In this Issue

• Market Update – ASX Pricing, CHESS replacement
• Regulatory Update – ATO assurance program findings and CPS230 Operational Risk Management
• Members Update – ACSA Thought Leadership, DEI and events
• Global Perspective – Insight on T+1 in North America and Asset Servicing Automation
• Industry Insights
• Upcoming Events
• Member Profile – Holley Nethercote
• In Focus – Harpreet Ahuja, HSBC
  

A word from our CEO

In this edition of the ACSA Industry Wrap we update you on the new pricing approach for the ASX Cash Equity and Settlement and CHESS replacement. We also provide an update on the ATO’s assurance program findings and ACSA’s focus on CPS230 guidance.

This issue also shares some interesting content on T+1 in North America and Asset Serving Automation, as well as what’s next for our Thought Leadership Series, our Diversity, Equity and Inclusion agenda and highlights from our recent member events held in Sydney and Melbourne.

This month we are In Focus with Harpreet Ahuja from HSBC and we present a profile on the new ACSA member – Holley Nethercote.

Market Update

ASX Cash Equities Clearing and Settlement new pricing policy.

ACSA responded to the ASX 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 our cash equity services. The new policy will build on our existing commitments in the Cash Equities Clearing and Settlement Code of Practice to ensure our clearing, settlement and issuer services pricing remains fair, reasonable, transparent, and non-discriminatory and that prices for those services remain stable and predictable. The consultation paper is available here.

Our response included commentary on the thresholds for repricing, options for over and under recovery of cost and the commencement date. We are also seeking more clarity on long term impact analysis, costs and revenue analysis and fee review triggers.

ACSA’s full response can be found here.

CHESS Replacement Insights

ASIC recently provided a submission to the Australian Parliamentary Joint Committee on Corporations and Financial Services which includes important insights into their perspective on the ASX CHESS replacement program as a key part of the ASX technology modernisation program.

If you’re interested to find out more about this submission you can find it here, in section F.


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

ATO – “Top100” and “Top 1,000” assurance programs.

The ATO recently published its Top 100 and Top 1,000 findings report.

The Findings Report includes specific findings for the investment industry in the context of the ATO Guidance: Governance over third-party data (published 2022).

The investment industry issues identified by the ATO were:

• Boards being appropriately informed - The ATO expects regular reporting to the board on the performance of outsourced service providers, including whether there have been any breaches of the service level agreements, and what controls have been put in place to prevent such a breach from occurring again.
• Periodic internal control testing - The ATO expects periodic internal control testing specific to tax control objectives. A report that does not include tax control objectives in its scope will not meet the design effectiveness criteria.
• Roles and responsibilities are clearly understood - The ATO expects the entity’s tax function or its external tax advisor to consider the impact of any changes to the systems or process improvements that provide data for tax reporting or tax calculations.
• Significant transactions are identified - The ATO expects criteria as to how the complexity of each investment is assessed, escalated, and signed-off to be clearly defined.
• Documented control frameworks - The ATO identifies taxpayers needing greater processes and controls to ensure the tax policy of the administrator is prepared in accordance with the tax law and reflected in the tax reporting.
  

The ATO noted some areas of concern, and items relevant for Collective Investment Vehicles (CIVs). In relation to the areas of concern for CIVs, the ACSA Tax working group members noted that, in the context of an outsourcing arrangements:

• determining the eligibility of a fund for MIT or AMIT status for tax purposes (upfront and on an ongoing basis) remains the responsibility of the relevant responsible entity (RE) (or trustee where relevant); and
• in relation to the other common areas of concern noted - these are ultimately a function of the scope, nature and basis upon which the relevant custodian/fund administrator provides its services to, and the specific contractual artefacts executed with, the relevant RE (or trustee or manager) (including but not limited to agreed service level agreements (SLAs), Governance models and reporting in relation to same).
  
  

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. 

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.

