Case Study: Enterprise – Capital Markets & Securities Industry

The Australian Securities Exchange Group (ASX) is the primary stock exchange in Australia. Due to rapid growth in the exchange and increased regulations and compliance, ASX needed a more efficient solution to handle its regulatory compliance needs.

ASX worked with compliance software developer Compliance Experts to customize Compliance Checkpoint, a web-based risk and audit solution. Compliance Checkpoint was developed by Compliance Experts using Microsoft Visual Studio 2010 and the Microsoft .NET Framework 4.0. With its new solution, companies can more efficiently perform self-assessments with ASX.

Additionally, ASX has streamlined workflow for its regulators and participant companies and has provided greater visibility of compliance requirements to its participants. ASX and its market participants are better prepared to quickly respond to financial regulations changes.

SITUATION

Headquartered in Sydney, the Australian Securities Exchange Group is one of the world’s top 10 listed exchange groups measured by market capitalization. The exchange employs 540 people and is a multi-asset class, vertically integrated exchange group. Its activities span primary and secondary market services, central counterparty risk transfer, and security settlement for both the equities and fixed income markets.

All licensed participants that carry out trades on the ASX must comply with the regulations and protocols of the exchange. ASX is responsible for ensuring that all member companies comply with all the rules of the Australian Securities Exchange, the Australian Clearing House, and the ASX Settlement and Transfer Corporation. This involves storing and maintaining compliance records and consolidated reporting on all participants including banks and stockbrokers. Ensuring compliance protects the integrity of the exchange and protects investors.

ASX participants must file three types of compliance assessments on a regular basis. The first are Routine Assessments, which occur periodically throughout the year and focus on the participants’ compliance. The second are Spot Assessments related to emergent issues that could occur at any point throughout the year. The final are Inbound Notifications, which are various notifications that participants must communicate to ASX, such as change of directorship, change of address, and change of control.

Because ASX relied on a primarily manual process, ASX employees and participant companies spent a significant amount of time manually preparing the three compliance assessments. Participant companies wanted a more efficient way to submit compliance assessments and a better process for performing their own self-assessments. ASX needed a more flexible system to handle changes in compliance requirements and the rapid growth of the exchange.

SOLUTION

After an extensive search, ASX enlisted the help of Microsoft Gold Certified partner Compliance Experts, a leading provider of compliance audit software and compliance audit services. ASX chose to partner with Compliance Experts because of its risk management expertise, compliance solution development experience, and understanding of ASX’s unique requirements. As Paul Molenaar of Compliance Experts states, “Developed using Microsoft .Net and SQL Server technology, Compliance Experts’ solutions offers an end to end and last mile approach to compliance. Our solution also aligns to the Microsoft approach of a common foundation for effective Risk and compliance across the value chain.”

ASX and Compliance Experts decided to customize Compliance Experts’ web-based risk and audit solution, Compliance Checkpoint. Compliance Experts developed Compliance Checkpoint using Microsoft Visual Studio 2010 and the Microsoft .NET Framework 4.0, a software framework that includes a large library of coded solutions to common programming problems. Compliance Experts chose Visual Studio and the .NET Framework because its interoperability with other tools and technologies, which helped to reduce development cost and time. Compliance Checkpoint runs on Windows Server 2008 Enterprise (64-bit) and Microsoft SQL Server 2005.

With its customized version of Compliance Checkpoint, ASX has a secure web-based compliance solution to receive Inbound Notifications from participants, manage and capture Routine and Spot Assessments, and analyze the data held within the system to better perform risk profile on participants. Accessing the Compliance Checkpoint portal through a web browser such as Microsoft Internet Explorer 8, external self-assessments, generate fully automated reports, and submit a range of mandatory notifications.

As Fiona Hooymans of ASX states, “This initiative is about laying the foundation for state of the art, next generation risk management capabilities for our market participants.”

As of November 2010, approximately 300 ASX participant companies were using the Compliance Checkpoint system.

ASX can assign each participant a unique, secure login to the Compliance Checkpoint system. After participants log in to the secure Compliance Checkpoint portal, they can simply click on the Routine or Spot Assessments that require completion.

A participant can also complete questionnaires to respond to the Routine or Spot Assessment online and attach any required documentation. Additionally, participants can quickly and easily submit Notifications, by selecting from a list and completing the requisite questionnaires. Participants can also perform self-assessments to confirm compliance with exchange regulations. Using the system, internal compliance advisers can easily request further information from participants, who can then upload additional evidentiary materials.

BENEFITS

With the improved regulatory compliance process made possible by Compliance Checkpoint, ASX has improved efficiency, streamlined workflow, provided better visibility, and improved flexibility to deal with frequently changing financial regulations.

Improved Efficiency
ASX receives significant benefits from the built-in self-assessment capabilities of Compliance Checkpoint. Participating companies and other external parties can perform self-assessments on a range of regulations and standards. ASX’s internal specialists validate documentation and other evidentiary material uploaded during Assessments and Notifications to ensure everything is complete. This has significantly improved the efficiency of existing compliance programs and allows the participant companies to focus on areas of concern, as identified by the assessment.

Streamlined Workflow and Improved Visibility 
ASX is improving the compliance process with the built-in workflow capability of the Compliance Checkpoint system. With the ability for participant companies to upload documents and the ability for ASX to request additional information from participant companies online, participant companies can quickly and easily respond to requests. Additionally, since all history is kept online, the regulators have complete visibility of participant performance and emerging issues and trends.

Improved Flexibility 
ASX has improved its ability to react quickly to changing regulations. The Compliance Checkpoint system can be easily and quickly customized to changes in regulations. As standards, regulations, and codes of practice frequently change in the financial arena, ASX has been able to easily adapt to the changes and ensure compliance of all its participant companies. With its new compliance solution, ASX is well positioned to support the financial and regulatory compliance requirements.

Solutions for the Financial Services Industry 
Financial institutions continue to seek cost-effective solutions that create rapid and sustainable competitive advantage while laying the groundwork for future innovation. Compliance Experts develop solutions that help meet the industry-specific needs of banks, insurance companies, and capital markets firms worldwide, and help financial services customers realize their full potential.