ASX to develop advisory group to guide CHESS replacement

ASX Cash Equities Clearing and Settlement Advisory Group

The ASX is set to create a new advisory group that is expected to further rebuild stakeholder “confidence and restore trust” in the Exchange’s clearing and settlement operations, with its first priority to provide strategic advice on the revised CHESS replacement program.

The to-be-launched Cash Equities Clearing and Settlement Advisory Group will have an overall goal to “increase industry contribution to key strategic cash equity clearing and settlement issues.”

Among its first major priorities, the Group will provide strategic advice to the ASX’s clearing and settlement teams on the CHESS replacement program with regard to stakeholder involvement.

“As ASX progresses the new solution design for CHESS replacement, the project will begin shifting into a detailed design and implementation planning phase which is expected to draw increased levels of stakeholder engagement,” the ASX wrote.

As well, the Group would offer guidance on “key matters” of importance to stakeholders, including the ASX’s proposed transition to T+1 settlement – a move to effectively halve the settlement cycle for cash market trades in Australia.

Since announcing at the end of 2022 it would abandon its original, and frequently delayed, CHESS replacement solution, the ASX has made several overtures to industry to revive confidence and ensure longer-term engagement in the program – an effort no doubt to ensure the next incarnation of the clearing and settlement system replacement can be delivered in a more timely fashion.

Earlier this year, the ASX announced it would form a dedicated CHESS Replacement Technical Committee intended to not only enable stakeholders to better track the progress of the program but also increase their direct involvement in decision-making.

The ASX also unveiled in February this year, as part of its half-year report, its CHESS Replacement Partnership Program, offering stakeholders up to $70 million to deliver on key project milestones, including $15 million in direct rebates for participants and a $55 million development incentive facility for those involved in building to the platform.

In response to the announcement on the Group’s formation, ASX managing director and chief executive Helen Lofthouse said: “ASX is committed to increasing transparency and enhancing stakeholder engagement, and we are supportive of the proposed development of a new advisory group that will have a highly strategic focus when it considers CHESS replacement and critical clearing and settlement changes.

“I’ve previously stated ASX needs to continue to take steps to rebuild confidence and restore trust, and later this month, we expect to release an expert report on our intra-group conflict management arrangements.

“We appreciate the facilitation provided by ASIC to support the establishment of the proposed stakeholder advisory group and look forward to further collaborating with senior industry stakeholders to work constructively and deliver quality outcomes for the whole market.”

The new Group will also function alongside the ASX’s existing Business Committee, which would continue its existing mandate, and together would “provide a solid foundation for market engagement at multiple levels,” the ASX wrote.