ASX extends go-live date for new clearing system following COVID-19 trading surge
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April 2023 is the new go-live date for the ASX (ASX:ASX) to introduce its updated clearing and settlement system for share trades.
That marks a 12-month extension from the previous timetable following an extensive project review, the exchange said.
The ASX currently clears and settles trades through CHESS (Clearing House Electronic Subregister System) — a system that has been in place for around 25 years.
The new system will be based on Java and Digital Asset Modelling Language which can be operated via a distributed ledger node — effectively a permissioned blockchain.
The exchange first flagged plans to roll out a blockchain clearing and settlement system at the end of 2017.
In early 2018, it flagged the fourth quarter of 2020 (now) as an indicative timeline for the go-live window.
In September of that year, the prospective launch data was pushed back to March/April 2021.
Today’s announcement marks the second of two 12-month extensions from that estimate, and the ASX said the COVID-19 disruption was a key factor in its decision.
As part of its review, the ASX said it sought feedback from around 100 organisations — most of whom indicated they were happy to meet the April 2022 timeframe.
However, feedback from stakeholders suggested the COVID-19 market panic in March reemphasised the importance of effective collaboration, and the need to de-risk the procedure around a single cut-over date.
The industry also requested an increase in post-trade processing capacity that was larger than anyone anticipated before the pandemic.
“This is in response to the extreme increases in trading volumes on the ASX platform during the most volatile period of the pandemic in March 2020,” the exchange said.
Daily trading volumes in March eclipsed previous records by around 3.5 million trades, the ASX said.
As a result, “the need for the replacement system to scale to much higher processing levels and sooner, is now a Day 1 requirement”, the ASX said.
Exchange CEO Dominic Stevens said the delayed rollout is reflective of evolving demands from the broader industry around trading capacity.
In the meantime, the ASX said it will make the necessary investments in the existing CHESS systems to maintain orderly function in the clearing and settlements.
The exchange is “confident the current CHESS system will continue to support the industry during the extended timeframe”, it said.