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ASX brings in Accenture for CHESS review as delays continue

ASX wants to see what work has been done and what is still left to do.

The Australian Securities Exchange (ASX) has appointed Accenture to provide an independent review of its CHESS application project as delays of the rollout continue. 

In 2017, following two years of evaluation, the ASX confirmed it was spending $50 million in replacing its decades-old Clearing House Electronic Subregister System (CHESS) with blockchain-inspired distributed ledger technology (DLT) developed by US software firm Digital Asset.

CHESS has been used to record shareholdings and manage the clearing and settlement of equity transactions in Australia since it was introduced in 1994. 

The exchange wanted to take the opportunity to replace it with “a next generation post-trade platform using contemporary technology”.

The appointment of Accenture comes as the ASX pushes back the CHESS go-live date “based on current information”, which the Exchange says it expects the new date to be at least after late 2024.

The Exchange expects the new review, which will take about 12 weeks and will be published, to provide further information to “help determine and communicate a new go-live date with confidence”.

The final report will be provided by ASX to the Australian Securities and Investments Commission (ASIC), the Reserve Bank of Australia (RBA) and EY as part of its ongoing reviews of the ASX’s assurance programs.

ASX managing director and CEO Helen Lofthouse acknowledged that customers will be disappointed with the uncertainty surrounding the timeline but claimed there had been significant progress with the CHESS replacement. The ASX is progressing testing and technical accreditation with software providers and is working towards a revised delivery schedule. 

“It is important to take time for a careful, independent review of the work done to date and the work still to do,” she said.

“CHESS is a critical system and we must have high confidence in the schedule to deliver new CHESS safely.” 

Lofthouse said the ASX continues to invest in the existing CHESS system and has strengthened its capacity, speed and resilience.

In a report, the ASX and Digital Asset identified more development was required than previously anticipated to meet the exchange’s scalability and resiliency requirements for the application. 

Benefits of the new system were meant to include reducing complexity for customers by having a distributed ledger that represents a single source of truth, and lowering access barriers to non-affiliated market operators and clearing and settlement facilities.

The new system will be operated by ASX on a secure private network where all participants are known, have access via the enabled permission and must comply with ongoing and enforceable obligations.