risk Management Framework Under the Corporations Act s912a(1)(h) a Participant is required to establish and maintain adequate risk management systems as a condition of its AFSL. More information regarding the requirements and conditions is available in ASIC s Policy Statement PS 164, Licensing: Organisational Capacities, which can be found on ASIC s website at It is critical that ACH Participants understand that while compliance with the capital requirements is a very important component of the overall risk management framework and is essential for the prudent operation of a securities business, they cannot exist in isolation of other risk measures and controls that collectively form a risk management framework. ASX has produced a document titled Risk Management Framework which covers key risk management principles and is available to all potential participants. Step Three - Information Services ASX can meet all the information needs of new Participants. ASX Information Services is responsible for providing the necessary connectivity for trading, market data and other services such as Voiceline, as well as the contractual process, to new Participants. The Voiceline service is a summary of price-sensitive listed company announcements, which is provided to Voiceline subscribers through a public address system. ASX Information Services provides a broad range of market data and other information containing ASX trading, company announcement and securities information. Depending on your needs, ASX can provide: MarketPoint real time or delayed market data Daily Official List market snapshots (first, high, low, last, cumulative volume & value) updated several times daily ReferencePoint a range of security reference data, corporate actions data and other value added content ASX ComNews - a service providing up to the minute access to all announcements lodged with ASX in relation to listed entities S&P/ASX index information as well as a series of report style products, such the Broker Market Activity Report, Security Activity Report, VWAP calculations. For copies of the necessary documentation contact ASX Market Information - info@asx.com.au Page 16 April 2007

20 Each of the following tasks should be completed on or before the indicated "Business Days Before Live Date". Provision of market information services and Voiceline may require the installation of dedicated communication lines. Table 6 Pre-clearing requirements for Information Services Estimated Business Days Before Live Date Task Dependant on task: Estimated Date: Actual Date: 30 A Advise Information Services of voiceline, and other market information requirements - B Contact Information Services to discuss installation of telecommunication line(s) - C Telecommunication company installs communication lines B 1 week (Including a weekend) D Information Services set up Participant (if subscribing to market information services) C Steps Four and Five CHESS and DCS ACH operates an electronic clearing system known as Clearing House Electronic Subregister System (CHESS) for the Cash Market and a Derivatives Clearing System (DCS) for the Derivatives Market. CHESS and DCS are fully computerised systems. CHESS provides electronic securities clearing, transfer and electronic Delivery versus Payment (DvP) Settlement, with monetary obligations between CHESS Participants being met directly between CHESS and the funds transfer system of the banks. DCS uses world s best practice risk management margining technology to clear derivatives transactions. CHESS also provides a means for Participants to effect their derivatives payment rights and obligations. The Corporations Act provides legislative support for CHESS and DCS. The legislation empowers ACH and ASTC to make rules to regulate the system. The ACH Clearing Rules and ASTC Settlement Rules provide the legal and regulatory framework for CHESS and DCS. Because each Participant has different internal procedures and computer systems, ASX can provide procedural guidelines to assist you in developing your own internal procedures with either your own systems development staff or a third-party software supplier. Table 7 outlines the tasks and schedules which should be completed by non-asx parties in order to establish your settlement systems. Tasks involving external parties are beyond the control of ASX and may extend beyond the estimates given. The external task estimates are based on operational experience. Table 7 Critical tasks for establishing a clearing and settlement system Estimated Business Days Before Live Date Task Dependent on Task 5 A Complete DCS Access Agreement - 30 (6 weeks) B Installation of VPN (CHESS) - 30 (6 weeks) C Installation of ASX trading network (DCS) A N/A2 D Accreditation of Systems Interface B and C 15 E Set up of Austraclear facility (if CHESS is not being used for derivatives payments) - 2 F Successful DCS validation and connectivity test C and D 2 G Successful CHESS validation and connectivity test D Estimated Date: Actual Date: 2 Cannot be estimated. CHESS and DCS will only agree to a proposed live date if the systems interface is accredited by ACH and ASTC. Page 17 April 2007

