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In this edition, we discuss the plans announced by the Australian Securities Exchange (ASX) to replace the existing Clearing House Electronic Subregister System (CHESS), the policy recommendations published by the International Organisation of Securities Commissions (IOSCO) in relation to crypto and digital asset markets, and public consultation by the Australian Securities and Investments Commission (ASIC) on proposed changes to the Banking Code of Practice.  We also examine the Australian Prudential Regulation Authority’s public consultation on proposed changes to banking liquidity and capital requirements and the Takeovers Panel’s reasons in Re Bullseye Mining Limited 06 [2023] ATP 11.

In Over the Horizon, we discuss the release of the Treasury’s published expectations of the Productivity Commission to modernise, refocus and reform.


ASX announces new plans to replace CHESS.  On 20 November 2023, ASX announced that it has completed its reassessment of the solution design to replace CHESS, with the replacement project set to move into the detailed design and implementation phase.  ASX entered into an agreement with TATA Consultancy Services for the delivery of its BaNCS for Market Infrastructure product, which provides a platform for clearing and settlement services.  The implementation of the new platform is proposed to be conducted in two main releases.  The clearing service will be delivered in a first release, with an indicative timeframe for implementation of 2026 and an estimated cost of between $105 and $125 million.  Following this, the settlement and sub-register services are expected to be implemented in 2028 or 2029.  Ms Michele Bullock, Governor of the Reserve Bank of Australia (RBA), stated that ASX’s announcement “sets a new direction for the CHESS Replacement program” and that it will “be critical for ASX to address the findings from various external audits and reviews so that past issues with the program are not repeated”.  See ASX media release (PDF download).

IOSCO publishes policy recommendations for crypto and digital asset markets.  On 16 November 2023, IOSCO published its Final Report with Policy Recommendations for Crypto and Digital Asset (CDA) Markets.  The organisation considers that these recommendations, which are aimed at addressing the key areas of harm observed in these markets, are central to the delivery of a coordinated global regulatory response to the investor protection and market integrity risks posed by centralised crypto asset intermediaries.  The Recommendations cover six areas: (1) conflicts of interest arising from vertical integration of activities and functions; (2) market manipulation, insider trading and fraud; (3) custody and client asset protection; (4) cross-border risks and regulatory cooperation; (5) operational and technology risk; and (6) retail distribution.  IOSCO Chair, Mr Jean-Paul Servais, observed that the release of the Report “is the first and important step to ensure investors are protected and crypto-asset markets operate fairly, efficiently and transparently”.  See IOSCO media release.

ASIC consults on proposed changes to Banking Code of Practice.  On 17 November 2023, ASIC opened its consultation on the ABA’s proposed changes to its Banking Code of Practice, Banking Code Compliance Committee Charter, and its new Customer Guide titled “Banking with confidence: your key rights and protections as a customer”.  The Code (and the accompanying documents) contain a set of contractually enforceable standards that customers and small business can expect subscribing banks to uphold.  Through the public consultation process, ASIC is seeking to ensure that the Code provides real benefits to consumers, small businesses and subscribing banks before making a decision regarding approval.  While ASIC’s approval of industry codes of conduct is not mandatory, the regulator’s approval signals that the relevant code responds to identified and emerging consumer issues and delivers substantial benefits to customers.  The consultation period closes on 15 January 2024, following which ASIC will look to make a decision on approving the Code in the first half of 2024.  See ASIC media release.

APRA consults on proposed changes to banking liquidity and capital requirements.  On 15 November 2023, APRA announced that it had begun consulting on a series of changes to the prudential framework primarily targeting how banks manage their liquidity.  The revisions, which will primarily affect the 60% of authorised deposit-taking institutions (ADIs) that are subject to the Minimum Liquidity Holdings (MLH) regime (rather than the Liquidity Coverage Ratio regime mainly used by larger banks), are aimed at strengthening the banking sector’s resilience to future stress.  Specifically, the changes are aimed at ensuring that: (1) ADIs on the MLH regime value liquid assets at their market value; (2) all ADIs have robust processes for accessing exceptional liquidity assistance from the RBA where needed; and (3) contagion risk is reduced by strengthening the composition of MLH liquid assets.  APRA aims to conclude the consultation in the first half of 2024.  See APRA media release.


Takeovers Panel publishes reasons for making a declaration of unacceptable circumstances in relation to the affairs of Bullseye.  On 15 November 2023, the Takeovers Panel published its reasons for making a declaration of unacceptable circumstances in relation to the affairs of Bullseye Mining Limited (Bullseye).  As noted in a previous edition of Boardroom Brief, the Panel considered that the off-market takeover bid by Emerald Resources NL (ASX:EMR) (Emerald) for Bullseye, shareholder intention statements executed by two of Bullseye’s substantial shareholders, and the settlement of oppression proceedings between Bullseye and those  two shareholders were interconnected as part of one commercial transaction.  The Panel also considered that, by entering into the shareholder intention statements and procuring the settlement of the oppression proceedings, Emerald acquired a relevant interest in the shares held by the two substantial shareholders and increased its voting power in Bullseye from approximately 57.23% to approximately 75.54%, in contravention of section 606 of the Corporations Act 2001 (Cth) (Corporations Act).  The Panel further noted that and independent expert would be better placed to assess whether there has been a benefit given to the two substantial shareholders that was not otherwise provided to other Bullseye shareholders, and ordered that Bullseye commission an independent expert’s report to opine on this issue.  See Bullseye Mining Limited 06 [2023] ATP 11.  The Panel’s decision is an example of the broad operation of the “relevant interest” concept underpinning much of Chapter 6 of the Corporations Act (the takeovers provisions) and the need for caution when soliciting support for control transactions from large shareholders.


Federal Government expects Productivity Commission to modernise and refocus.  On 10 November 2023, the Commonwealth Treasury released the inaugural Statement of Expectations for the Productivity Commission to help it become stronger and more effective – the first in its 25-year history.  As the Federal Government’s principal independent advisory body on microeconomic policy, regulation and a range of other social and environmental issues across a variety of sectors, the Productivity Commission has potential to be pivotal to Australia’s future economic growth.  The Statement reflects the Federal Government’s expectation that the Productivity Commission will “sharpen its focus” on major forces that will impact the Australian economy in the coming decades, including (among others) (a) technological and digital transformation, (b) climate change and the net zero transformation, and (c) global shifts such as geopolitical risk and fragmentation.  The Productivity Commission is also expected to work closely with the Treasurer and all relevant Australian Public Service boards.  With the release of the Statement, the Federal Government has envisioned the Productivity Commission as a key source of practical advice with a focus on promoting “economic dynamism, resilience and competition, building a skilled and adaptable workforce, harnessing data and digital technologies, delivering quality care more efficiently, and realising the opportunities of the net zero transformation”. Looking ahead, the Federal Government anticipates the Productivity Commission’s publication of a Statement of Intent and integration of both Statements of (a) Expectations and (b) Intent into its Corporate Plan to cement these ideas into its operations. See Treasury media release and Statement of Expectations.

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