The Future of Clearing and Settlement in Australia: Part I – The Current System

This article analyses the current clearing and settlement infrastructure for transferring shares in Australia. It analyses the legal and regulatory regime in Australia and identifies areas of legal uncertainty. Furthermore, it sets the scene for Part II of this article, which analyses the forthcoming upgrade that the ASX proposes to make to the Clearing House Electronic Subregister System using Distributed Ledger Technology. The purpose of Part I of this article is to understand how the system currently works in order to understand the changes that are being proposed for the future. It focuses on legal concepts such as settlement finality and negotiability, and makes recommendations for strengthening the rights of investors. It also examines the important role played by ASX Clear – the central counterparty – in the existing system, which is a role that it will continue to play in the upgraded system.