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Monday, 27 April 2020   (0 Comments)
Posted by: Kate Dent
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The focus of ACSA has mirrored the changing priorities of our members, the broader industry and indeed the whole country as COVID-19 impacts have unfolded.


It’s fair to say that the custody industry has adapted remarkably well to the pandemic containment measures and shown considerable resilience in maintaining services to clients.


Working from home, virtual meetings, heightened supply chain vigilance, and real time business continuity management have become the new normal – all in parallel with maintaining focus on client priorities, in-flight change management, adapting to market volatility and spikes in volume.  A couple of examples: 

  • The record trade volumes of Friday 13 March settled normally on Tuesday 17 March (T+2). According to the ASX, the batch settled 295,264 transactions compared to the daily average for the last 12 months of 95,725.
  • Spikes in the number of client initiated unlisted asset revaluations that occurred through March.  Valuation movements of 7% to 10% were common, and necessary to support fair valuation for fund investor switching/redemptions.



  • ACSA immediately complied with health measures including adoption of voice and video formats for all board, working group and taskforce meetings.
  • ACSA wrote to Treasury, ASIC and each State and Territory seeking clarification of custody and investment administration as “essential services.”
  • The ACSA Board initiated weekly meetings with focus on immediate operational impacts of the Pandemic and abnormal market conditions (see below).
  • Engagement with other peak bodies, regulators and key supply chain sectors to share priorities, including:
    • An industry forum with share and unit registries, initially meeting weekly. This forum has established agreed escalation points, outlined approaches to physical documents, wet-ink signatures, cheques and overall service chain dependencies.
    • A regular informal forum with ASIC to discuss market resilience matters.
    • A formal submission to ASIC and the ASX seeking support:
      • in eliminating the compulsory use of cheques in corporate actions, and
      • explaining the challenges of listed company deferral of dividends where notification to the market is incomplete and not timely (in some cases, on the advised payment date). At the time of writing a sample from member houses indicates that approximately 36 listed companies deferred payment of their announced dividends for periods of up to 228 days. The value of dividends deferred in this sample is over $761 million.
    • An exposure draft of voluntary corporate event types that create potential operational issues and adverse investor impact in the COVID environment. ACSA has identified areas for potential simplification.
    • Review of regulatory priorities (APRA, ASIC and ATO) and inflight change
    • Review of the ASX’s decision to amend the timetable for CHESS Replacement, and advocacy by ACSA that the re-set in June should be a formal and public process predicated on a risk-based approach (not an arbitrary choice of new go-live date).
  • Raised specific issues with regulators on “business as usual” matters – for example, the decision by the ATO to remove the ABN as a reference on BAS refunds form January this year. An unintended change that has created significant processing inefficiency. We have written to the ATO to request reinstatement of this important reference field.



In the introduction I shared my view that the industry has coped incredibly well. Can this continue?  Almost certainly, although how our industry (or any sector for that matter) would respond to escalation to full lock down and high infection rates in the work force is unknown. Pandemic planning is ultimately a member issue with contingency planning determined by operating model, geography, service roster and client mix.  

ACSA will maintain focus in two broad areas:

  • Systemic challenges in supporting financial transactions and orderly operation of post-trade services to markets. These include clearing and settlement, custody, payments system access, trade execution and capital markets support; and
  • Systemic challenges to the maintenance of key books of record, data and related services in support of clients (investment, accounting, tax, portfolio valuation, unit pricing and registry).


The first supports orderly market post-trade operations and institutional investors. 


The second underpins the supply chain that supports managed funds, superannuation, wealth platforms and insurance (representing the savings of millions of ordinary Australians).


ACSA is currently reviewing scenarios for June year-end.  Potential impacts apply to the full service chain, and could include:

  • interaction with fund advisers (accountants, actuaries, tax consultants, auditors) and other key service partners (member administrators, investment professionals) as the majority of the extended supply chain workforce is at home;
  • potential lags in sourcing vendor reference data, subject matter expertise (for example, classification of provisions and accruals aligned to client valuation policy, standards and tax law);
  • potential production impacts through the supply chain, including fund accounting, unit pricing, unit registry and global sourcing models;
  • additional ad hoc requests for information by regulators driving additional reporting needs for clients.


Naturally, it is up to each member firm to consider COVID service impacts and contingency measures (if required) in consultation with clients and service partners.   

Where there are systemic issues, however, ACSA will continue to advocate for change, including the delay or deferral of regulatory deadlines, and shared understanding of priorities.



Manual processes, requirements for the use of cheques and physical documents have created additional challenges under pandemic business continuity arrangements.  These challenges were already well-known inefficiencies across the industry.  Most have been flagged explicitly in past work by ACSA including submissions on CHESS Replacement functionality, Corporate Actions STP, through the Funds 2.0 Taskforce and across our standing Working Groups (Operations, Tax and Regulatory).


ACSA will add the learnings from COVID-19 to the rationale for change.  Fewer manual dependencies through the full service chain, while maintaining key controls, would benefit clients and contribute to future resilience and efficiency.


Having said this, there is a time and place for this reflection and advocacy.  We remain in the thick of understanding and managing COVID impacts.  Our key client segments, governments and regulators quite rightly have their current focus on adapting to the changing environment.



I speak with a lot of people in our industry.  The mood has changed through the phases of the pandemic almost with the same volatility as the share market.  We are at heart social beings.  Much has been said and written about the effects and tactics for dealing with physical isolation and the uncertainty of these extraordinary times.


I can’t add a lot to the insight shared by others – have a routine, eat well, exercise, use your social technology, and celebrate every positive – but I have seen the benefits of sharing.


It remains important that peers have a forum for discussion on business and personal challenges – a safe place neutral from competitive interests.  This is what ACSA will continue to seek to provide.




Robert J Brown


Chief Executive Officer

Australian Custodial Services Association


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