In this Issue

• Market update – ASX Pricing, Central Bank Digital Currency (CBDC)
• Regulatory Update –APRA Super Data Transformation and CPS230, Digital Transformation Agency and AI, AUSTRAC Outsourcing AML/CTF
• Members Update – ACSA Thought Leadership, conferences, events
• Global Perspective – ISSA Future of Securities Services, Citi Securities Services Evolution
• Industry Insights
• Upcoming Events
• Member profile - XCheqer
• In Focus – Nadia Schiavon, JP Morgan
  

A word from our CEO

In this edition of the ACSA Industry Wrap we update you on the new pricing approach for ASX Cash Equities and Settlements, ARRA’s response the Super Data Transformation consultation, and our continued focus on CPS230. We also share Treasury and RBA’s whitepaper on the Future of Money in Australia, and provide some insights into AI from the Australian Digital Transformation Agency and new guidance from AUSTRAC.

This month, we share the Future of Securities Services whitepaper, published by ISSA, what’s next for the ACSA Thought Leadership Series, participation in recent conferences and the next round of our Coffee Buddies program.

This month we are In Focus with Nadia Schiavon. from JP Morgan and we share a profile on XCheqer, a new member.

Market Update

ASX Cash Equities Clearing and Settlement new pricing policy.

ASX recently released a consultation paper on its new pricing policy for Cash Equities clearing and settlement.

ASX Clear and ASX Settlement are proposing to adopt a new pricing policy for cash equity services. The new Policy will build on existing commitments in the Cash Equities Clearing and Settlement Code of Practice to ensure our clearing and settlement and issuer services pricing remains fair, reasonable, transparent, and non-discriminatory and that prices for those services remain stable and predictable.

The new Policy will implement a cost recovery model, using a new methodology whereby they will only recover the efficient costs of providing cash equity services, plus a reasonable rate of return commensurate with the risks involved. ASX noted, the new pricing model is widely used across other industries and will introduce a cost recovery mechanism and a cap on revenue for cash equity services.

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

Treasury and RBA Central Bank Digital Currency (CBDC) and the Future of Digital Money in Australia.

Ongoing changes in payment behaviour and the emergence of new payment technologies are reshaping the payments landscape in Australia and internationally. These changes raise key questions about whether available forms of money are fit for purpose in the digital age. Considering this, the RBA and the Australian Treasury have been examining arguments for and against introducing a central bank digital currency (CBDC), as well as considering aspects of CBDC design.

The paper summarises RBA and Treasury research to date, including how it has informed their assessment on the future of CBDC in Australia, and sets out a roadmap for future analysis. It describes what a CBDC is and examines potential benefits, costs and other considerations related to CBDCs, covering some more complex technical issues. Finally, it outlines the forward work agenda for the RBA and Treasury.

If you’re interested in reading this paper you can find it here.


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

APRA – Enhancements to superannuation data collection.

On 20 September 2024, APRA released a response to its consultation on proposed enhancements for the collection of data on indirect investment costs and RSE licensee financials.

APRA intends to release a second response to its consultation on proposed enhancements for the collection of data on investments and registrable superannuation entity (RSE) and RSE licensee profile by the end of 2024.

APRA’s full response can be found here.
 

APRA – ACSA response to Operational Resilience Standard CPS230.

ACSA members continue to engage on the industry response to CPS230 and how the industry can provide guidance to assist clients in meeting their operational resilience obligations. We have already released guidance in critical operations, this can be found here.

The ACSA CPS230 Working Group is currently considering guidance in relation to tolerance setting, assurance requirement, and legal agreements. We will issue additional guidance, where appropriate, on key operational resilience topics related to CPS230 obligations of members and their clients. 

Digital Transformation Agency – Safe and Responsible AI in Australia.

The potential for Artificial Intelligence (AI) to improve social and economic well-being is immense. AI development and deployment is accelerating and is already permeating institutions, infrastructure, products, and services. This often occurs undetected by those engaging with it. The Australian Government’s consultations on safe and responsible AI have shown that the current regulatory system is not fit for purpose to respond to the distinct risks that AI poses.

