ASX continues search process for CHESS replacement
05 September 2018 Sydney
Image: Shutterstock
ASX has released its response to feedback received on its consultation paper ”CHESS Replacement: New Scope and Implementation Plan”, which was issued in April this year.
The paper was the latest stage in a process that started in January 2016, when ASX began working with its technology partner Digital Asset to examine and test the ability of a distributed ledger technology (DLT)-based system to underpin the replacement of its high-value payment system, Clearing House Electronic Subregister System (CHESS).
For the April consultation, ASX sought feedback on the planned new features and timetable for replacing CHESS with DLT.
Some 41 written submissions were received from a wide variety of stakeholders representing the views of a wide range of stakeholder groups including clearing and settlement participants, payment providers, back office technology vendors, market operators, share registries, and industry associations representing issuers, brokers and custodians.
Overall, ASX said there was broad support for its approach and for the new features being implemented, although with differences about their relative priorities. There is also strong interest in better understanding the potential benefits of a DLT-based system.
A major question raised was whether the timetable towards implementation was achievable given the significant operational, technology and regulatory effort required.
The new paper also includes a summary of the responses received and details the changes ASX will make to the scope and implementation plan as a result of industry feedback.
Respondents questioned whether the proposed implementation window of Q4 2020 to Q1 2021 was achievable given the significance of the technology change and the range of new scope is introduced.
ASX considered this feedback having regard to the priority respondents placed on these changes, the estimated reduction in development and testing effort (operational and technology) required by users, and the regulatory work that would need to be addressed prior to implementation.
As a result, it has modified the plan. It said it will “defer implementation of seven new scope items from day one to post-day one” and bring forward one new requirement in response to strong representations from a number of respondents.
It will also push back the earliest commencement date for the new system from Q4 2020 to target March-April 2021, provide an additional six months for user development and testing, defer the commencement of industry-wide testing by six months, and extend mandatory accreditation by six months.
On the execution of implementation, ASX said that it remains of the view—informed by previous experience transitioning critical market infrastructure systems—that a single cutover weekend is the most appropriate solution and is lower risk than other alternatives such as running multiple systems in parallel.
The paper was the latest stage in a process that started in January 2016, when ASX began working with its technology partner Digital Asset to examine and test the ability of a distributed ledger technology (DLT)-based system to underpin the replacement of its high-value payment system, Clearing House Electronic Subregister System (CHESS).
For the April consultation, ASX sought feedback on the planned new features and timetable for replacing CHESS with DLT.
Some 41 written submissions were received from a wide variety of stakeholders representing the views of a wide range of stakeholder groups including clearing and settlement participants, payment providers, back office technology vendors, market operators, share registries, and industry associations representing issuers, brokers and custodians.
Overall, ASX said there was broad support for its approach and for the new features being implemented, although with differences about their relative priorities. There is also strong interest in better understanding the potential benefits of a DLT-based system.
A major question raised was whether the timetable towards implementation was achievable given the significant operational, technology and regulatory effort required.
The new paper also includes a summary of the responses received and details the changes ASX will make to the scope and implementation plan as a result of industry feedback.
Respondents questioned whether the proposed implementation window of Q4 2020 to Q1 2021 was achievable given the significance of the technology change and the range of new scope is introduced.
ASX considered this feedback having regard to the priority respondents placed on these changes, the estimated reduction in development and testing effort (operational and technology) required by users, and the regulatory work that would need to be addressed prior to implementation.
As a result, it has modified the plan. It said it will “defer implementation of seven new scope items from day one to post-day one” and bring forward one new requirement in response to strong representations from a number of respondents.
It will also push back the earliest commencement date for the new system from Q4 2020 to target March-April 2021, provide an additional six months for user development and testing, defer the commencement of industry-wide testing by six months, and extend mandatory accreditation by six months.
On the execution of implementation, ASX said that it remains of the view—informed by previous experience transitioning critical market infrastructure systems—that a single cutover weekend is the most appropriate solution and is lower risk than other alternatives such as running multiple systems in parallel.
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