The Australian Securities Exchange has commissioned an independent review of its troubled blockchain-based core system replacement after the go-live was delayed by another 18 months.
The new clearing house electronic subregister system (CHESS) application, which was has been pushed back once this year already, is now not expected to be up-and-running before late 2024.
ASX managing director Helen Lofthouse, who replaced Dominic Stevens this month, called for the assessment of CHESS and the remaining deliverables after more development work was identified.
“To bring external expertise to assess the remaining work required to complete delivery of the applications, ASX will engage Accenture to provide an independent review,” ASX said in a statement.
“The review will also identify necessary actions for ASX to communicate a revised timetable to finish the project.”
The replacement system for the legacy CHESS that underpins all trades and settlements on the exchange is being developed by Digital Asset (DA), which ASX has an equity stake in.
The ASX said DA will work with Accenture to complete the review over the next 12 weeks, while testing and technical accreditation with software providers continues.
The review will then be provided to the Australian Securities and Investments Commission and the Reserve Bank of Australia, and publicly released thereafter.
Work on the new CHESS system has been underway since December 2017, but there has been uncertainty over the go-live since it was first pushed back in 2018 due to concerns the upgrade was too rushed.
The project was last delayed in March 2022, when ASX advised there was a “strong likelihood of delay to the go-live date”, which at that point in time was April 2023.
But based on current information, ASX now does “not expect that the go-live date for new CHESS could be before late 2024”, with “user testing in ITE2 [Industry Test Environment 2]” planned for September now on hold.
It is hoped the review will “strengthen stakeholder confidence” in what Lofthouse said is a critical new system that requires “high confidence in the schedule to deliver new CHESS safely”.
“I know our customers will be as disappointed as I am with the uncertainty about the timeline for completion,” she added.
“I apologise for the uncertainty and thank them for their close and constructive work with us on this important project.”
After a series of delays to the CHESS system, ASIC and the RBA welcomed Accenture’s appointment for the review, which will help to “confidently determine a new go-live date”.
“It is now time for a careful and independent review of ASX’s and DA’s work to date on the CHESS replacement and the work needed to complete the project,” the regulators said.
“It is critical that ASX and the market have a high degree of confidence and certainty in a new go-live date.
“Industry has mobilised significant resources to date and will need to continue to invest to ensure a successful and safe launch of the CHESS replacement.”
Both ASIC chair Joseph Longo and RBA governor Philip Lowe expressed disappointment in the continued delays, but recognised the importance of getting the replacement system right.
“It is important that the Australian financial system is served well by contemporary infrastructure that is efficient resilient, reliable and scalable to meet existing and future needs,” Longo said.
When the new CHESS system goes live, it will be expected to meet the same requirements that CHESS “meets today for system availability, resilience, recoverability, performance and security”.
ASIC and the RBA will continue to supervise the CHESS replacement “closely”, and also expects ASX to continue to invest in the current CHESS system to ensure its stability.
