Settlement services and pricing
ASX's model for settlement maximises efficiency through the netting of settlement obligations in each individual equity and the netting of all payment obligations, while minimising the risk of settlement failure.
When cash market products (equities, exchange traded funds or warrants) are bought or sold on licensed Australian financial markets, legal ownership of those cash market products is exchanged for money. This exchange is called settlement. The diagram below shows the relationship between Australia's trading, clearing and settlement services:
Settlement is effected through CHESS, Clearing House Electronic Sub-register System. Usually, two business days after a buyer and seller agree to a trade, the settlement of that trade is effected through CHESS. This involves the transfer of title or legal ownership of the cash market products and the simultaneous transfer of money for those cash market products between participants via their respective banks. This type of settlement is called Delivery versus Payment (DvP). It is irrevocable.
CHESS achieves DvP settlement through a Model 3 multilateral net batch settlement mechanism (for an explanation of Model 3 settlement and how it differs from other models please see Section 5.1 of the RBA's 'Review of Settlement Practices for Australian Equities').
This settlement of all transactions due for settlement on a given business day occurs in a single 'batch' settlement which completes at around 12:30pm. Batch settlement involves the determination of each participant’s net funds and security delivery obligations and the net funds obligations of all participants’ financial institutions (payment providers). This maximises the efficiency of settlement by:
Funds settlement (the transfer of money) occurs across the Exchange Settlement Accounts of those payment providers in the Reserve Bank of Australia’s Information and Transfer System (RITS). Once completed, this triggers the movement of securities from delivering to receiving settlement participants within CHESS. These multilateral payment netting arrangements, which are key to the settlement efficiency of the system, are approved under the Payment Systems and Netting Act.
To facilitate settlement between participants on a delivery versus payment basis (DvP), CHESS electronically registers the title (ownership) of cash market products on its sub-register. Investors can choose to have their holdings registered in one of two ways:
The two types of sub-register provide alternative forms of registration for investors and the cash market products they own. Every company admitted to the official list of an Approved Market Operator (AMO), or issuer of investment products that are quoted on the market of an AMO, manages its own Issuer Sponsored Sub-register for the registration of cash market products in their company or fund. This form of registration is also referred to as being ‘Issuer Sponsored’.
Alternatively, cash market products in any listed company or investment product issuer can be registered in the CHESS Sub-register. This form of registration is held within the CHESS system and allows brokers to manage their sponsored clients' shareholdings, while the client retains legal title to those holdings. This form of registration is also referred as being 'Broker Sponsored'.
An investor who is Broker Sponsored can include a variety of different cash market products in a single registration held in CHESS under that investor's name. This has the advantage of simplifying the administration of a portfolio by consolidating all cash market products into a single account. It also provides investors with comfort and confidence that their holdings are registered in their name. CHESS Holding Statements are also generated directly from the sub-register and sent to investors to provide a form of independent validation of their share purchases, sales, transfers and holdings.
For brokers, maintaining their investor clients' holdings on the sub-register also has the advantage of reducing their risk in facilitating settlement of market and client transactions through expediting both the movement of securities in preparation for settlement and the timely allocation of shares to client accounts post settlement. Finally, for issuers, the CHESS sub-register provides both a cost effective manner to maintain a register of investors and an efficient and accurate mechanism to process corporate actions.
ASX Settlement operates a settlement system and a fully electronic securities depository for products traded on Approved Market Operators and Approved Listing Market Operators.
ASX Settlement charges participants for holdings transfers and DvP settlement to meet novated obligations between the participant and ASX Clear and non-novated obligations directly between participants.
Headline cash market settlement fees
| Service | Charge basis | Charge |
| Batch Settlement DvP Instruction | Per settled DvP settlement instruction | $0.30 |
| DvP Settlement / Miscellaneous payment | Per request to create settlement obligation with value | $1.30 |
| CHESS & Sub-register Transfer & Conversion | Per request to transfer a holding | $0.90 |
Cash market settlement fee schedule
The fee schedule sets out the fees for cash market settlement services for ASX Settlement participants and a brief service description for each of the services. It also provides the details of the ASX cash market settlement revenue sharing scheme.
Participants with queries on the fee schedule should contact ASX via EquityPostTrade@asx.com.au.
Participants are notified of any fee changes by way of market notice.
If ASX changes cash market clearing and/or settlement fees, participants will be provided with information to assist in their analysis of the impact of clearing and settlement price changes on their total service costs.
Market notices are available via the participant portal on ASX Online. For access contact the ASX Online Help Desk on 1800 663 053 or email.
ASX Clear and ASX Settlement do not discriminate between different participant types with respect to fees and charges.
Under Financial Stability Standard guidelines, ASX is required to publish its policies with respect to any available fee waivers and discounts. Under the Code of Practice for Clearing and Settlement of Cash Equities in Australia, ASX is also required to provide the details of the applicable terms, conditions and eligibility criteria of any rebates, revenue sharing arrangements and discounts applicable to each cash market clearing and settlement service
ASX Clear and ASX Settlement are wholly-owned subsidiaries of ASX Limited (ASX) and are responsible for the provision of clearing and settlement services to ASX clearing and settlement participants.
Invoices for clearing and settlement services are issued to clearing and settlement participants monthly in arrears.