21 CHESS At the heart of CHESS, is an electronic subregister that forms part of each Australian listed entity's principal register of securities. Each entity admitted to the official list of ASX is required to participate in CHESS unless the law of a foreign jurisdiction precludes participation. The Corporations Act recognises holdings in CHESS as if they were maintained directly as holdings on an entity's principal register. As the CHESS register is electronic, securities can be transferred without paper documentation. The CHESS register is updated automatically when a transfer takes place. CHESS operates over a Virtual Private Network (VPN). DCS DCS operates over the ASX s proprietary trading network. This network is supported and maintained by ASX. An ACH Clearing Participant with DCS Clearing permission will require an ASX supplied DCS gateway to connect the ASX network to the Participant s own network and systems. Additional details on this can be found in the DCS Access Agreement. Step Seven - Administration As a new ACH Participant you will need to establish mail distribution channels and other communication links (eg. access to ASXOnline etc). Contact your ASX Equity Markets Account Manager for further information. INACTIVE PARTICIPANTS All inactive ACH Clearing Participants that become active will be charged a reactivation fee of 50% of the original admission fee i.e. ASX Market Participant, ACH Clearing Participant and/or ASTC Participant A$125,000 (plus GST), or ACH Clearing Participant A$100,000 (plus GST). THE ROLE OF ACH S COMPLIANCE SERVICES AFTER ADMISSION There are a number of general compliance obligations that apply once admission has been given (refer ACH Clearing Rules section 4 and in particular 4.1) including continuing to satisfy the initial Admission Requirements. It is the responsibility of Compliance Services to monitor Participants to ensure their ongoing compliance with the ACH Clearing Rules (capital requirements is separately monitored by Prudential Risk Management). Compliance Services performs this role in four main ways: 1. Yearly self assessment of Participants, using a questionnaire on a major area pertinent to the stockbroking industry (and thus may not always apply to ACH Participants). 2. Onsite reviews, where Participants are subject to a periodic review of their business and compliance with the ACH regulatory requirements. 3. Spot reviews, where an individual area or issue is highlighted to obtain an industry-wide profile. 4. Ad hoc reviews, as and when issues arise in relation to a Participant. Reviews and assessments can, after consultation with the Participant result in the issue of a report which may require or recommend further action. Whilst assisting in carrying out the self-regulatory obligations of ASX Group, Compliance Services seeks to take a preventative approach and provide Participants with Rule interpretations and other assistance connected with the Rules. For further information contact ASX Compliance Services Page 18 April 2007

22 COSTS OF GAINING ACCESS TO ASX MARKETS For current access charges to ASX markets please refer to the Schedules of Fees available on under Library and Information, in the Participants Application Kit. FURTHER INFORMATION For further information please contact ASX Equity Markets on telephone or participants@asx.com.au. For information on Participation in ASX and/or ASTC within the ASX Group please refer to: - A Guide to Becoming a Market Participant of ASX Limited - A Guide to Becoming an ASTC Participant. IMPORTANT DISCLAIMER This manual contains general information only and outlines the requirements under ACH s Clearing Rules on how you can become an ACH Clearing Participant with access to clear ASX s markets. It is not intended to be a precise statement of the provisions of the ACH Clearing Rules or the Corporations Act, many of the provisions that govern the requirements for access to clear ASX s markets are very technical. Whilst every care has been taken in the compilation of this publication, ACH expressly disclaims all liability to any person in respect of any statement in or omission from this guide. You should obtain your own independent legal and/or financial advice should you wish to know how the provisions of the ACH Clearing Rules or the Corporations Act may impact upon you. Page 19 April 2007

23 APPENDIX A - ABBREVIATIONS ACH Australian Clearing House Pty Limited ABN ADI Approved Deposit-taking Institution AFSL Australian Financial Services Licence AIC Access Identification Code ASIC Australian Securities and Investments Commission (ASIC) ASTC ASX Settlement and Transfer Corporation Pty Limited ABN ASX ASX Limited CHESS Clearing House Electronic Subregister System DCS Derivatives Clearing System DvP Delivery versus Payment GST Goods and Services Tax HIN Holder Identification Number ITS Integrated Trading System SEGC Securities Exchanges Guarantee Corporation Limited ABN T+1 Settlement regime of trade date plus one business day T+3 Settlement regime of trade date plus three business days UIC User Identification Code VPN Virtual Private Network APPENDIX B USEFUL WEBSITES ASX Public Website ASX Online ASIC SDIA Tribeca Page 20 April 2007