Members Update

ACSA Members Event

We recently hosted members at State Street in Sydney and Northern Trust in Melbourne for our second networking event of 2024. The event was an opportunity for us to celebrate the member participants in the AIMA, 100 Women in Finance, ACSA Elevating Women’s Voice (EWV) Program, recognise October as mental health month and an update on the ACSA agenda.

It was great to hear from our EWV panel on how the program has changed confidence, motivation and engagement as future industry leaders. Thank you to our wonderful moderator, Karen Leong-Ng (BNP Paribas) and her esteemed panel members, Margaret Nguyen (Northern Trust), Wendy Liu (BNP Paribas) and Sarah Reynolds (Northern Trust) for delivering an engaging overview of the program. Keep an eye out for the next program launch in early 2025.

Tim Hoopman, a Beyond Blue spokesperson shared his personal mental health journey which included his journey of hope, recovery, and resilience. We encourage you to provide your feedback with Beyond Blue through this link.

We encourage you to check in with yourself and your workmates/friends/peers and take some time to look after yourselves and one another. Please reach out to your friends, your manager, your EAP, Beyond Blue support service or Lifeline on 13 11 14 if you need further support.

Check out the ACSA gallery for photos from the event.

Diversity Equity and Inclusion (DEI)

  
ACSA as the peak industry body representing member of Australia’s custodial and investment administration sector is committed to diversity, equity, and inclusion. We aim to ensure that every employee in our sector feels safe, respected and free to bring their whole selves to work every day!

Fostering a culture of inclusion and diversity is key to making our industry a great place to work. We have set up a working group to bring focus to DEI and are now looking for some further representatives from our member houses to join our working group to drive this agenda which includes; Pride networks, Women’s networks, Mental health, Multi-cultural, and Disability. Anne Leyton (BNP Paribas) is the chair of the DEI working group.

If you would like to get involved and participate in ACSA’s DEI agenda please reach out to us by email.

ACSA Thought Leadership Webinar Series

The next topic in the ACSA Thought Leadership series is Regulating Digital Assets.

The regulatory landscape in Australia is evolving and a new digital asset regulatory regime is expected soon. In this webinar, we’ll discuss what this means for custodians and holding digital assets in Australia.

In this webinar Alvin Chia from Northern Trust will host Michael Mavromatis from Holley Nethercote to discuss how Australia compares to other key regions in the Asia-Pacific (APAC) in terms of regulatory developments and market adoption. We’ll also discuss Australia's position within the broader APAC digital asset landscape, as well as provide updates on regulatory reforms and best practices for custodians.

When: 22nd Nov 2024 from 12-1pm AEDT
Where: Virtually via Teams

REGISTER NOW

Global Perspective 

ISSA recently collaborated with The Value Exchange, with the support of DTCC, TMX and industry associations around the globe, on a survey of the global impacts of the May 2024 move to T+1 settlement in the Americas, including in the U.S. and Canada.

You can download the key findings report from this "T+1 pulse survey" via this link

The report provides statistical insights from market practitioners and will give you a uniquely practical perspective of where and how firms have gone through the long-awaited transition to T+1.

The Value Exchange also hosted an expert webinar to discuss exactly how our processes and platforms have been shaped since the transition to T+1 in May. Industry specialists from Citi, Delta Capita, FIS and Xceptor looked back on the transition to T+1 in North America and discussed what lies ahead for other markets, and more specifically the UK and Europe.

If you're interested in learning what they had to say about the specific challenges created by T+1 in Asia, how T+1 impacted the automation of the industry operating models and more feel free to watch the recording of the discussion.

Watch our webinar on T+1 after 120 days

ISSA and The Value Exchange, with sponsorship from Broadridge and DTCC, recently completed an “ASSET SERVICING AUTOMATION in 2024” study which highlights a decrease in industry automation rates as firms struggle to accommodate significant volume growth.

