In this Issue

• Market update – CHESS replacement, Bond and Repo clearing, settlement competition
  
• Regulatory Update – ASIC, APRA, CoFR
  
• Members Update – ACSA Thought Leadership, conferences, events
  
• Global Perspective – US central clearing
  
• Industry Insights
  
• Upcoming Events
  
• In Focus – Leon Stavrou (Northern Trust)
  

A word from our CEO

In this edition of the ACSA Industry Wrap we update you on next steps for ASX CHESS Replacement, Competition in Settlements and Central Clearing for Bonds and Repos, and the latest on ASIC’s business plan, APRA’s investment governance guidance and CoFR quarterly update. We also share some interesting content on US central clearing of US Treasuries.

This issue also details what’s next for the ACSA Thought Leadership Series, ACSA participation in upcoming conferences and the next round of our Coffee Buddies program. You can refer to the key events table for more information and links to register for upcoming events.

This month we are In Focus with Leon Stavrou from Northern Trust.

Market Update

CHESS Replacement Release 2

On 2 August 2024, ASX released a consultation paper on the scope and implementation of CHESS replacement Release 2 (settlement and subregister).

The paper outlines ASX's proposed plan for Release 2 and seeks feedback on the design, scope, schedule, and transition for Release 2. The paper also outlines a proposed plan for timing and approach on a shift to T+1 settlement cycle, as well as interoperability, testing and industry readiness approaches. The consultation paper is available here.

ACSA is currently preparing its response to the ASX consultation paper.

CoFR Consultation on Central Clearing of Bonds and Repos in Australia

There have been considerable changes in the size and structure of the Australian bond and repo markets in recent years. Recent analysis by Reserve Bank of Australia (RBA) indicates that the potential benefits of central clearing in these markets has increased, and that the case for central clearing may be stronger than previously assessed by the RBA in 2015.

The Council of Financial Regulators (CoFR) released a consultation paper to reassess the case for central clearing of bonds and repos in Australia.

ACSA is currently preparing its response. 

ASIC consults on competition in cash equity clearing and settlement services

ASIC has released a consultation paper on proposed rules to facilitate competitive outcomes in cash equity clearing and settlement services provided by the ASX Group. It is the first time ASIC is exercising its new powers under the competition in clearing and settlement reforms.
The proposed rules are intended to support the long-term interests of the Australian market by delivering efficient outcomes for investors consistent with those expected in a competitive environment.
ACSA is currently preparing its response.

Join the discussion.

If you’re interested in joining in ACSA’s response to these consultations, please connect to us at admin@acsa.com.au.

Regulatory Update

ASIC – 2024/2025 Corporate Plan

Australia’s public and private markets and emerging financial products will form a new pillar of ASIC’s expanded strategic priorities.

ASIC Chair Joe Longo said the agency’s latest Corporate Plan included a new pillar in its strategic priorities that underscored a commitment to strengthening integrity across Australia’s markets.

‘The integrity of our markets is fundamental to maintaining trust in Australia’s financial system which is core to ASIC’s remit, trust in the financial system and markets means greater confidence which means more investment. That has direct benefits for the jobs and opportunities of Australians.

‘While Australia’s private markets are dwarfed in size by our listed equity markets, their opacity presents an outsized risk to market integrity, particularly as more investors become exposed. The addition of a new strategic priority aimed at driving consistency and transparency across markets and products puts all market participants on notice.’

Mr Longo said the transformation work that had been underway at ASIC over the past three years had helped the agency to review and clarify its focus areas.

Follow the links below to find out more.

ASIC 2024 Corporate Plan

APRA – Final investment governance guidance published.

The Australian Prudential Regulation Authority (APRA) has released final guidance on investment governance for superannuation trustees. The updated guidance is designed to assist trustees in meeting their obligations under the strengthened Prudential Standard SPS 530 Investment Governance (SPS 530), which came into force on 1 January 2023.

Prudential Practice Guide SPG 530 Investment Governance (SPG 530) provides:

• additional guidance to support requirements relating to liquidity management, stress testing and asset valuations
  
• an outline of how APRA expects trustees will consider environmental, social and governance risk factors as part of their overall investment risk management
  
• greater clarity in areas requested by industry in applying the standard, and
  
• a more streamlined approach to guidance, bringing SPG 530 in line with APRA’s Modernising the Prudential Architecture strategic initiative
  

A copy of SPG 530 is available on the APRA website at: Prudential Standard SPS 530 Investment Governance in Superannuation.

Council of Financial Regulators – Quarterly Statement

The Council of Financial Regulators (CoFR) recently released its statement from their latest meeting. The Council discussed a range of current and emerging vulnerabilities in the financial system. Members discussed actions the Council agencies are taking to mitigate these vulnerabilities and to strengthen resilience in the financial system. This approach involves increased engagement with industry, including in scenario planning exercises, and addressing existing information gaps.
The statement included commentary on:

• The geopolitical landscape
  
• The adoption of new technologies
  
• Supervisory Lessons learned from the CHESS replacement project, and
  
• Other initiatives
  

You can read the full COFR statement buy following this link.

COFR Latest Quarterly Statement

Members Update

ACSA Thought Leadership Webinar Series

Last month, we hosted two webinars as part of our Thought Leadership Series:

• CPS230 Update – Critical Operations, APRA practice guide and what’s next including a panel from State Street, EY and Australian Super
  
• Driving Growth in Asset Management – Key factors affecting Asset Managers presented by Northern trust.

If you missed these webinars, you can access the recordings here.

We have several webinars planned throughout Q4 this year on the below topics:

• Updates on T+1
  
• Evolutions in digital and crypto assets
  
• Unlisted and private assets, and
  
• Operational Resilience and CPS 230

ACSA at IBR Investment Operations Conference

ACSA and its members will be hosting several presentations and panels at the IBR Investment Operations Conference being held in Sydney on September 11-12, 2024.

