ASX announces go-live date for CHESS replacement

ASX CHESS Replacement

The Australian Securities Exchange (ASX) has announced its revised go-live date for its blockchain-backed CHESS replacement, now slated for an April 2022 launch.

As part of its revised implementation timeline, the to-be-named clearing and settlements platform will go live 12 months later than originally planned – though, the ASX noted, this date may also be subject to change following a current industry consultation to be concluded at the end of this month.

The ASX cited “a number of factors, including the pandemic” for the delay.

“The revised timetable has been produced to provide additional time for the ongoing impact of the Covid-19 pandemic on all stakeholders, accommodate functionality changes requested by users, and have a longer period for ASX and CHESS users to complete their respective development and readiness activities,” the ASX said in a statement.

ASX deputy chief executive Peter Hiom said the project had come to an “important and exciting phase… involving close collaboration between ASX and CHESS users”.

“At its core, the new CHESS system will deliver existing services, new and enhanced functionality, high availability, reliability and performance, and will underpin Australia’s financial markets for the next decade and beyond.

“We have made great progress in challenging circumstances and are focused on delivering the solution in a safe and timely manner.”

CHESS is the stock exchange’s 26-year-old core equities clearing and settlement system. In 2016, the ASX flagged potential replacement options for the CHESS platform, settling on a Distributed Ledger Technology (DTL) solution.

Last week, the ASX announced the launch of a new API plug-in capability for its DLT settlements system, with the hope of luring outside software developers to build tailored “microservices” for users of the platform.

Increased volatility on the share market and the hot pursuit of cut-priced stocks by traders in the wake of the Covid crisis have no doubt put pressure on the existing CHESS platform, further spurring the ASX to overhaul its long-standing core trading system.

“While no-one was predicting this significant increase in trading volumes that have occurred recently, it highlights the need to replace older systems across the industry with flexible, contemporary technology.”

“The recent period of record trading activity and volatility, and the prevalence of manual and paper-based processes in many back offices across the industry, have underlined why the implementation of the next generation of technology to support the digitisation of Australia’s equity market is a priority,” Hiom said.

Despite the delay, the ASX revealed a number of milestones achieved since a reassigned go-live date was proposed earlier in March, including the deployment of “several ASX technology environments across multiple data centres”, the release of a seventh software drop into the customer development environment, and the completion of the ISO 20022 Technical Committee’s task sheet to fast-track the adoption of the global messaging standard within the new system.

The ASX said it had also published all functional specifications and messaging requirements “for software providers to develop to the new system”.

Under the revised timetable, by December of 2020, software providers, including third-party back-office vendors and users who develop and maintain their own in-house systems, will be able to access the new platforms Industry Test Environment (ITE), allowing them to conclude both their functional and non-functional developments.

“This will allow additional time to optionally test their connectivity and their systems against ASX’s production state infrastructure,” the ASX said in its Revised Timetable briefing document.