ASX dumps flawed project
Clearing system ‘gaps’
ASX Limited has ditched the current project to replace its troubled CHESS clearing system after an independent review found significant gaps in the bourse operator’s ability to deliver it.
The external review by Accenture, released on Thursday, found there were significant gaps in the project’s test, analysis and design, and program and project management.
“The program lacks a holistic, agreed, single view of status with adequate traceability of resources and estimation to the draft delivery plan,” it said.
“Evolution to siloed management and execution structures and tooling has impeded collaboration with inefficient escalation processes that has resulted in friction at the working team level and resulted in misaligned views of accountability.”
ASX Ltd, which will write off $245-$255m in pre-tax costs associated with the project, will now reassess “all aspects” of it and set up an industry forum to consult on its CHESS replacement. The Reserve Bank and the Australian Securities and Investment Commission hit out at the ASX for its handling of the project, which has suffered five delays to its implementation timeline in seven years.
The two regulators issued a statement expressing their concern at the ASX’s delayed replacement program for its CHESS clearing and settlement system, saying it marked a “significant setback to the replacement of critical infrastructure for Australia’s (share) market”.
“It now brings into sharp focus the longevity of the existing CHESS system,” they said.
ASX managing director and chief executive Helen Lofthouse said on Thursday the company must revisit the CHESS solution design as well as validate and test feedback from the independent review to “assess changes required to bring the project to market safely, efficiently and for the long term”.
“The independent report, coupled with our own assessment work, confirms a number of significant challenges associated with aspects of the CHESS replacement project,” she said. “These findings provide valuable inputs to helping us determine a revised solution. We have some work to do before updating and consulting with stakeholders more deeply.” Accenture’s findings will “provide an important input into ASX’s own continuing assessment”, she said.
Given the reassessment and the uncertainty of future economic benefits from the CHESS replacement solution already developed, all of the capitalised software in relation to the development will be “derecognised” in the first half of the 2023 financial year.
The non-cash derecognition charge is estimated to be in the range of $245-$255m pre-tax, or $172-179m after tax, and will be a significant item in the first-half results for the 2023 financial year.