In this issue

• Prudential Standard CPS 230 Operational Risk Management
• T+1 – What’s happening
• Unit pricing conference
• ACSA industry submissions
• ACSA Thought Leadership Series
• Global Perspective – Digital Money Dashboard
• In Focus – Michelle Cross (Automic Group)
  

Introduction

In this edition of the ACSA Industry Wrap we are excited to update you on significant industry change relating to operational risk management, T+1 and unit price data.

We also highlight some of the regulatory and industry activity of our Working Groups, the upcoming webinars on Climate reporting and Crypto ETFS and share some interesting content from Cambridge University on digital money.

We are in Focus with Michelle Cross from Automic Registries.

CPS230 – APRA Operational Risk Management Prudential Standard

In a recent speech to the AFR Banking Summit, APRA Chair, John Lonsdale noted the wider view of risk is in APRA’s focus. In the speech, CPS 230 was identified as a critical framework for the regulator as it considered recent cyber incidents and noted them as a reminder that the financial sector is heavily dependent on non-financial industries to operate. The full speech can be found here.

APRA released Prudential Standard CPS 230 Operational Risk Management last July to ensure banks, insurers and superannuation trustees better manage operational risks and respond to business disruptions. It doesn’t make banks and super funds responsible for a telecommunications or electricity outage, but it does mean they expect these types of scenarios to have been identified against defined critical operations, and plans put in place to respond so that impacts on business continuity and customers are minimised.

The effective date will be July 1, 2025, however APRA will start assessing APRA Regulated Entities (AREs) preparedness for the new standard throughout 2024. AREs must have identified their critical operations and material service providers by mid-2024 and set their tolerance levels by end of 2024.

APRA has announced that by mid-year they will be releasing the final version of the accompanying prudential practice guide, along with a response paper to recent consultations.

ACSA has formed a working group to consider if industry guidance will benefit ACSA member clients in understanding their obligations for oversight of third and fourth parties that support their critical operations. ACSA has completed its first phase of information gathering and is now engaging with other industry associations as to how ACSA can assist their members in meeting their obligations.

ACSA is looking to provide a further update on CPS 230 via a webinar in June.

T+1 – What’s happening

International Markets
The U.S. will move to T+1 settlement on May 28, 2024. Canada and Mexico are moving one day earlier on May 27. This will present challenges for global investors as North American securities, which represent the largest concentration of global assets, will now settle one day earlier than most of the rest of the world.

The UK’s Accelerated Settlement Taskforce has recommended shortening their settlement cycle beginning with operational changes in 2025 and a full transition by the end of 2027. The Taskforce further noted that if the EU commits to move to T+1 within a timeframe that aligns with the UK’s plans, simultaneous adoption should be considered.

ACSA’s webinar on T+1 in March highlighted the preparedness of the US, Canadian and Mexican markets and you can view the recording here.

Australia
The ASX has published an industry whitepaper ‘Considerations for accelerating cash equities settlement in Australia to T+1’, following on from the establishment of the T+1 working group in December 2023 to provide strategic considerations for a potential transition to T+1 and provide analysis and insights to the ASX Business Committee.

Despite similarities with other global financial market intermediaries and marketplaces, key differences require specific understanding of the risks, benefits and costs of transitioning to T+1 in Australia which require consideration as Australia determines its position.

The ASX industry whitepaper ‘Considerations for accelerating cash equities settlement in Australia to T+1’ can be found here.

ACSA continues to be at the forefront of discussions surrounding market infrastructure and settlement practices with ACSA members participating in the ASX T+1 working group.

The move towards T+1 settlement represents a potential paradigm shift in how transactions are settled in the Australian market. It promises benefits such as reduced counterparty risk, increased efficiency and enhanced market liquidity. However, it also raises questions and considerations that warrant thorough exploration and analysis.

ACSA has released a T+1 Position Paper which can be found here.

ACSA has created a working group to look at the standardisation of data related to unit prices. Spearheaded by Mal Sargeant from Citi, ACSA is developing a Unit Price Data Standard to address the ongoing need for consistency and reliability in unit price data across custodians, asset managers, unit registries and other data users.

The demand for a uniform unit price data standard continues to grow and the industry's recognition of the issue to streamline operations and bolster data accuracy is critical to drive a best practice approach. This initiative not only promises to enhance efficiency but also to provide clear guidelines for unit price data.

ACSA is hosting a panel at the IBR Conference on Unit Pricing where the status of the Unit Price Data Standard will be shared. You can find out more about the conference here.

ACSA Industry Submissions

It’s been a busy start to the year for regulatory and industry submissions and there are more to come. Our Working Groups have been working diligently to get responses complete and we thank all those involved for your outstanding contribution.

ACSA has responded to the following submissions, click the links to read more:

• Treasury submission on Climate Related Risk.
• Treasury submission on Competition in Cash Equity Clearing and Settlement.
• APRA submission on Superannuation Data Transformation Phase 2.
• Treasury submission on Tax Treaties.
• ASX submission on CHESS Replacement Phase 1.

Coming up, ACSA will be considering and responding to the following:

• ASX consultation white paper on Considerations for Accelerating Cash Equity Settlements for T+1.
• AUSTRAC consultation on Contribution Levies.
• ASX Consultation on CHESS Replacement Phase 2 (late 2024)

ACSA regulatory and industry submissions are all available on the ACSA website under the Advocacy Submissions section in Our Industry.

ACSA Thought Leadership Webinar Series

Climate reporting – getting ready for new Australian sustainability standards

When: 9th May 2024 – 12pm – 1pm

Where: Online, via Teams

In October 2023, the Australian Accounting Standards Board (AASB) released an exposure draft (ED) for disclosure of climate-related financial information. The ED includes three proposed Australian Sustainability Reporting Standards (ASRS Standards) that include modifications to the baseline of the ISSB™ Standards with a climate-first approach.

