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T+2 INDUSTRY READINESS GUIDEASX will implement a T+2 Settlement cycle in March 2016, as endorsed by the Australian industry. To assist industry stakeholders with their own and their customer’s readiness ASX has developed a readiness guide. Ask yourself if you have considered these questions in your plans and preparedness for T+2.

ARE YOU READYFOR T+2?

COMMUNICATION WITH CLIENTS AND COUNTERPARTIES

OPERATIONAL AND TECHNICAL PROCESSES IMPACTED BY T+2

CORPORATE ACTIONS

REGULATORY, CONTRACT AND INFORMATION CHANGES IMPACTED BY T+2

GO LIVE READINESS AND TIMING

DISCLAIMER This document provides general information only and may be subject to change at any time without notice. ASX Limited (ABN 98 008 624 691) and its related bodies corporate (“ASX”) makes no representation or warranty with respect to the accuracy, reliability or completeness of this information. To the extent permitted by law, ASX and its employees, officers and contractors shall not be liable for any loss or damage arising in any way, including by way of negligence, from or in connection with any information provided or omitted, or from anyone acting or refraining to act in reliance on this information. The information in this document is not a substitute for any relevant operating rules, and in the event of any inconsistency between this document and the operating rules, the operating rules prevail to the extent of the inconsistency.© Copyright 2015 ASX Operations Pty Limited ABN 42 004 523 782. All rights reserved 2015.

For more information go to www.asx.com.au/t2 or [email protected]

T + 2 INDUSTRY READINESS GUIDE TRADE POST TRADE ISSUERS MARKET OPERATORS SUPPORT REGULATORS

FOCUS COMMUNICATION WITH CLIENTS AND COUNTERPARTIES Trade Participants

Clearing Participants

Settlement Participants

Banks – Payment Providers

Issuers /Agents / Share

RegistriesMarket

OperatorsListing Market

Operators

IndependentSoftware Vendors

Market Data Vendors

Industry Bodies ASIC/RBA

EXTERNAL COMMUNICATIONHave you considered a communication plan about the T+2 changes for your clients and how it will impact them? How will you communicate the changes – email, website, call centre, mail? e.g. for retail customers, changes to payment arrangements, including cheques, CMTs, direct debits.Have you considered a communication plan for your other counterparties, e.g. service providers?

• • • • • • • • • • •

FOCUS OPERATIONAL AND TECHNICAL PROCESSES IMPACTED BY T+2 Trade Participants





RegistriesMarket


Operators


Market Data Vendors


ASX OVERVIEW Have you reviewed the ASX T+2 Business & Technical Overview document and considered if any changes impact the service provided to you by ASX, or the services you (or your nominated third party) provide to your clients? • • • • • • • • • • •

TECHNICAL CHANGES Have you identified any technical changes you may need to make to your operational systems such as upgrading your system or technology interface or taking steps to replicate the changes outlined in the technical specification in your own operation systems? • • • • • • • • • •

PRODUCTS Have you identified all the products you deal with to determine if any of the settlement periods differ, and if so what changes (if any) need to be made to your processes (e.g. bonds, ETFs, NZX, FX, international securities)? • • • • • • •

BOOKINGS PROCESS Does your middleware/bookings process need review? Is further automation or process improvement required to meet a shorter timetable? •

WORKFLOWSSETTLEMENT CYCLE

Have you reviewed your processes to ensure the internal and external workflows, including offshored and outsourced activity, have been adjusted for the shorter T+2 settlement cycle? Including: trade cancellation (only available on T), cross-border settlement, dual-listings, special markets, trade allocation, reporting, client affirmations (manual vs. electronic trade confirmation), confirmations, options collateral & options exercise management, margin lending, settlement matching, stock lending arrangements, payment provider arrangements, issuer to CHESS and B2B transfers (issuer sponsored procedures and policies, and with registries), corporate actions, redemption timing for external Cash Management Accounts, funding, contra policy and process, debtors policy and process, time zones, custodial arrangements, processing of direct debits, credits/handling cheques, BPAY arrangements, off-shore arrangements; and, any other impact to your policies, procedures and processes

• • • • •

WORKFLOWSBATCH CUT OFF

Have you reviewed your processes to ensure the internal and external workflows, including offshored and outsourced activity, have been adjusted for the change to the batch cut off time? Including: evening processing runs, reporting, stock lending, consider recall processes under different timeframes for securities lending engines, payment provider arrangements, redemption timing for external Cash management Accounts, processing of direct debts/handling cheques, funding, time zones, corporate actions, custodial arrangements, off-shore arrangements, and, any other impact to your policies, procedures and processes

• • • • •

REPORTINGHave you undertaken a review of your downstream reporting outputs to identify any reports, system interfaces or processes that are required to be amended including, but not limited to: daily settlement reports (management/matching failure), outstanding aged debtors, dealers trade reports, contract notes, client email notifications, margin reporting, stock lending reporting, short sale reporting, internal credit/exposure reporting, ASX Clear Capital Reporting etc.?

