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Highlights
- Regulators intensify pressure on ASX over delayed reforms
- CHESS upgrade project sees extended timeline and rising costs
- Independent inquiry to assess governance and risk measures
The Australian Securities Exchange (ASX:ASX) finds itself under heightened regulatory scrutiny as both the Australian Securities and Investments Commission (ASIC) and the Reserve Bank of Australia (RBA) push for quicker progress in reforms aimed at restoring confidence in Australia’s financial markets. This follows the significant disruption caused by the December 2024 outage of the Clearing House Electronic Subregister System (CHESS), a critical component of ASX's settlement infrastructure.
During a recent investor briefing, ASX Chief Executive Helen Lofthouse acknowledged dissatisfaction among regulators regarding the pace of internal improvements. The CHESS system failure, stemming from a memory allocation error, forced the cancellation of batch settlements in the equities market—an incident that has become a catalyst for urgent regulatory attention.
Recognising the gravity of the situation, Lofthouse confirmed the establishment of a dedicated taskforce to coordinate with ASIC. The taskforce is part of ASX’s commitment to full cooperation with a newly launched governance and risk management inquiry. The aim of the inquiry is to offer an independent and transparent review of ASX’s operational practices and ongoing reform efforts.
The CHESS upgrade program, which was originally unveiled in 2017, has faced repeated delays. In 2023, ASX outlined a phased rollout, with the initial phase now projected for 2026 and costs estimated between A$105 million and A$125 million. The second phase is expected by 2029, with projected costs escalating to between A$270 million and A$320 million. These figures mark a significant increase from early expectations, raising industry-wide concerns over project delivery and cost control.
While the upgrade is central to modernising Australia’s post-trade systems, the prolonged timeline has stirred dissatisfaction across market participants. There is also ongoing legal action initiated by ASIC over alleged misleading statements made in 2022 about the CHESS replacement project—adding to the challenges ASX faces in repairing its credibility.
The stakes are high as the ASX (ASX) navigates these pressures. The outcome of the inquiry and the execution of its technology overhaul will play a crucial role in shaping market trust and operational reliability in Australia’s financial markets going forward.