The AASB is proposing the ASRS Standards would apply to annual reporting periods beginning on or after 1 July 2024. In January 2024, the Australian Treasury released its Final Policy position for climate-related disclosures, including Exposure Draft legislation and accompanying explanatory materials.

To understand the new standards KPMG will be sharing insights on how to prepare for this change and how the market is approaching the challenge.

Our panel will discuss:

• An overview of ESG landscape and the new reporting requirements
• Accountabilities for reporting
• Preparing now for the future

Our panellists include:

• David Travers – ACSA – (Moderator)
• Linda Elkins - KPMG
• Lisa Butler-Beatty - KPMG
• Nathan Kessey - KPMG
• Marshall Watkins - KPMG
  

The webinar is on May 9 at 12 noon. Follow the link here to register.

Next Up: CRYPTO ETFS – SIMPLIFYING CRYPTO INVESTMENT

When: 24th May 2024 – 12pm – 1pm

Where: Online, via Teams

Crypto ETFs track the price performance of one cryptocurrency or more by investing in a portfolio linked to their instruments. Like other ETFs, crypto ETFs trade on regular stock exchanges and investors can hold them through traditional retail accounts or custody arrangements.

There are a variety of Crypto ETFs, they can track the value of cryptocurrencies by investing in futures contracts for digital currency or by investing in digital currencies directly. This makes it possible to gain exposure to cryptocurrency prices without having to do business on a crypto exchange or deal with the costs and complexities of directly owning digital assets.

The most significant benefit of crypto ETFs is that they provide exposure to crypto without additional ownership expenses or exposure to risk. For example, there are custody charges for cryptocurrencies and some secure digital wallets charge an annual fee.

Our panel will discuss:

• 2024 Crypto Market Outlook
• The evolution of Crypto into ETFs
• Different types of Crypto ETFs
• Retail v Institution application
• The role of custodians in Crypto ETFs
  
• Crypto ETFs in Australia
  

The panel consists of:

• Alvin Chia - Northern Trust (Moderator)
• Sagar Desai - Coinbase
• Brian Foster - Coinbase
• Jordan Gillman - Coinbase
• Tanvir Gill – Coinbase

The webinar is on May 24 at 12pm. Follow the link here to register.

Cambridge University has released a digital money dashboard that explores the multifaceted concept of money, shaped by social, historical, cultural, political, economic, and financial contexts. Money seems paradoxically familiar yet alien, especially considering emerging digital money instruments from diverse issuers, which challenge traditional monetary norms.

The objective of the dashboard is to guide readers through the evolving digital money landscape, examining new instruments and their relation to traditional arrangements and forms and highlighting potential risks and opportunities for retail users.

A broader societal understanding of the monetary system is essential as it deeply influences resource allocation, wealth distribution and the very foundations of the social fabric.

The Cambridge Digital Money Dashboard (CDMD) is an online resource that aims to provide interactive visual representations of up-to-date data on the following emerging digital money instruments:

• stablecoins
• central bank digital currencies
• tokenised bank deposits
• crypto assets.

The CDMD is envisaged to be a one-stop platform that brings together relevant digital asset adoption and risk indicators, allowing for multi-stakeholder uses and comparison. It aims to offer policymakers, financial authorities, academics, industry and the public access to reliable information and analytical tools for thorough and insightful decision making.
This is a very informative and easy to use resource, it includes “Digital Money 101” content for those new to digital assets. You can access the CDMD here.

In Focus – Michelle Cross

Michelle joined Automic Group as Head of Fund Registry at the start of 2023, bringing over 30 years of operational and project management experience in financial services across Australia, New Zealand and Hong Kong, to the fast-growing Fund Registry team.

Michelle has worked for organisations that provide outsourced registry and administration services to many of Australia’s leading fund managers. Michelle was most recently at AMP Capital as Head of Service Provider Relationships and prior to that in various senior management registry roles, including, General Manager-Managed Fund Outsourcing, Head of Operations-Employee Share Plan Services, Corporate Actions General Manager and Program Manager.

Quick fire five

Coffee or Tea? Neither
Tik Tock, Instagram or Facebook? Facebook
Pop, Rock or Rap? Pop
Cocktail or Wine? Cocktail
Summer or Winter? Summer

Questions

Can you briefly describe your role and responsibilities?
As the Head of Fund registry at Automic Group, I am responsible for ensuring that we provide a high-quality service to our clients and to continue to evolve our fund registry solution.

What is the most satisfying part of your role?
Providing our clients with the support, industry-leading technology, and expertise that they need to make business easier. Equally, watching my team grow and develop is really rewarding.

How do you motivate yourself and your team?
The key to motivating my team is to communicate a clear vision of what we want to achieve, recognise achievements and provide career development opportunities.

I am motivated by working with a high-performing team and for an innovative company that continually challenges the status quo.

As a team, we always feel a great sense of achievement from being able to continually deliver tailored solutions that positively impacts business performance and saves time for our clients.

What are some of the exciting places your career has taken you?
I have worked in New Zealand and Hong Kong to assist in establishing registries. I have also travelled to Europe to conduct onsite due diligence visits on suppliers in Paris, Luxembourg, and London.

What advice would you give your 21-year-old self?
Learn as much as you can about the business and industry that you are in and take every opportunity that you can to develop new skills and build your knowledge. It is also very important to build strong professional relationships as your networks can open doors to new opportunities.

What excites you about the future of our Industry?
The ability to leverage technology such as artificial intelligence, machine learning and data analytics to improve decision-making, enhance risk management and streamline operations. And the important role all organisations can collectively play as part of ASCA in shaping the future.