The Australian Government is considering mandating guardrails on those developing and deploying AI in Australia in high-risk settings. These options include adapting existing regulatory frameworks to introduce additional guardrails on AI, or creating new frameworks through framework legislation, or by introducing an Australian AI Act. A risk-based approach has been developed, with emphasis on measures including testing, transparency, and accountability, consistent with developments in other jurisdictions.

The Digital Transformation Agency paper can be found here.

AUSTRAC – New guidance available

AUSTRAC has published new guidance to help your members identify and manage the risks that may arise if they use outsourcing and identifying suspicious activities.

Understanding and managing risk is key to complying with their obligations. It is also an important step in protecting their business, our community, and the Australian financial system.

Businesses will generally remain legally liable for any breach of their AML/CTF obligations, even under outsourcing arrangements, and will incur any penalty that arises from a breach. You can find the full outsourcing guidance here.

Businesses must identify suspicious activity; they must conduct enhanced customer due diligence in line with their AML/CTF program and submit a suspicious matter report to AUSTRAC within the required timeframe. Follow the embedded links for guidance on suspicious activity indicators relevant for Banking and Superannuation.


Join the discussion.

If you’re interested in joining in ACSA’s discussions and response to regulatory initiatives and industry consultations, please connect to us at admin@acsa.com.au.

Members Update

ACSA Thought Leadership Webinar Series

ACSA hosted two webinars in September as part of ACSA Thought Leadership Series:

• T+1 Settlement in Australia with a panel including the ASX, and ACSA members, Citi and Northern Trust
• Blockchain and DLT, is it still a big deal for financial services hosted by the ACSA Digital Asset Working Group and with presentations from the ValueExchange
  

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

Further the ACSA Thought Leadership Series has several webinars planned on current topics including:

• Regulating digital assets

• Unlisted and private assets, and

• Operational Resilience and CPS 230

ACSA at IBR Investment Operations Conference

ACSA and ACSA members hosted several presentations and panels at the IBR Investment Operations Conference in Sydney on September 11-12, 2024.

This year’s forum focused on investment operations for both large and small organisations. The content presented was an ideal introduction for those new to investment operations but also provided the opportunity for experienced participants to hear from and network with their peers. We enjoyed seeing and hearing from experts across the industry including several ACSA members, share their insights and perspective on challenges and opportunities for our industry.

See some of the presentation panels below.

Coffee buddies’ program

The ACSA Next Generation Leaders Working Group have been matched and catch ups are underway. The program is designed to help industry colleagues build their professional networks and learn more about the industry.

Benefits include:

• Providing an opportunity to learn about other organisations within the industry and the overall custody industry
• Mentorship and Career opportunities
• Build connections for the next ACSA industry event

Keep watching for future programs if you’re interested in joining the program.

Global Perspective 

In 2020, ISSA published the “Future of Securities Services”. The paper outlined a set of key forces and strategic themes expected to impact the Securities Services industry over the subsequent five to ten years, to allow industry leaders to take informed actions and to foster collaboration among ISSA members to solve industry-level problems.

An ISSA working group (WG) has reconvened and reviewed the paper to verify whether – or not – the original hypothesis had occurred or was still in progress, and to forecast the future impact of key forces on the direction of the Securities Services industry. In addition, the WG was asked to include any additional forces that it felt were significant for the Securities Services industry and to detail why.

The full ISSA paper is available here.

The Citi Securities Services Evolution whitepaper series has provided industry-led insights on the key themes that underpin our industry’s development for the last four years and, in many ways, 2024 has proven to b e the culminating year for many of the initiatives that have been underway since our first paper in 2021.

This past year has seen a reduction in settlement cycle affecting USD59 trillion-worth of market capitalisation (through T+1 transitions in seven markets), it has also seen the volume of digital asset issuance exceed USD15 billion (with multiples of that now being used as tokenized liquidity in the world’s collateral markets).

With this execution comes experience. And with several key development milestones now behind us in 2024, securities services firms and financial market infrastructures (FMIs) are now finally able to understand the cost-benefit trade-offs that underpin their future development roadmaps, including a number of unintended consequences of change.

