ASX has announced its implementation plan for the settlement and sub-register services of the Clearing House Electronic Subregister System (CHESS), dubbed as Release 2.
In an announcement on Tuesday, the market operator said it expects the CHESS Release 2 implementation – targeted for 2029 – to cost between $270 million and $320 million.
It also continues to work towards the delivery of Release 1 for 2026, with estimated project costs currently expected to be at the “upper end” of ASX’s previously estimate of $105 million to $125 million
Earlier in August, ASX released a consultation which proposed that the CHESS replacement be broken up across two main releases. Namely, Release 1 will focus on clearing services, with settlement and sub-register services to follow in Release 2.
“This staged approach is expected to reduce overall delivery risk and should help manage impacts on stakeholders, as compared to a single release,” it clarified on Tuesday.
Moreover, ASX released its response paper to the consultation on the CHESS Replacement Partnership Program, its initiative designed to support continued industry participation in the CHESS project.
It had previously said it expects to provide up to $70 million under the program and, following a series of payments, there remains $37 million to be disbursed which is linked to “future project milestones”.
“ASX plans to use the full $70 million allocation towards the Partnership Program, subject to other considerations, in particular, all eligible entities accepting their invitation to participate in the Partnership Program,” the company said.
Commenting on the update, CEO and managing director Helen Lofthouse said ASX maintains its focus on the safe delivery and reliability of the CHESS project.
“This is reflected in our proposal to implement the project over two releases and to implement Release 2 in 2029, which is expected to allow time for industry preparation and readiness activities following extensive stakeholder engagement,” Lofthouse said.
“Our technology modernisation program is part of our strategy to continue to build long-term shareholder value.”
Looking ahead, Lofthouse noted that the new CHESS system is intended to provide “critical market infrastructure” moving forward.
“We need to make the appropriate investment to ensure it can provide for the market today and into the future. As we progress this important project, we are continuing our investment for the effective and reliable operation of current CHESS.”
The managing director affirmed that the ASX will continue to engage with stakeholders as it progresses delivery on the project.
Earlier this month the market operator filed a concise statement in response to the proceedings brought by the Australian Securities and Investments Commission (ASIC) in the Federal Court on 13 August 2024.
At the time, the regulator alleged that by making certain statements to the market on 10 February 2022, in relation to the previous CHESS replacement project, ASX contravened sections of the ASIC Act 2001 relating to misleading or deceptive conduct, and false or misleading representations.
However, based on the work being carried out by ASX and the information available at the time regarding the status of the project, ASX has said it denies that the statements made on 10 February 2022 contravened the law.
“ASX accepts that the delays with the previous CHESS replacement project caused disruption, something for which we’ve apologised. However, there was a reasonable basis for the statements ASX made about the project’s progress on 10 February 2022 and we do not accept the allegations that we breached the law,” Lofthouse said in November.
