T+2 Settlement

Market Implementation Group (MIG)

25 June 2015

1. Introduction & action

items

Agenda

1. Introductions & action itemsa) Agenda overview

b) Welcome & presenters

c) Action items

2. Project Updatea) Project Roadmap

b) Consultation - Draft Rule Amendments

c) Review of Vendor and Participant workshops

3. Readiness Updatea) Industry Readiness Guide

b) Readiness Tracking

4. Topics of Interesta) Matching statistics

b) Update on NZX transition to T+2

5. Q&A

1b) Welcome and Presenters

Rodd Kingham

Senior ManagerClearing ServicesASX

Karen Webb

ManagerSettlement ServicesASX

Hamish Macdonald

Head of PolicyNZX Limited

Rita Thomas

Technology Relationship ManagerASX

Reminder to submit questions

1c) Action items

Publication of T+2 Settlement documents on http://www.asx.com.au/t2 :

• Market Implementation Group webinar material – recording and presentation slides from March 2015 meeting

• Frequently Asked Questions document – updated in May – based on questions from March 2015 MIG, and other queries

• Market Notice – 29 May advise of 25 June MIG and consultation paper

• Business & Technical Overview document updated

• Link to Consultation Paper: Draft Rule Amendments

2. Project Update

2a) Project Roadmap

Milestones

Activities

Deliverables

Go-liveASX Project planning and commitment

Market Implementation Planning - solution design/ development/ testing/ training/ review/ consult - rule book changes

Nov 14Oct 14 Dec 14 1Q2015 1Q20162Q2015 3Q2015 4Q2015

Mar 2016 Go-live date

APCA endorsement Batch cut-off

MIGNov 27 COP BC - Batch endorsement

Market Implementation Group (MIG) Kick-off

External Stakeholder attestation deadline

MIG MIG MIG

Targeted Industry Consultation (Batch cut-off/ Payment Authorisation period)

Stakeholder Bi-lateral readiness discussions/ Consultation on rule changesQuarterly MIGs including topics of interest/ On-going COP Forum and Business Committee updates

Batch cut-off decision/Go-live and MIG communication

Lodge Rules with ASIC

APCA Briefing Paper

Technical Specifications Available

Consultation Paper – draft rule changes

Business Committee Paper

Vendor/ CP check-in

External Testing Available

Vendor/CP check-in

ASX stand at the SAA conference –

28,29 May

2b) Consultation: Draft Rule Amendments

• Consultation Paper issued on 27 May 2015 – available at asx.com.au/regulation/public-consultations.htm or via www.asx.com.au/t2

• Rule amendments are subject to regulatory approval

• Rule amendments reflect the changes described in the Business & Technical Overview document

• Written submissions are due by Wednesday 8 July 2015

• ASX has informally lodged the proposed rule changes with ASIC

• ASX will update ASIC on the consultation process (to support the changes)

2c) Review of T+2 Workshops

• Vendor & Participant Workshops

• Workshops run for all ISVs and their clients in March 2015

• All ISVs comfortable with the timelines

• Impact – mostly configuration changes or minor development

• All ISVs plan to complete their own testing

• All ISVs have confirmed that changes or software can be released in time for IWT

• Next ISV & Client workshops will be run in November (prior to IWT)

• Workshops have also been held with:

• participants that have in-house systems

• share registries

• Securities Lending Association

• ACSA Operations working group

• Market Operators

3. Readiness Update

3a) Industry Readiness Guide

ASX has published an Industry Readiness Guide for stakeholders

• Now available for you to download and use on www.asx.com.au/t2

• Good feedback from stakeholders

• Educational material is next

3b) Readiness tracking

• ASX Customer Technical Support (CTS) team will start to contact Vendors and Participants in July

• Help us in this process - tell us your project lead, business and technical lead contact details for your organisation

• Email details to t2settlement@asx.com.au

• Initial contact by CTS will be seeking details of your preparation and testing milestones

• Suggested test samples will be published to assist you

• Proposed that CTS will check-in with you during test period and per your project milestones and to seek final attestation

4. Topics of interest

4 Topics of interest – forward agendas

December 14 (Kick-off)