This annual forum is focused investment operations for both large and small organisations and provides an ideal introduction for those new to investment operations as well as providing the opportunity for experienced participants to hear from and network with their peers. The speakers represent industry experts, several of which are our members, who will share their experiences insights with the delegates.

If you want to find out more about the conference you can access the full details here, or if you interested in joining a panel please contact admin@acsa.com.au.

ACSA at ASFA Investment Summit

ACSA will be at the inaugural ASFA Investment Summit in Newcastle from September 3-5, 2004.
This summit is a platform for insights, strategic discussions, and transformative ideas and will bring together visionaries, industry leaders, and thought leaders that shape the future of investment.

If you want to find out more about the conference you can access the full details here.

Global Perspective – Asset Servicing Automation

Whilst the Australian Council of Financial Regulators have issued a consultation on Bond and Repo Clearing in Australia, the US SEC has already published rules that will require central clearing of certain US Treasuries through the Fixed Income Clearing Corporation (FICC) between 2025-2026.

DTCC has released the findings of a survey that serves as a pulse check for how the industry is progressing in its preparations. The survey gives an overview of the US clearing market and an understanding of how clients plan to use FICC’s access models, and how margin and liquidity risk management resources may be impacted by the rule.

The key findings of that survey have now been published by DTCC and are available for download here.

Key Events

• Now until 27 September 2024: Round two of the ACSA Coffee Buddies program is underway
  
• 11 September 2024: Conference - IBR Investment Operations Conference with ACSA leading panel discussions
  
• 13 September 2024: Webinar – ACSA Thought Leadership Series – T+1 Update
  
• 20 September 2024: Webinar – ACSA Thought Leadership Series – Evolutions in Crypto and Digital Assets
  
• 20 October 2024: Members Event (Sydney and Melbourne) - ACSA Members Update

Head to our events page to find out more and register.

Insights and Updates

• August 2024 - ACSA response to Treasury consultation on Strengthening the foreign resident capital gains tax regime
  
• July 2024 - ACSA response to Treasury consultation on meetings and proxy voting
  

In Focus –Leon Stavrou

Leon is the managing director for The Northern Trust Company in Australia and New Zealand. Overseeing the overall business and strategic direction for Asset Servicing, Leon has over 25 years of fund administration and global custody experience. Leon joined Northern Trust in April 2010 and was previously a global services executive responsible for Northern Trust’s asset servicing operations across Australia and for ensuring the provision and development of Northern Trust’s tailored range of asset servicing solutions to clients across Asia-Pacific.

Prior to Northern Trust, Leon held management roles at NAB Asset Servicing and Victorian Funds Management Corporation (VFMC), and holds a BCom (Melbourne University), Graduate Diploma in Applied Finance and Investment (FINSIA), and is a CPA.

Life outside of work tends to be dominated by being the father of two young, active and energetic children, a role of great importance and balance… and being kept on your toes at the very least.

Quick fire five
Coffee or Tea? Coffee
Tik Tock, Instagram or Facebook? Instagram
Pop , Rock or Rap? The short answer is Rock, but I listen to a lot of different styles of music
Cocktail or Wine? Wine, unless I am at Black Pearl
Summer or Winter? Spring

Can you briefly describe your role and responsibilities?

As Northern Trust Country Head for Australia and New Zealand, I am responsible for leading the Asset Servicing business. I am also an Accountable Person under the FAR regime, which is an important part of my role.

As Country Head, I am involved in almost every aspect of our business, from working with clients, product and business development, technology, people and talent development, business strategy, financial management and risk management. Being part of a global organisation and working with peers and colleagues across the globe is also an important aspect of my role.

What is the most satisfying part of your role?

Being part of a team that has helped build and grow the business from early stages, and to see that translate into success for our people, clients and the organisation continues to be the most satisfying part of my role. Being in a position to connect the dots across different parts of the business, and working at an industry level to create opportunities and solve problems is what I get the most enjoyment from.

How do you motivate yourself and your team?

Setting, but more importantly communicating clear goals and objectives so that our team can work together towards achieving those, and understanding how each of them contribute to it, I find a great source of motivation through purpose. I also like to make sure we enjoy what we do and that there is a sense of fun along the way.

What excites you about the future of our Industry? (Include role of ACSA)

In a word - innovation. The data and digital journal that the Custody and Financial Services Industry more broadly has been on, continues to be so exciting to see unfold. I am not old enough to remember T+5 but do remember T+3, and now T+1 is here and T-zero is coming. How markets are shifting to digital exchanges, digital assets, and the role that data plays is a fascinating and exciting aspect to our Industry. ACSA is also at the forefront of this, and invariably innovation does not happen effectively without collaboration, especially when there is a common problem to solve.

What advice would you give to somebody who wants to pursue a career in Custody?

Well I am biased but what I would say is there isn’t just one career you can have in Custody, you can have several “careers” within the industry or even within your organisation, and that’s what makes it such a compelling industry to be a part of, due to the breadth and depth of different types of work you can be exposed to. In your career, the best thing you can do is not repeat the same year of experience twice, and that is something you can easily achieve with a career in this Industry.

What advice would you give your 21-year-old self?

It’s funny the things you remember. When I was a kid (I can’t remember what age), my mum put a poster on my bedroom wall with Rudyard Kipling’s poem “If” printed on it. Back then, without smart phones etc, I used to read it when I had nothing better to do, and I think it seeped into my subconscious. As I think now about what the characteristics are that I have developed over time that have led me to where I am today, a lot are reflected in that poem. So I would tell 21 year old Leon, whom I assure you had no time for poetry at that time of his life, to “remember if”.