• • • • • •

SETTLEMENT Have you scrutinised your current settlement performance and that of your clients, such as straight through processing/settlement matching percentages and timing, to identify areas you will need to refine or automate to cater for the shorter settlement cycle? What needs to change to avoid any increase in failed settlement rates or customer impact? • • • •

DEFAULT Have you considered your fails and client default management processes and timeframes? (possible impacts: stock lending/close outs/increased costs/efficiency impact/operational losses) • •

FOCUS CORPORATE ACTIONS Trade Participants





RegistriesMarket


Operators


Market Data Vendors


TIMETABLESHave you considered changes to your corporate action process and communication including: Identifying areas of your corporate action processes or documentation that specify or imply timings and obligations that will need to be amended for the new settlement cycle; Identifying investor communication and education needs to explain the ex-period changes, Identifying and establishing a transition and communication plan for record dates and implications for the resultant ex-date during the transition period?

• • • • • • • • •

FOCUS REGULATORY, CONTRACT AND INFORMATION CHANGES IMPACTED BY T+2 Trade Participants





RegistriesMarket


Operators


Market Data Vendors


RULES Do the ASX Operating Rules and procedures amendments impact you? • • • • • • •Do the ASX Clear Operating Rules and procedures amendments impact you? • • • • •Do the ASX Settlement Operating Rules and procedures amendments impact you? • • • • • • •Do the ASX Listing Rules (including Appendices) amendments impact you? • • • • •

POLICIES AND PROCEDURES Have you reviewed and updated your policies and procedures to ensure they are consistent with the rule changes applicable to you? • • • • • • • •RISK AND COMPLIANCE Have you reviewed your risk and compliance framework to identify any required changes resulting from the rule changes applicable to you? • • • • • •

SERVICES Have you identified which of the services you (or your nominated third party service provider) provide to your clients that may be impacted by the rule changes? • • • • • • •CLIENTS Have you identified the clients using your services, or the third parties you rely on to perform those services which are impacted by the rule changes? • • • • • • • • •

CONTRACTS AND AGREEMENTS

Have you reviewed your existing contracts/agreements with clients or third party service providers (including, as applicable, Trading, Clearing and Settlement Participants, registries, security lenders (AMSLA Agreements), custodians, outsourced service providers, intermediaries, clients you are trading/clearing/settling for or any other client type using your services) to identify any required changes resulting from the rule changes applicable to you?

• • • • • • • •

PUBLISHED INFORMATION Have you identified and reviewed any other information sources which may contain references to settlement times that need to be amended for the T+2 rules includingwebsites, product disclosure documents, contract notes, debtor letters, auto scheduled emails, sales documentation? • • • • • • • • •

CUSTOMERS Do you need to change policies and/or agreements with your customers to support this change? (e.g. for holders cheques vs direct debit, contra policies, debtors, CMT's) • • • •FOCUS GO LIVE READINESS AND TIMING Trade

ParticipantsClearing

ParticipantsSettlement

Participants



RegistriesMarket


Operators


Market Data Vendors


PLANNING Do you have any implementation freeze/no go periods or other planned upgrades/installations that could be impacted by the T+2 transition date/test period? • • • • • • • • • •ATTESTATION Are you aware of and prepared for the attestation process? • • • •

TRANSITION PLAN Do you have a cut-over/transition plan in place? Are your staff aware of the changes and will they need training? • • • • • • • • • •COUNTERPARTIES Are your counterparties/service providers ready? (e.g. customers, custodians, investment managers, buy-side, securities lending, share registry) • • • • • • • • • •

TECHNOLOGY Is your technology/system supplier ready? • • • • • • • • •RISK Do you need internal risk and compliance overview/sign off in readiness for the transition to T+2? • • • • • • • • • •

TRANSITION WEEKEND Have you considered your transition weekend (and contingency weekend) and post implementation support arrangements? Will you need additional supplier/vendor and staffing support? • • • • • • • • • •

TESTING PLAN Have you designed a comprehensive testing plan to test the changes and ensure readiness for T+2? • • • • • • • • •AFTER THE TRANSITION Have you considered what happens after the transition/implementation period? Do you need to implement additional reporting, exception management to ensure you

meet the T+2 requirements? • • • • • • • • • • •

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