FAQs: Redemption Process

Frequently asked questions: mFund redemption process

How do Trading Participants and Settlement Participants process redemption requests?

A broker can submit a redemption request in three ways: Full Redemption, Number of Units, Fund Amount. CHESS will perform validation on the request as follows:

  • For a Full redemption request, CHESS does not validate a Full redemption request against the CHESS Holding Balance (because units are not supplied).
  • For a units based redemption request, CHESS will validate the number of units entered by the PISP in the MT802 against the broker’s original MT800 request
  • For a Fund Amount redemption request

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When must a PISP respond to a redemption request?

Pursuant to SOR 18.3.3, where a redemption request has been received by 11am, a PISP must respond and accept or defer the request by 11:30am (MT801)

  • Where a redemption request has been received after 11am, a PISP must respond and accept or defer the request by 11:30am on the following business day

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How is a valid redemption request accepted by a PISP?

The full redemption process can be found in APG Section 28.6.3.

In order to accept a redemption request, the initial MT801 must contain valid responses to the fields as indicated in Refer to diagram on p28 of APG Section 28.

A PISP may not have all information available to it at the time of the initial acceptance, therefore multiple MT802s may need to be sent to build up a completed transaction data set. Following is an examples of this:

Please note: Notwithstanding the MT732 contains the Adjustment Units and Unit Price, brokers may rely on these fields being completed in the MT802 for contract notes and reconciliation purposes. As such, to provide greater transparency back to brokers it is our strong recommendation that the MT802 be updated with these fields prior to the sending of the MT732.

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How does the PISP decrease units (delivery) in line with the redemption request?

  • Pursuant to SOR 18.3.6(b) the PISP is required to decrease units via a Holding Adjustment (MT732 – Fund Reason “RED”) prior to CHESS End of Day (7pm) on the day of the issuance (as specified in the MT810 Update Order)
  • CHESS validates the Adjustment Units against the CHESS Holding Balance to ensure that there are sufficient units to satisfy the redemption

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How does the PISP advise of Cash settlement (Payment)?

For redemptions, the PISP will advise the (cash) settlement date on the Payment Date field in the MT802, including as amended (refer above)

  • ASX/CHESS will schedule settlement in accordance with the Payment Date and will notify the PISP of their net payment obligation [CB1] for that settlement day via the MT150 Projected Funds Obligation
  • Settlement obligations in relation to a specific redemption relate to the Fund Amount

Prerequisites for Settlement (contained in MT802, as updated via subsequent MT802 or MT810): Fund Code, Fund Amount, HIN, PID, Processing Timestamp, Transaction Status, Transaction ID, Origin Transaction ID, Unit Price, Nett or Gross, Number of Units, Unit Pricing Date, Payment Date.

Please note: In order for settlement to occur, the Payment Date must be set at no earlier than the current date (or no earlier than the following day if updated after 11:30am). As such, where the PISP sends an update to any of the fields in the MT802 (eg Fund Amount), the PISP should also ensure that the MT802 Payment Date is appropriate, or send an additional MT810 to update it.


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