As we reach “the end of the beginning” in T+1 market transitions and significant issuance volumes using distributed ledger technology (DLT), the future steps or our industry are now clearer than ever.

The full Citi whitepaper is available here.

Key Events

• 20 October 2024: Members Event - ACSA Members Update, discussion on Mental Health and Elevating Women’s Voices
• 19 November 2024: Industry Conference – ASFA Conference, Sydney
• 29 November 2024: Webinar - Regulating Digital Assets: How is Australia competing on custody regulations for digital and crypto assets?
  

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

Insights and Updates

• September 2024 - ACSA response to ASX CHESS Replacement consultation paper Release 2.
• September 2024 - ACSA response to Council of Financial Regulators on Central Clearing for Bonds and Repos in Australia.
• August 2024 - ACSA response to Treasury consultation on Strengthening the foreign resident capital gains tax regime
  
  

Member Profile – Xcheqer Consulting Services

XCHEQER is a boutique fund administrator and investment operations specialist based in Sydney, offering tailored operational expertise to a diverse range of industry players. With over 80 years of collective experience, the team provides comprehensive operational support, including asset servicing, target operating model development, digital integration, risk management, and special project execution.

XCHEQER offers independent back & middle office services, NAV oversight services, Fund Accounting, Registry and AML/KYC verifications, across a broad spectrum of asset classes, including alternative assets, Property, ESVCLPs, Private Credit and Crypto. XCHEQER has grown steadily, providing support to a diverse range of funds, including public sector funds, while continually enhancing service offerings.

Kesara Jayasuriya is the Managing Director of XCHEQER and brings over 25 years of experience in the Financial Services industry, with a strong focus on Funds Management. Throughout his career, he has held leadership roles in both global and boutique firms including Credit Suisse, Zurich Financial Services, State Street, Royal Bank of Canada, Mainstream, Investors Mutual, One Investment Group, and Suncorp.

His expertise spans both in-house operations and outsourced models. In addition to his operational acumen, Kesara has provided strategic advisory services to CEOs and Boards on driving operational and financial transformation, compliance initiatives, and commercial outcomes.

XCHEQER recently joined ACSA as an Associate member, what are the benefits of being a member?

By joining ACSA, we expect XCHEQER to gain access to a strong network of industry peers, keeping us informed on the latest trends and regulatory changes in the asset servicing and custody space. As a boutique fund administrator, this membership also enables us to collaborate and share knowledge with major players in the sector, ensuring we continue to provide cutting-edge and compliant solutions for our clients. Additionally, it opens opportunities to contribute to thought leadership and advocacy, aligning with our goal to drive best practices within the industry.

Tell us about your business’s involvement in asset servicing / financial services? What is your primary focus?

XCHEQER is a boutique fund administrator and investment operations specialist based in Sydney. Our primary focus is delivering tailored back & middle office services and fund administration to boutique investment managers, as well as providing operational consulting to industry players including investment managers, trustees and custodians. With our extensive industry expertise and broad range of experience, we offer comprehensive services across various asset classes, including alternative assets, property, ESVCLPs, private credit and crypto. We excel in managing the operational intricacies for our clients and pride ourselves on being flexible and responsive to their evolving needs.

What industry challenges do you help to solve?

At XCHEQER, we tackle complex challenges that are often perceived as too difficult or impossible within the fund administration and asset servicing space. We specialize in relieving the operational burden on investment managers, trustees and custodians; confident in our ability to find innovative solutions to even the most intricate issues. We excel at managing products that don’t fit into standard industry models and are particularly suited for clients who require bespoke, tailored services. Our goal is to deliver customised, efficient solutions that turn challenges into manageable outcomes.

What excites you about the future of the asset serving/custody industry?

We are excited about the rapid evolution of technology and the expanding opportunities within the asset servicing industry. The integration of digital solutions, AI, blockchain, and fintech innovations is set to streamline operations, reduce risks, and enhance transparency. We also see growing opportunities in alternative asset classes like crypto, which are driving changes in how fund administration and custody services are being delivered. At XCHEQER, we are committed to adapting and leading in this space by leveraging new technologies to provide forward-thinking, efficient and secure services that add value to the industry. We are eager to support the industry on this journey and contribute to shaping its future.

