Settlement Failure Levy Overview

Table of Contents

Levy Overview

The CSP charges a penalty, in the form of a settlement failure levy, to Settlement Participants who enter the settlement batch cycle with delivering Accounts (HINs) that have insufficient units or Cum Entitlement Balances (CEBs) to cover the settlement obligations of the Participant. Settlement failure levies are calculated on the overall short unit position of financial product for an Account (HIN). The specific transactions that caused the short unit position are used in the calculation, but the penalty is charged at the Account (HIN) level. The unit shortfall is the difference between the aggregate unit value of the settlement obligations vs. the holding balance of the Account (HIN) during batch settlement.

For financial products subject to foreign ownership restrictions, a unit shortfall occurs if the delivering settlement obligations have been marked as a foreign to foreign allocation and there are insufficient “confirmed foreign” financial products in the designated Foreign delivering Account (HIN) when the CSP attempts to effect settlement. Knock-on effects to other settlement holdings due to these unit shortfalls do not incur settlement failure levy.

The CSP requires a Settlement Participant to meet financial product obligations and DvP funds obligations to other Settlement Participants irrespective of failures to deliver or pay by the due settlement time on the part of the clients of a Settlement Participant.

Responsibility for resolving fails on the part of the client rests entirely with the Settlement Participant. ASX Settlement does not levy settlement failure fees directly on the clients of Settlement Participants. Settlement Participants have the discretion under ASX Operating Rules to pass on to the client any resulting penalty administration fees; this is an issue between each Settlement Participant and their clients.

Levy Calculation

The CSP calculates the settlement failure levy on the unit shortfall, the difference between the aggregate unit value of the settlement obligations vs. the holding balance of the Account (HIN) during batch settlement. For each holding balance failing to meet a aggregate unit value of the settlement obligations, the settlement failure levy will be applied on an ad valorem basis to the cash value of the aggregate unit value, subject to a minimum and maximum fee. The initial terms are:

  • The settlement failure levy is calculated at 0.10% of the cash value of the aggregate unit value using a valuation price (closing price of the security two business days prior to the current date);
  • The minimum settlement failure levy is $100.00; and
  • The maximum settlement failure levy is $5,000.00.

The percentage used to calculate the settlement failure levy and the maximum and minimum amounts are based on the existing settlement failure levy in CHESS. These fees are subject to the fee schedule of the CSP. 

Following the completion of batch settlement, the CSP advises Settlement Participants of any settlement failure levy details through the Settlement Failure Levy Process.

Levy Payment

The settlement failure levy is accumulated daily and charged on a monthly basis through the ASX Settlement billing facility.

Levy Reversal

Settlement Participants may request, in writing, the reversal of the settlement failure levy. Where ASX Operations accept the request, the settlement failure levy will be reversed and the Settlement Participant will be notified through the Settlement Failure Levy Reversal Process

Related Pages:

There are no related labels.

Browse Popular Pages:

No labels match these criteria.

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.

© 2022 ASX Limited ABN 98 008 624 691