The Australian Securities Exchange (ASX) is replacing CHESS – its clearing and settlement system which has been running for more than 25 years – with a blockchain-based system.
The first fully-integrated Industry Test Environment (ITE) of the blockchain system took place in November 2021. Since then there has been a lot of activity, input and engagement across the industry.
Tim Hogben, group executive, securities and payments at ASX Limited, said, “With Q1 2022 drawing to a close, I can report that ITE1 is progressing well. Robust testing is underway internally and with our technology providers, and we are confident in the technical solution and the program assurance.”
ASX has 25 software providers – including all vendors – working through functional testing and has built and successfully system tested almost all mandatory features and over 90 per cent of optional features of the new systems’ functionality with software providers in ITE1.
Hogben further added “In terms of performance of the ledger and the CHESS application: the ledger is performing well. Of note, the same technology (i.e. ledger and language) is now in production in the US and processing billions of dollars of US debt repo each day.
“Application code fixes identified as part of ITE1 are in line with expectations, reflecting the high quality of the solution and extensive testing by software providers in the Customer Development Environment (CDE). This outcome is particularly important given the current testing environment represents the first time the full technical stack has been brought together.”
ASX released the first independent report on the project’s assurance program in March 2022, with EY finding that the program is fit for purpose and no significant gaps have been identified. ASX taking into account recommendations and learnings from ITE1 and applying these to assurance activities and ITE2 onboarding.
Delay to next software release and accreditation schedule
Following receipt of the next software release (v1.3) from ASX’s technology provider, it will be tested and deployed into ITE1 in July. This 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.
Accreditation can commence once this software is available in ITE1 in July, rather than the end of April. Accreditation commencement will vary dependent on the participant type the vendor is supporting, with some commencing in July and others from August.
“We continue to work closely with our technology providers to finalise the application build, testing and integration aspects of the program.” Said Hogben, “additional detail regarding v1.3 will be provided to users at the next Implementation and Transition (I&T) webinar on 7 April.
“For now, software providers will continue to work through functional testing (on v1.2) in ITE1. I want to thank software providers for their efforts in working through functional testing to date. We will continue to work closely with this critical user group.”
Dedicated ITE2 customer onboarding to commence in April
To accommodate the Easter and Anzac Day public holidays, ITE2 will now open on 27 April (rather than 18 April) in a phased approach, commencing with a dedicated onboarding period that includes certificate management set up.
This approach incorporates learnings from ITE1 onboarding and testing allowing for the known complexity involved in safely updating, connecting and testing technology across multiple parties and jurisdictions.
ASX will begin preparations for CHESS user testing once accreditation has commenced in ITE1 (in July), with CHESS user testing commencing following connectivity and onboarding and once the v1.3 software release has been tested and deployed in ITE2. Further detail will be provided as we progress through these milestones.
As a result of the changes to the ITE2 approach, migration dress rehearsals (MDR) will not commence in October as previously advised. Further detail will be provided as we work with customers to assess the change in approach to the ITE2 schedule.
Ongoing engagement and consultation
Hogben further added, “We are confident with the delivery, testing and industry participation to date. However, we also recognise the complexity and risk management necessary for this type of project and the need for comprehensive industry testing, integration and operational readiness.
“We remain committed to meeting industry and stakeholder expectations of implementing the new
system in a manner that appropriately balances efficiency and safety.
“CHESS replacement is an ongoing process with the industry, and industry engagement will be
even more important as we move into the CHESS user testing environment and operational
readiness activities, and as we agree an approach that ensures utmost confidence in a safe,
secure and performant system at go-live.
“We recognise the impact these changes will have on our customers’ programming activities and
apologise for the inconvenience. We will be actively working with all stakeholders to assess the
flow-on impacts of these schedule changes to project milestones, industry testing, operational
readiness, migration dress rehearsals and implementation (go-live).”
At this time, ASX advises that there is a strong likelihood of delay to the go-live date. It has said it will
engage with its technology providers and stakeholders to assess the impact. The outcome of this process will be disclosed through regular updates to CHESS users and