In Focus –Nadia Schiavon

Nadia Schiavon is responsible for the strategic direction and overall delivery of J.P. Morgan’s Securities Services business in Australia and New Zealand. In this role, she oversees all aspects of J.P. Morgan’s products and services for asset owner and asset manager clients, including sales, service, product, operations, and technology.

Before assuming her current role in 2015, Nadia was the head of Treasury Services (now Payments) for Australia, New Zealand, and the ASEAN region. With nearly 30 years of banking experience, Nadia previously worked at Citi, holding senior positions such as Country CFO, Head of Operations and Technology, and Global Transaction Services.

Nadia is the Executive Sponsor of J.P. Morgan’s partnership with Women in Super and actively mentors upcoming leaders at J.P. Morgan and the broader financial services sector. She holds an Economics degree from the University of Sydney and is a member of the Institute of Chartered Accountants in Australia.

Quick fire five
Coffee or Tea? Coffee
Tik Tock, Instagram or Facebook? Instagram
Pop , Rock or Rap? Pop
Cocktail or Wine? Wine
Summer or Winter? Summer

Can you briefly describe your role and responsibilities?

I head up the Securities Services business for J.P. Morgan in Australia and New Zealand, overseeing the delivery of a comprehensive suite of services, including custody and fund services. My role involves ensuring we are strategic partners to our clients by supporting their growth agenda, driving efficiencies, and providing real-time information to help them make informed investment decisions.

We are a strategic partner to our clients. Our role is to truly understand our clients, partnering with them, being agile, and maintaining a constant dialogue, which is integral to our clients' growth journey and success.

What is the most satisfying part of your role?

The most satisfying part of my role is working with a great team and creating a collaborative and enjoyable work environment. I also obtain personal satisfaction in providing team members with stretch assignments and watching them grow and develop into future leaders. Seeing team members step out of their comfort zones and take on greater responsibilities is incredibly rewarding. Knowing that, with the help of the senior management team within Securities Services, we have helped facilitate that growth, alongside fostering a culture of respect, teamwork, and community, is what drives me every day.

How do you motivate yourself and your team?

Motivation comes from creating an environment where people feel supported and encouraged to reach their potential. I emphasise collaboration, ensuring the team understands the bigger picture and feels invested in our shared goals. It's also about providing opportunities for development and mobility, allowing people to grow within the firm and across different locations. For me, seeing that growth and watching people take on new challenges keeps me energised and excited about the future.

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

The future of our industry is exciting, especially as we see continued advancements in technology, digitisation, and data. These are going to be the key drivers of change, enabling faster, more efficient processes. J.P. Morgan is investing heavily in technology, and that positions us to stay ahead of the curve.
As for ACSA, its role in the superannuation industry is pivotal. By facilitating dialogue among key players, it helps the industry navigate regulatory challenges and drives innovation. This collective problem-solving approach will only become more important as the industry evolves.

What are some of the exciting places your career has taken you?

I have been fortunate to work across various functions. Starting with Citi in finance, I transitioned into leadership roles in Treasury Services and then headed Operations and Technology for both institutional and retail banking. Moving to J.P. Morgan in 2011, where I initially managed the Treasury Services business locally and the ASEAN region, was a significant milestone. Then, in 2015, I took on the Securities Services business, a role that has allowed me to work closely with global leadership and lead a very talented and diverse team.

I have also had the chance to work with great initiatives outside the firm, like mentoring future leaders through Women in Super and at the University of Sydney. These experiences have been personally fulfilling and have expanded my perspective on leadership and giving back.

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

I would tell my 21-year-old self to embrace change and take on opportunities that might feel outside of my comfort zone. It is these experiences that build resilience and open doors to exciting career paths. Also, the importance of relationships and teamwork cannot be understated - success is rarely achieved alone, so surround yourself with supportive colleagues and always keep learning. Most importantly, treat everyone with respect and dignity - be humble and be kind.