The research gathered insights from over 270 teams and departments across the capital markets globally and has been supplemented by interviews with industry professionals to incorporate their unique perspectives on the findings.

This research highlights the critical need to redefine what we mean by industry-wide cooperation as we look to resolve the asset servicing challenge.

The Asset Servicing Automation Studys key findings can be accessed via this link.

Key Events

• 19 November 2024: Industry Conference – ASFA Conference, Sydney
• 22 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.
• October 2024 - ACSA response to Treasury Law Amendments (Mergers& Acquisitions) Bill 2024
• October 2024 - ACSA response to ASX Consultation on Cash Equities and Settlement New Pricing policy
  

Member Profile –Holley Nethercote

Established since 1995, Holley Nethercote Lawyers are experts in financial services law and regulation. We are also experts in credit, financial crime, digital economy and commercial law. Employing 35 staff across our Melbourne and Sydney offices, our firm has a preventative-law focus and deep regulatory expertise.

Michael Mavromatis is a Partner at Holley Nethercote Lawyers and Head of Sydney. Michael advises on legal, compliance and regulatory requirements affecting financial services businesses. His practice areas include funds management, platforms, payments, derivatives, digital asset regulation, custody and financial services generally.

Michael has previously worked in senior in-house roles across large national and multi-national financial services businesses, including major fund managers and platform providers.

Holley Nethercote recently joined ACSA as an Associate member, what are the benefits of being a member?
Holley Nethercote is pleased to be an Associate member of ACSA and is keen to assist with working through industry issues as they arise. I’m presently a member of the Regulatory Compliance and Digital Asset working groups and enjoy the opportunity to share ideas with highly experienced colleagues across the industry. We also gain access to various guest speakers and are grateful for the ability to engage in thought leadership with the group.

Tell us about your business’s involvement in asset servicing / financial services? What is your primary focus?
The expertise of our lawyers extends across the financial services industry, including in relation to funds management, superannuation, custody, global remittance, new payments, traditional banking, financial advisory businesses, stockbrokers, emerging financial technology startups, digital currency exchanges, consumer and corporate foreign exchange issuers and OTC derivatives market makers.

We are also one of Australia’s leading law firms in distributed ledger and other digital technologies so far as they impact on the financial services and credit sectors, and we act for some of the world’s largest digital asset groups. We were also heavily involved in consulting with AUSTRAC on the creation of Australia’s current Digital Currency Exchange regime, were primary authors of Blockchain Australia’s Code of Conduct for Digital Currency Businesses and chair Blockchain Australia’s Financial Crime Committee. We also presented in person in February 2023, on behalf of the International Digital Asset Exchange Association (IDAXA), to the FSB in response to their consultation paper proposing regulation, supervision and oversight of crypto-asset activities and markets.

Holley Nethercote also provides non-legal services, including Australian Financial Services Licence (AFSL) and Australian Credit Licence (ACL) application support, training, template compliance documents and regulatory updates via the HN Hub.

What industry challenges do you help to solve?
Holley Nethercote has deep experience in financial services laws, including in relation to custody, administration, and digital asset regulation. We are grateful for the opportunity to join ACSA and contribute to working groups in connection with regulatory compliance and regulatory development, particularly in the area of digital asset regulation.

We support improvements to the regulatory framework for the crypto ecosystem in Australia. Appropriate regulation will be critical to providing regulatory certainty to digital asset businesses and improving consumer confidence in the sector.

In terms of digital asset regulation and custody, traditional concepts around what constitutes custody will require extensive and appropriate consideration. We support expanding the existing financial services regulatory regime, including as to how it relates to custody, to improve regulation of the crypto ecosystem.

Minimum standards in digital asset custody will require extensive consideration, including NTA requirements and also the risks associated with the custody of digital assets. We look forward to supporting ACSA with all of the above.

This year, our firm were on the drafting team of the Commonwealth Model Law on Virtual Assets, which is currently being implemented by approximately 20 countries, globally. This helps meet FATF benchmark standards for countries who would otherwise not be able to implement globally-benchmarked laws in this space.

