Tuesday 20 June 2006 – LAWFUEL – Press Release Service – The Australian Securities and Investments Commission (ASIC) today released the findings of its fourth assessment of the Sydney Futures Exchange Limited (SFE) and SFE Clearing Corporation Limited (SFECC), and its second assessment of Austraclear Limited (Austraclear). Under the Corporations Act, ASIC is required to conduct an annual assessment of how well the SFE is complying with its obligations to supervise its market and how well SFECC and Austraclear are complying with their obligations to supervise their respective clearing and settlement facilities. ASIC has concluded that the SFE has adequate arrangements for supervising the market, including arrangements for:
• handling conflicts between its commercial interests and the obligation to operate the market in a fair, orderly and transparent way
• monitoring the conduct of participants, and
• enforcing compliance with its rules. SFE is already acting on suggested improvements to its supervision, compliance and disciplinary arrangements to ensure it can continue to comply with its obligations in the future. The report also notes that SFE suffered some outages on its SYCOM trading system in the last year.
ASIC is satisfied that SFE has taken swift action to minimise the chances of unexpected outages in the future. ASIC will continue to monitor this issue in conjunction with SFE. ASIC has also concluded that SFECC and Austraclear have adequate arrangements for supervising their respective clearing and settlement facilities, including arrangements for:
• handling conflicts between their commercial interests and the need to ensure that the clearing and settlement facilites services are provided in a fair and effective way, and
• enforcing compliance with their operating rules. The assessment reports are available from the ASIC website at www.asic.gov.au. Background Financial market
A financial market is defined as a facility through which offers to buy and sell financial products are regularly made. Anyone who operates a financial market in Australia must obtain a licence to do so, or otherwise be exempted by the Minister.
As part of the conditions of granting a licence to operate a financial market, the licensee must supervise the market in accordance with Part 7.2 of the Corporations Act (the Act). Under the Act, ASIC is required to conduct an assessment of how well licensed financial markets are complying with their obligations to supervise their markets. ASIC must do this at least once per year in relation to each licensee.
ASIC can also assess how well a licensee is complying with its other obligations under the Act. Clearing and settlement facility A clearing and settlement facility is defined under the Act as a facility that provides a regular mechanism for the parties to transactions relating to financial products to meet obligations to each other.
Anyone who operates a clearing and settlement facility in Australia must obtain a licence to do so, or otherwise be exempted by the Minister. As part of the conditions of granting a licence to operate a clearing and settlement facility, the licensee must supervise the clearing and settlement facility in accordance with Part 7.3 of the Act. ASIC is required to conduct an assessment of how well a licensed clearing and settlement facility is complying with its obligations to supervise the facility. ASIC must do this at least once per year in relation to each licensee.
ASIC can also assess how well a licensee is complying with its other obligations under the Act. For further information contact: Tracey Lyons Director, Markets Regulation Telephone: 02 9911 2342 Mobile: 0412 673 041 Kate Harvey Director, Media Communications Telephone: 03 9280 3553 Mobile: 0401 985 966
