Sorry @n00bmater have really got it all wrong. In the Review of Settlement Practices for Australian Equities - May 2008, the document states "As part of the Review, the Reserve Bank has considered possible fundamental changes to current settlement arrangements. One option would be to split the current batch into two parts: one for transactions that are novated to ACH, and one for non-novated transactions. The Bank does not support this option, given that there are often close connections between novated and non-novated transactions. Another option would be to move to a system in which settlement occurs on a trade-by-trade basis. The Bank’s view is that this type of settlement arrangement represents the first-best outcome from a pure risk-control perspective and that there is a strong case for moving to such a system over the medium term."
In fact ASX is scrambling to meet this recommendation by redeveloping CHESS to be a trade-by-trade settlement process. Appears that ISX will beat them to it. Great to have the competition in Australia!