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

As a firm, we are truly excited about the possibilities that come with the tokenisation of financial and real world assets. We see real opportunities for innovation in this space, with a view to developing distributed ledger technologies that provide new solutions in custody and administration.

The ability to tokenise real-world assets locally, will ultimately make trading, holding and accounting for assets far more efficient and accessible. We firmly believe the industry needs to embrace these technologies in a safe way, and that Australian regulatory reform in this space appropriately accommodates these developments.

In Focus –Harpreet Ahuja

Harpreet joined HSBC in September 2019 as Director, Head of Product Management & Strategy, HSBC Securities Services Australia & New Zealand. In this role, Harpreet is responsible for driving the strategic direction of the business and further enhancing the existing product suite. In May 2023, Harpreet was appointed Head of Securities Services, Australia and New Zealand, in addition to his current role.

Harpreet brings a wealth of industry and practical experience to HSBC. Prior to joining HSBC, Harpreet was Product Manager, Global Fund Services at Citigroup for Australia and New Zealand, responsible for Product Management, Development and Operating model design across all aspects of Fund Administration including Middle Office and Fund Accounting.

Prior to joining Citi, Harpreet was the Head of Unit Pricing at NAB where he led a large operations team.

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

Can you briefly describe your role and responsibilities?
My role is the Country Head for Securities Services, Australia and New Zealand. I am responsible in developing and driving the strategy to grow the business, mitigate and manage the risk that allows us to safely deliver successful outcomes for our people, clients and the organisation. My role involves collaboration, consultation and influencing various stakeholders both externally and internally such as clients, client management, product, operations, risk and sales that leads to us in delivering a comprehensive suite of custody and fund services to our clients whilst driving efficiencies within the industry.

What is the most satisfying part of your role?
Enabling people to thrive in their chosen path & providing product solutions to clients. As people managers, we are in a unique position that allows us to have influence into people’s careers by being able to show them a path, provide support and see them grow to their maximum potential, this is a driving force for me as a people manager. And as someone who is very passionate about product development, partnering with clients and to provide solutions to their needs, gives me an enormous amount of satisfaction.

How do you motivate yourself and your team?
By providing a clear vision, creating a healthy working environment through open communication & most importantly, recognition. Having a good working environment which encourages everyone to feel comfortable in speaking up is key for any organisation, it enables us to drive a high performing culture that holds ourselves and our people to account. Having a clear vision allows me to bring our people along with the journey towards the future of our organisation that makes the reward and recognition more impactful.
To be part of the industry that plays a pivotal role in people’s financial outcomes gives me a sense of achievement to keep pushing forward and upwards.

What’s excites you about the future of our Industry? (Include role of ACSA)
The unlimited possibilities of technological advancements that will allow us to provide solutions for our clients that will enable us to continuously deliver a best-in-class service as custodians. It is exciting to be part of the future and to see how much efficiency we can still achieve and transparency we can provide to our clients with advancements in technology. ACSA is at the forefront leading these changes by having a united voice across the custodial industry.

What are some of the exciting places your career has taken you?
I have been fortunate to be in an industry and career that allowed me to travel the world, Asia and Europe is indeed a standout. I was able to work in London when I was just starting my career that allowed me to travel across Europe and in my current role, I get to travel around Asia which is equally as remarkable. I find that the excitement always comes from the people and the warm welcome that I have received and in learning their culture that provides a different perspective both at a professional and personal level.

What advice would you give your 21-year-old self?
The world is your oyster – the opportunity lies in the chances you take. At 21, the future was still a blur for me, trying to navigate my university life and independence. Looking back, I will tell my 21-year-old self to fail fast, fail often and embrace the unknown. These are all building blocks necessary to build a solid foundation that will allow you to get to where you want to go. Afterall, it is the journey that makes the destination worth it.