Accenture has been commissioned by the Australian Securities Exchange to review the blockchain-based core system replacing CHESS, as its go-live date has been pushed back another 18 months.
The new clearing house electronic subregister system is now not expected to launch until late 2024. The update follows ASX’s announcement this March that the previous April 2023 go-live date would be delayed.
The CHESS software enables ASX's registry to manage the settlement of transactions, and the exchange has strived since 2017 to replace it with distributed ledger technology in a bid to cut costs for customers.
The replacement system is being developed by Digital Asset, which ASX has an equity stake in.
The ASX said Digital Asset will work with Accenture to complete the review over the next 12 weeks, while testing and technical accreditation with software providers continues.
The review will then be provided to the Australian Securities and Investments Commission and the Reserve Bank of Australia, and publicly released thereafter.
Both ASIC and the RBA said in a statement that the latest delay to the go-live date was “disappointing”.
RBA governor Philip Lowe, commenting on the appointment of Accenture, said “the review initiated by ASX is an important step in providing assurance that the new CHESS application software 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.’
ASIC chair Joseph Longo added that ‘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.”
“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.”
EY conducted a previous review of the new system after, in November 2021, ASIC and the RBA imposed new conditions on ASX’s clearing and settlement licence, including appointing an ASIC-approved expert to assess the replacement project.
ASX released the report by EY earlier this year that said the new blockchain-based system was “fit for purpose”.
However, EY’s report was based on a “desktop review,” as opposed to “process walkthroughs and control testing on the environment to confirm that key functionalities were working as expected", owing to the parameters of the audit it was commissioned to perform.
Work on the new system started in December 2017, but it has been delayed several times.
When the ASX retracted the planned April 2023 launch this March, it said a software update Digital Asset planned to release this April, v1.3, would be released in July instead, without providing a reason for the delay.
The release will “incorporate the next iteration of non-functional tuning of the application and code fixes identified by customers, and a software candidate for providers to accredit against” ASX said at the time.
In 2018, the ASX delayed the switch-on date to early 2020 due to concerns that implementation timeframes were too rushed for industry to appropriately prepare for the changes.
In March 2020, the exchange said the pandemic had prompted a further delay to April 21 2021, which was then extended to April 2022.