australian market infrastructure initiatives working...2016 june 2017 dec 2017 june 2018 dec 2018...

Australian Market Infrastructure InitiativesPresentation to APAC SMPG

16 October 2018

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The World’s Most Respected Market Place

ASX presentation to APAC SMPG

• Overview of ASX

• Stronger foundations program

• Contemporary technology

• New generation of products and services

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ASX – a vertically integrated exchange group


FY2018 revenueTotal AU$823m Rank Exchange

Market Capitalisation

(US$m)

1 CME Group Inc $ 54,593

2 Intercontinental Exchange Inc $ 41,479

3 Hong Kong Exchanges & Clearing $ 40,628

4 Deutsche Böerse Ag $ 27,499

5 London Stock Exchange Group $ 21,091

6 B3 Sa Brasil Bolsa Balcao $ 15,943

7 Nasdaq Inc $ 14,307

8 CBOE Global Markets Inc $ 12,447

9 Japan Exchange Group Inc $ 10,062

10 ASX Ltd $ 8,412

11 Singapore Exchange Ltd $ 5,988

12 Euronext Nv $ 5,194

13 Moscow Exchange MICEX-TRS $ 4,116

14 TMX Group Ltd $ 3,316

15 Bolsas Y Mercados Espanoles $ 2,883

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ASX’s market


Capital formation FY18 • 137 IPOs

• Total capital raised AU$82 billion of equity

Equity markets • 2,285 listed entities

• Market capitalisation AU$2 trillion – 9th in the world

• 37% of adult population owns listed investments (6.9 million Australians)

Derivatives markets • Largest interest rate derivatives market in Asia & top 5 globally

• Notional turnover of exchange traded derivatives AU$47 trillion

• Notional value cleared in OTC AU$6.3 trillion

Foreign exchange • AUD is 5th most traded currency in the world

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Australian capital market


high proportion in large cap Australian equities

via ASX

$700bin SMSF

$239b

$2.6tin super, growing to $9.4t by 2035

$1.9ttotal market cap of ASX listed equities

6.9mhold on-exchange investment

27%super held in SMSF

In AU$, ASX Investor Study 2017; ATO self-managed super fund quarterly statistical report – Dec 2017

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Stronger foundations for resilience and growth

Contemporary technology to drive efficiency and innovation

A new generation of products and services

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Building Stronger Foundations


Positioning ASX to be a leader in the financial services industry and capture market growth

Dec2016

June2017

Dec2017

June2018

Dec2018

ASX NetConsolidation of six customer networks onto single platform

Secondary data centreNew location, new hardware and software

Planning and selection

BuildEvaluation

TODAY

Customer implementation

Build

Clearing risk Promoting stability in the financial system and protectingASX capital

Margin call improvements

Enterprise risk management

Jun2019

Dec2019

Migration to new site

Refresh risk management practices for operational and technology risk

Executive changes

Capital buffer strengthened

Risk modelling enhanced

Near real-time risk management

ERM and technology strategies refreshed

Rollout of enhanced policies, processes and tools

1. Included internal analysis, external consultant and guidance from both ASIC and RBA

1

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Contemporising technology platforms


To support the next 20 years of growth

Richer, more timely data sets

Better operational functionality & resilience

Improved analytics

New futures platform

Operational infrastructure

Secondary data centre

ASX Net upgrade

Digital refresh

BBSW robustness

CHESS replacement

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ASX and Distributed Ledger Technology


ASX has taken a world leading position in understanding DLT

ASX began considering the replacement of CHESS in 2015

We have extensively tested DLT and its application in financial markets

We have consulted widely with our stakeholders for 2 years

• Performs clearing and settlement for equities

• Stable and operates extremely well, but it is ageing

• Deeply embedded in customer’s businesses

• ASX consideration coincided with ‘peak blockchain’

• Significant POCs, prototyping and industrial strength testing

• Resulting in a solution designed for financial markets

• Founded on data privacy, flexible connectivity and standardisation

• Solving data synchronicity between market users

• 80 DLT system demonstrations to more than 500 attendees

• 60 CHESS Replacement workshops for more than 100 organisations

• Resulting in 50 new business requirements

• Focused on workflow simplification

ASX is now implementing the first scale deployment of DLT in financial markets

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Broker E

Broker F

Bank D

Bank B

Bank A

Broker C

CHESS today

CHESS today


Sends messages to reconcile many and different systems

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Bank D DLT node

Broker C DLT node

Bank A DLT node

DLT-based CHESS offers flexibility and choice


Connection options via DLT node or message-based like today

Bank B ISO messaging

DLT system

Broker E ISO messaging

010101010101010101010101010101

Broker F ISO messaging

14 | ASX presentation to APAC SMPG

DLT – market infrastructure that will be a business enabler ASX will be safely liberating source of truth information, encouraging innovation

Different data formats and software

Node-basedSimplification allows innovative solutions

End users

End users

End users

End users

End users

CHESS today

End users

End users

End users

End users

End users

Harmonised databases and software

DLT solution

010101010101010101010101010101

Traditional database

Distributed ledger database

Message-basedInherent complexity, slow and expensive

15 | ASX presentation to APAC SMPG

CHESS replacement On track for go live in March / April 2021

*Dates subject to completion of system development, stakeholder readiness and regulatory clearance

Dec 2017Decision to use DA and DLT

Mid 2018Day 1 scope agreed

Analysis, building and testing

Stakeholder consultation and Day 1 functionality

Technology partner and software evaluation

2016 2017 2018 20212019 2020

TODAY

Evolution of DLT solutions

Upgrade of equities technologyinfrastructure

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Big Data initiative


ASX is building a big data platform to deliver internal and external analytics-based use cases

The platform will also be used to serve internal/operational use cases

A data management and governance framework has been designed to control access to and usage of the data

The platform will be populated with both ASX and third party datasets

Both ASX and third parties will have the ability to build and distribute analytics solutions that use the available datasets

Revenue will be shared between data providers, analytics developers and ASX as the platform operator

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Corporate Actions STP initiative

ISSUER: structured

announcement lodged with ASX

ASX:review and release

equivalent PDF announcement to

market

ASX: Disseminate

information product – near real time,

global standardised format (STP)

Information vendor: announcement

analysis and manual? capture of

data

Intermediary (e.g. custodian): STP capture &

forward

ASX: structured information captured near real time

The golden copy

INVESTOR

Data validation & capture

Notification

Improved time, accuracy, pre-validated, reduced manual processing(Risk burden shifted to issuers – pre announcement release)

ASX: mandated structured

process via AOL

ISSUER: AOL training environment


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Thank you.

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Disclaimer

ASX presentation to Global SMPG

This document provides general information only. ASX limited (ABN 98 008 624 691) and its related bodies corporate (“ASX”) makes no representation or warranty with respect to the accuracy, reliability or completeness of the information. To the extent permitted by law, ASX and its employees, officers and contractors shall not be liable for any loss or damage arising in any way (including by way of negligence) from or in connection with any information provided or omitted or from anyone acting or refraining to act in reliance on this information. The information in these slides is confidential and should not be disclosed to or shared with any third parties without the prior written permission of ASX.

© 2018 ASX Limited ABN 98 008 624 691

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