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CHESS replacement delayed further, review underway

The ASX has commissioned an independent review of its long-delayed CHESS replacement to enable the bourse to set a realistic go-live date, saying current indications suggest it won't launch before late 2024.

The CHESS replacement project has been underway for some time, originally slated for launch in April 2021. This was pushed to April 2022 and then April 2023. In May of this year, the ASX advised it would be delayed further but could not provide a new go-live date, saying it required further discussion with its technology partner, Digital Asset, and other stakeholders.

Today, in announcing it has appointed Accenture to review its work to date and the remaining deliverables so that a revised timetable and estimated go-live date can be determined, the ASX said it does not expect the new CHESS to be live before late 2024.

The review is expected to commence this month and take about 12 weeks, the ASX said. The findings will be provided to ASIC and the Reserve Bank of Australia and released publicly.

User testing that was scheduled to commence in September has now been put on hold until a new go-live date has been announced. It added that CHESS user readiness testing will take place no later than 12 months prior to the new go-live date.

"There has been significant progress with CHESS replacement. But it is important that we take time for a careful, independent review of the work done to date and the work still to do. CHESS is a critical system, and we must have high confidence in the schedule to deliver new CHESS safely," ASX chief executive Helen Lofthouse said.

"I know our customers will be as disappointed as I am with the uncertainty about the timeline for completion. I apologise for the uncertainty and thank them for their close and constructive work with us on this important project."

Lofthouse took over as chief executive this month, following the retirement of Dominic Stevens in February.

ASIC chair Joseph Longo expressed disappointment over the further delay but welcomed the independent review.

"Given the delays and duration of the project, it is critical that Accenture now undertake this review to provide assurance on the delivery of a resilient replacement for CHESS and a high degree of confidence in a revised go-live date. To achieve this, we expect ASX to publish the findings of the Accenture review," he said.

"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 of the market and participants."

Also commenting, RBA governor Philip Lowe is an important step in providing assurance that the new system will be fit for purpose.

"The replacement system must be safe and reliable to maintain investor confidence and the stability of Australia's financial system," he said.

The regulators added that their minimum expectations are that the new system meets the requirements the existing CHESS meets for system availability, resilience, recoverability, performance and security.

Read more: ASXAccentureASICHelen LofthouseReserve Bank of AustraliaDigital AssetDominic StevensJoseph LongoPhilip Lowe