Recommendation 1 Recommendation 2 Recommendation 3 Recommendation 4

Recommendation 5 Recommendation 6 Recommendation 7 Recommendation 8

Market selection

Recommendation 1

Securities Systems* have a primary responsibility to their users** and other stakeholders. They must provide effective low cost processing. Services should be priced equitably.

* Securities Systems = depositories, settlement and clearing systems
** Users = customers of the securities system, and all other parties to whom the securities system owes a duty of care

1.	Is the board that governs the depository answerable to its users?	Austraclear* The Board of Austraclear, as operator of the depository, is responsible to SFE, as the sole shareholder of Austraclear, for the overall corporate governance of Austraclear and for the performance of Austraclear in both the short and longer terms. RITS * RITS is owned and operated by the Reserve Bank of Australia (RBA). ). As such its operations are subject to governance by the Board of the RBA. CHESS * The Board that governs ASX Settlement and Transfer Corporation (ASTC) is answerable to all of its stakeholders - principally clearing house participants, investors, issuers, shareholders of the Australian Stock Exchange (ASX), and regulators.
2.	Does any single organisation, or sector (e.g. brokers, custodians, Stock Exchange) have a large voting position at the board of the depository?	Austraclear There are 11 directors on the Board of Austraclear, five of whom are representatives of financial institutions. The positions of Chairman and Deputy Chairman of the Board of Austraclear are not held by any of those representatives. RITS The RBA Board comprises 9 members: 3 ex-officio - the Governor, Deputy Governor and the Secretary of the Treasury - and 6 external members, who are appointed by the Governor-General. CHESS The Board of ASTC comprises two executive directors, two directors who are also directors of the owner (ASX Limited) and five external directors.
3.	Is there cross subsidisation of products (e.g. international services subsidised by local ones or transaction costs subsidised by asset servicing charges)?	Austraclear: No. RITS: No. CHESS: No.
4.	What process is in place at the depository to ensure that it meets the needs of all its stakeholders (e.g. institutions, broker dealers, retail investors, issuers)?	Austraclear User group meetings, customer satisfaction surveys, statistical analysis, call logging, member visits, participation in industry working groups. The call logging referred to operates on the Austraclear HelpDesk which is in itself an established medium of two way communication. RITS The RBA keeps in touch with stakeholder needs by market liaison (including by way of user surveys and call logging by the RITS Help Desk) and participation in industry associations. CHESS Processes include: a Board including external directors who are current or former executives of stakeholder entities ad hoc industry forums to debate significant systemic changes liaison with industry sector organisations extensive scrutiny of Business Rule amendment processes by regulators, including the Australian Securities & Investments Commission, and potentially the Australian Competition & Consumer Commission and the Reserve Bank of Australia.
5.	What is the communications strategy of the depository to its stakeholders and how is this run?	Austraclear Regular contact is maintained with stakeholders through user group meetings, newsletters, mailouts and special presentations. Feedback from customer satisfaction surveys is also communicated to stakeholders. The Austraclear HelpDesk is an established medium of two way communication with stakeholders. RITS In addition to market liaison (see 4 above), the RBA issues periodical newsletters to members and uses direct fax/mail communication. CHESS The regular communications vehicle comprises a number of sector specific bulletin series (participants, issuers, registries) and technical bulletins, which are distributed by email or paper mail, and are available to subscribers through an ASX user group website.

• Austraclear Limited (Austraclear) is the system which provides electronic settlement and custody of actively traded semi-government and corporate paper issues, bills and promissory notes. Eligible securities are bank and commercial bills of exchange, negotiable certificates of deposit, promissory notes and other commercial paper as well as dematerialised (registered) securities issued by banks, corporations and state and semi-government bodies.
• Reserve Bank Information and Transfer System (RITS) is the electronic system which provides clearing house and depository services for all Commonwealth Government securities lodged in it. These include Treasury Notes, Treasury Bonds, Treasury indexed bonds and Treasury adjustable rate bonds
• Clearing House Electronic Sub-Register System (CHESS) is the electronic system which acts as a clearing house and provides DVP settlement for all Australian Stock Exchange listed equity securities. The controlling entity for CHESS is ASX Settelent and Transfer Corporation (ASTC).