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Highlights
- ASX targets CHESS replacement rollout in 2026.
- Phase 2 of the system planned for 2029, with significant investment.
- Legal challenges related to previous project updates remain unresolved.
The Australian Stock Exchange (ASX:ASX) is set to overhaul its Clearing House Electronic Subregister System (CHESS), aiming for a significant upgrade to the decades-old infrastructure by 2026. The CHESS system, critical for handling trade settlements, has long been due for modernization as it continues to rely on outdated practices like paper statements for shareholder transactions.
The company announced the project’s first phase, “Release 1,” would cost between A$105 million and A$125 million, with a targeted delivery date in 2026. Phase 2, expected by 2029, comes with an estimated price tag of up to A$320 million. The company stated that expenses related to this phase would extend beyond the current financial guidance period.
ASX CEO Helen Lofthouse highlighted the importance of the initiative, stating the project was central to ensuring the ASX could meet present and future market demands. She emphasized the broader goal of maintaining market reliability while supporting long-term shareholder value. The company continues to invest in the effective operation of its current CHESS infrastructure as it transitions to the new system.
This ambitious modernization comes amid legal challenges for the ASX. The Australian Securities and Investments Commission (ASIC) initiated legal proceedings against the company in August 2023. The case revolves around allegations that the ASX misrepresented the progress of the CHESS replacement project. ASIC claimed the company’s 2023 statements, which suggested the system upgrade was “progressing well,” were misleading. The regulator also raised concerns over market confidence, highlighting the broad implications of ASX's management of such critical infrastructure.
Adding to the challenges, the ASX faced a separate penalty earlier this year, paying $1 million over unrelated matters. The company’s previous attempt to integrate blockchain technology into the CHESS replacement has also quietly been sidelined after failing to deliver expected outcomes.
Despite the legal and technical hurdles, the ASX remains committed to its long-term modernization strategy. The replacement system is envisioned as a robust and scalable solution that will address the evolving needs of the financial market. The company has not commented further on the ASIC lawsuit or the abandoned blockchain plans in its latest announcement.
The CHESS replacement represents a pivotal project for ASX, poised to reshape the infrastructure supporting Australia's financial markets while navigating regulatory scrutiny and operational challenges.
