The Australian Securities Exchange’s (ASX) much anticipated clearing and settlement technology overhaul has suffered further delays, with the exchange announcing this week the April 2023 “go-live” date is “no longer viable”.
The Clearing House Electronic Subregister System (CHESS) replacement is incorporating distributed ledger technology to enable instant transactions and automated records in real-time.
ASX’s $250 million project, touted as the “most costly and longest-running blockchain project”, was first forecast to be ready for industry-wide testing in July 2020 and fully functional by April 2021. This date was then delayed to April 2022 and pushed out again to April 2023.
This week’s announcement comes after the ASX advised CHESS users, software providers and stakeholders of the strong likelihood of a delay just over a month ago.
A new “go-live” and hopefully final date is still in question and likely to be announced after June.
Input from stakeholders to establish new deadline
ASX has confirmed it will lean on “input from stakeholders” in reaching a new deadline date and project milestones, which will include industry testing, operational readiness, market trials and ultimately implementation of the technology.
The securities exchange remains confident in bringing forward a CHESS replacement to “balance safety and efficiency”, but insists the existing CHESS system is “robust” and is “performing well”.
Ongoing issues forcing the continued delays
A number of role changes in the ASX were identified as contributors towards the continued delays.
ASX deputy chief executive officer and group executive business development Peter Hiom, responsible for project itself, resigned last year after 23 years, and has been replaced by Tim Hogben who has assumed the role of group executive of the ASX.
ASX chief executive officer and managing director Dominic Stevens has also announced he will be retiring, which has prompted Ord Minnett chief executive officer Karl Morris to note Mr Stevens’ replacement would likely bring a different approach to the project, which could cause further delays.
“I wouldn’t be surprised if there’s some significant different decisions when a new chief executive officer takes over,” Mr Morris said.
ASX using its monopoly to buy time
Morningstar analyst Gareth James says the ASX’s continued delays in transitioning points towards the exchange acting in a “monopolistic fashion”.
“ASX has this incredibly strong monopoly that’s detrimental to innovation and efficiency in companies,” he said.
Mr James isn’t surprised to see the ASX implementing further delays, stating “operational problems” resulting in people departing the company.