ASX picks TATA in bid to finally put CHESS replacement bungle to rest

afr.com:

The Australian Securities Exchange has hired TATA Consultancy to design the replacement for itsshare settlement and clearing infrastructure, a year after the abandonment of plans for a long-touted blockchain-based system left the market operator in disarray and in the sight of regulators.

The ASX said on Monday that it had re-assessed how to replace the 29-year-old CHESS infrastructure that handles millions of trades per day, and would opt for a “product-based solution” provided by the Indian technology group.

It had previously suggested the ageing technology that underpins most of Australia’s trading would have to stay until 2032, even as other exchanges purchased cheaper systems to improve how their markets operate.

Helen Lofthouse, ASX’s chief executive, at a parliamentary inquiry in June, where she faced questions about the bungled CHESS replacement project. Alex Ellinghausen

ASX said on Monday it would implement the new CHESS in two main releases, with the clearing service to be delivered in a first release, followed by the settlement and sub-register services. The first release of the project is estimated to cost between $105 million and $125 million, and is scheduled to be completed in 2026.

The cost will be “incurred over multiple years”, with expenses next year already factored into the ASX’s current guidance.

The second-phase upgrade of the settlement and sub-register function is scheduled to be implemented in 2028 or 2029 – the costs will be determined “in late 2024 following stakeholder consultation”.

But Australian Securities and Investments Commission chairman Joe Longo said there was “still a long way to go to deliver a CHESS replacement”.

“It will be critical for ASX to now focus on engaging with the