After torching A$250 million on a botched blockchain replacement for its CHESS clearing and settlement system, the ASX will spend up to half that again on the first phase of another upgrade attempt.
Under a deal confirmed last week, the ASX hired Tata Consultancy Services (TCS) to install its off-the-shelf BaNCS for Market Infrastructure product in place of CHESS via a two-stage process.
Industry reports suggest TCS was a surprise winner with the US-based Nasdaq understood to be the previous front-runner.
The NZX along with other stock exchanges including Finland and South Africa also use the TCS platform.
TCS, part of the India-headquartered global Tata conglomerate, is slated to complete the first part of the CHESS change, clearing services, in 2026 with settlement and sub-register expected to switch on “in 2028 or 2029”.
ASX has budgeted between A$105 and A$125 million for the first clearing instalment with the “scope, timing and cost” of phase two “to be determined in late 2024 following stakeholder consultation”.
Helen Lofthouse, ASX chief, said in the release that the new clearing and settlement technology was selected to meet “current and future market needs and our licence obligations, enabling a safe transition from the incumbent platform, minimising industry impacts where possible, and having the capability to provider interoperability and facilitate future innovation”.
The Australian exchange was slammed by shareholders, market participants and regulators in the wake of its bungled blockchain reboot that stalled early in 2023, six years into the effort.
Both the Reserve Bank of Australia (RBA) and the Australian Securities and Investments Commission required the ASX to produce multiple reports on the failed CHESS fix with a third-party Advisory Group also convened to oversee the replacement process.
RBA governor, Michelle Bullock, said in a statement: “The Advisory Group’s input will remain critical throughout the implementation phase of the replacement solution. It will also be critical for ASX to address the findings from various external audits and reviews so that past issues with the program are not repeated.”
Consultancy firm, Accenture, which authored a damning review of the previous CHESS upgrade process, has been retained “in the role of solution integrator”, the release says.