Engagement Plan/ Roadmap/ go live period

Batch cut-off endorsement and impacts

Attestation on readiness

Proposed forward topics and timing

Other Markets

March 15

Milestone:

Technical specs for ASX changes including Transition

Readiness Checklist

Special Topics:

Update on European experience

Debt markets –equivalent changes

June 15

Milestone:

ASX Rule changes –overview/ consultation

Industry Readiness Guide

Special Topics:

Matching Statistics

NZX Transition to T+2

October 15

Milestone:

Testing readiness

Corporate Action testing

Special Topics:

Fails management

ETFs

Clearing (margins, calls and collateral management)

December 15

Milestone:

Testing progress

Special Topics:

Trade cancellations

Common concerns tracked

Readiness attestation

Settlement Calendars 2016

February 16

Final Milestones:

Project update

Last Readiness Check

Go live readiness –including re-cap on transition

4a) Matching Statistics – Settlement Notification

What are the statistics telling us:

64% of instructions are released prior to T+2

36% of instructions are released on T+2 or after

0%

36%

32%

32%

Settlement Participant (Buy/Sell)

T+3

T+2

T+1

T

4a) Matching Statistics – Settlement Matching

1%

23%

56%

16%

4%

Broker matching

T+3

T+2 post 11:30am

T+2 pre 11:30am

T+1

T

3%

38%

48%

3%

8%

Non-Broker matching

T+3

T+2 post 11:30am

T+2 pre 11:30am

T+1

T

What are the stats telling us:

76% matched before 11:30am on T+2

24% matched after 11:30am on T+2

What are the stats telling us:

59% matched before 11:30am on T+2

41% matched after 11:30am on T+2

4a) Matching Statistics – Registry support

What are the stats telling us:

78% of requests received are STP

22% of total requests are rejected

What are the stats telling us:

98% are processed same day

2% matched after same day

78%

22%

Conversions and transfers processed

Effected

Rejected 2%

98%

Same day processing

NZX to move to T+2

© Copyright NZX Ltd. 2015

© Copyright NZX Ltd. 2015

Overview

• NZX has confirmed its intention to move to a shortened settlement

cycle of T+2 for its cash markets (debt and equity)

• Move is scheduled for March 2016, which will align with ASX

• NZX will consult on necessary rule changes shortly

• Business process and technology changes for NZX are relatively

straight forward

• NZX will be engaging with market participants to ensure their readiness

for the move and communicating further as necessary

Decision to move to T+2

• In December 2014, NZX published a consultation paper

• Feedback received as part of the consultation process unanimously

supported the proposal to move to T+2

• In April 2015, NZX published a consultation response document

confirming the intention to move to T+2 in March 2016

• This change is being timed to align with ASX. NZX and ASX remain in

close contact in relation their respective moves

• NZX has also been engaging separately with the Reserve Bank of New

Zealand

© Copyright NZX Ltd. 2015

© Copyright NZX Ltd. 2015

NZX changes to accommodate T+2

• As identified in the initial consultation document, changes to NZX’s

rules will be required to accommodate the move to T+2

• NZX intends to consult on these specific changes in Q3 2015

• NZX is also considering feedback received from some respondents to

the initial consultation regarding election dates for DRPs

• The business process and technology changes required by NZX are

relatively straight forward

• NZX is considering what testing might be required in advance of

proposed move

© Copyright NZX Ltd. 2015

Communications

• Publicly communicated intention to move to T+2 in April 2015

• Have set up a dedicated section on NZX’s website to manage

communications, including publishing a Q&A

https://www.nzx.com/regulation/T2-settlement

• We have also been communicating with key stakeholders in relation to

the change - including NZX participants, the Reserve Bank and

Securities Industry Association

• NZX is coordinating a discussion forum (scheduled for 2 July 2015) for

key stakeholders to identify and discuss key issues

• NZX will be engaging with NZX participants in advance of the

scheduled move in March 2016 to confirm participants readiness for

the change

6. Q&A

5) Q&A

Please use

webinar facility to post questionsWe will allow 10min for questions