John Brogden

ASX has  officially launched its new managed funds settlement service – mFund. The launch was hosted at Exchange Square in Sydney by ASX Managing Director and CEO, Elmer Funke Kupper, with guest speaker John Brogden, Chief Executive Officer of the Financial Services Council.

mFund – through which the first transaction took place on Tuesday between APN Funds Management and Bell Direct – will broaden fund managers’ distribution networks, offer brokers a greater choice of products, reduce costs for industry, and make processes more efficient for transacting in managed funds.

ASX acknowledges the cooperation and hard work of more than 70 Foundation Members in delivering mFund. These include fund managers and their unit registries, and ASX brokers, supported by back office providers and other distributors of financial services, such as administration service providers and independent financial adviser groups.

mFund is an electronic processing service that allows investors to use an ASX broker to buy and sell units in unlisted managed funds. It has been developed for investors, brokers and fund managers to improve the timeliness and efficiency associated with investing in managed funds. The service will replace the traditional paper-based processes and use the same electronic system (CHESS) familiar to investors and brokers for settling – or finalising – ASX share transactions.

mFund products are unlisted and not traded between investors on the market, but will be settled directly with fund managers via CHESS. Unit prices are set by the fund manager, usually at the end-of-the-day.

Visit www.mfund.com.au for more information, including a list of funds that will grow with time, prices, performance details and an educational video explaining how the mFund service works.

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The assessment concludes that ASX has:

• adequate arrangements to monitor and enforce its operating rules
• adequate arrangements to manage conflicts between its commercial interests and the need to ensure fair, orderly and transparent markets, and fair and effective clearing and settlement facilities
• sufficient financial, technological and human resources to properly operate its facilities.

ASIC’s annual assessment report, published today, covers the activities of all six ASX group licensees for the period 1 July 2009 to 30 June 2010, as well as some specific market events that occurred more recently.

The report contains nine areas of ‘agreed actions’ between ASX and ASIC to further enhance ASX’s arrangements. ASX will progress each of the nine areas and has initiated action on many of them as part of its normal program of operational improvement. The agreed actions relate primarily to the deployment of ASX’s technology resources, the monitoring and enforcing of listing rules, and the development of a new set of performance measures that take account of ASX’s changed role following the transfer of market supervision to ASIC in August 2010.

Elmer Funke Kupper, ASX’s Managing Director and CEO, said: “ASX values ASIC’s independent assessment. It provides an external perspective that the ASX uses to improve its practices.

“ASIC is right to highlight the importance of technology for our operations. ASX will continue to invest in technology to ensure its customers have access to world-class products, services and systems.

“At the end of November ASX will launch PureMatch, its high speed/low latency order book, and in February 2012 the company will open its new $36 million data and co-location centre. These are examples of ASX’s determination to provide for the needs of its customers and meet the demands of a competitive marketplace.”

ASIC’s assessment follows the Reserve Bank of Australia’s (RBA) annual assessment of ASX’s licensed clearing and settlement facilities, published on 7 October 2011. RBA found that all four clearing and settlement facilities operated by ASX complied with the relevant Financial Stability Standards and did all other things necessary to reduce systemic risk in the 2010-11 financial year.

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The market was halted due to a network connectivity issue that prevented participants from interacting with the trading platform.
ASX Trade markets closed today as normal and are expected to open at the regular time of 10:00 am tomorrow. The ASX 24 futures market operated normally throughout the day.

ASX’s technical team worked in conjunction with its technology provider – NASDAQ OMX – to resolve the issue.

The connectivity issue was not related to the introduction of competition next week, and will not affect ASX’s ability to provide the clearing, settlement and other services necessary to support the launch of Chi-X.

Elmer Funke Kupper, ASX Managing Director and CEO, said: “Today ASX did not meet the high standards that we set for ourselves and that our customers expect.

“ASX has a strong reputation for the quality and reliability of its systems, and this incident gave me a first-hand experience of the way our technical team resolves significant issues. As the new Chief Executive of the company I am committed to the continued investment in our systems to ensure we deliver world-class products, latency and reliability.”

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